101. Trump’s Plan To Humiliate Europe

0:00This episode is brought to you by Progressive Insurance. Fiscally responsible. Financial geniuses. Monetary magicians. These are things people say about drivers who switch their car insurance to Progressive and save hundreds. Visit Progressive.com to see if you could save. Progressive Casualty Insurance Company and affiliates. Potential savings will vary. Not available in all states or situations.

0:35Welcome to The Rest is Politics US with me, Katty Kaye, in Wiltshire, actually, staying in the English countryside, which is very lovely, although a little chilly. Not where you are, Anthony. You Brits like cold weather in the summer, not me. I'm in Sicily in a heat wave. Going to search and destroy and buy things, be an American consumer. With that weak dollar, that's a problem. You're going to find that even you might notice the weak dollar. But are we allowed to reveal where you are? Yeah, I'm staying. I'm at the San Domenico Palace, the Four Seasons, and I'm in Taramina. I think it's actually only known as the White Lotus Hotel now, right?

1:18Yes. Yeah, I am that ugly American watching White Lotus episodes while I'm here, right? I mean, you got to own who you are, Caddy. See, I brought the conspicuous consumption out of you. in the last year, which I'm proud of. You have. You have. Yes. I think it's a source of pride for me. I hope that no dead bodies wash up on the beach for you and Deirdre. This hotel is not even anywhere near the beach. They made it look like it was, but it's miles from the beach, but that's a whole other magic of Hollywood. All right. What are we talking about today? Well, talking of Europe, since you're in Europe, while you were flying over to Sicily, We're recording this on Monday morning.

1:57Donald Trump arrived in Scotland over the weekend to play some golf, but also fit in a bit of business. And he managed to sign a trade deal with the European Union. This has been one of the stickiest trade deals for the United States to get. Of course, the European Union is a major trading partner of the US and there had been quite a lot of feeling in Europe's 27 member states of the EU that they should push back against the administration. In the end, they've got a deal which I think looks like more of a win for Trump than it does for the European Union. Tariffs will be set at 15 % across the board for goods going into America, American goods going into the EU will be zero tariffed.

2:42I mean, it's also worth pointing out that Keir Starmer managed to get a 10 % tariff deal for the United Kingdom, went first, rushed it at the time, was kind of criticized for going too quickly. And perhaps the Europeans felt that the UK should have stayed with the EU, negotiated altogether, given themselves more leverage. But actually, for the UK and for British companies, they have ended up with a better deal because Keir Starmer went quickly. We can get into some of the details, although they are a little scant at the moment, which raises concerns about all of these trade deals that are being announced.

3:16But there could be some sectors that get relief or quotas. The Europeans are hoping, for example, for a bit of relief around car exports, steel and aluminium exports. There was some confusion about whether pharmaceuticals, which is a very big deal for Ireland, would be included in that 15 % tariff. An Irish business contact that I have texted overnight saying that that was what they were looking at in Ireland. And there is some confusion about the prospect of pharmaceuticals. So, I think the main thing, though, to say is that But when we looked back at this extended deadline, we all thought that it was going to be very hard for the Trump administration to pull this off to get any of these deals announced by this August the 1st deadline.

4:00And yet here he is. He's got the big one that he needed to get. This is going to make markets happy. And I think it gives the Trump administration some bragging rights over, OK, well, we announced all of these massive tariff percentages of 35 percent at one point that we're going to put against the European Union. And now we've got them down to 15 percent and we'll take that as a win. Is that how you think that Trump is going to play this? Yeah. I mean, listen, I mean, the the pros for Europe, let's talk about what they are. It prevents the worst outcome. So you don't have this 30 percent tariff that you're mentioning, but a 15 percent tariff.

4:38It's hard. I don't know if you remember the guy that was a African-American in New York. He was campaigning for mayor and he had a slogan, the rent is too damn high. Okay. And that was his slogan. Of course, he didn't win, but he was right about the rent. And the tariff is too damn high, Caddy. It's just not a great thing. It will create a slowdown in demand. It will generate revenues for the US. But remember, American consumers will be paying that revenue. And when I go out and talk to people about these tariffs, I tell people America is quietly introducing a VAT. It just happens to be a VAT on imported goods, not all goods.

5:20And this is going to be something that's going to stick. This is the one thing that Trump does where I may not like it, but the next president is going to leave a lot of these tariffs in place because of the revenue sourced around them. And it will also reconfigure the way people consume goods in the United States. Some of the goods are actually going to fall by the wayside. I'm waiting for the carve-outs. You may remember in the UK deal, there were tens of thousands of car units, both for Jaguar, Land Rover, and Rolls-Royce, believe it or not, that were carved out, which is going to help those automobile companies.

5:59But that's number one. It averts the worst outcome. Number two, they've got a blanket tariff now. And so when I read through the agreement, it didn't address the pharmaceuticals, but that should be covered under the omnibus portion of the provisions that were in the agreement, at least the stuff that was announced. That's what the Europeans are saying. That's what Ursula von der Leyen is saying. I got a text this morning saying the Europeans do believe that it's in that. Trump has thrown a little bit of confusion, I think, himself into that because he was asked about this after the deal was announced.

6:31And he said, oh, no, that's not covered here. So I think that's where the confusion is. But the Europeans are pretty clear that it is covered. Yeah, it looks like it's covered from the agreement. But this is one of those things where Trump probably doesn't want to admit that, but it is probably covered. And this is something I've said when I've spoken in Dublin. The practicality, people are saying, oh, no, he's going to shut down our pharmaceutical business. Obviously, the Irish are running a trade surplus with the US, but he really can't do that. The practicality of what's going on in terms of the way this has been set up, he's not going to be able to unwind it without causing a healthcare crisis in the United States.

7:08But just one more quick thing. This is also the energy component of this, where the Europeans are going to buy$750 billion worth of energy. Sounds good as a top line. And they were going to do that anyway because they've shut themselves down from the Russian natural and liquid natural gas component of their imports for energy. So they were going to do that anyway. I guess the thing that I would love to really understand is the investment,$600 billion of investments in the U.S. And by the way, I went back and looked at some of the previous announcements of investments, big announcements of investments that have happened from Taiwan, from South Korea, from Saudi Arabia.

7:48in a few of the cases where these big top number investments have been announced, the reality is actually quite a lot less than the initial announcement figure. So I think that's, again, going to be spread out over a few years. We would have to see how that actually pans out, whether the 600 billion does pan out. I had a question for you, though. One, there was a good article in the Financial Times over the weekend, asking the question about whether forecasters have got it wrong on the US economy, which just seems to be irrepressible at the moment. And all of the doom and gloom, and we talked about that, that economists were feeling when a tariff war was initially announced, the tariff regime was initially announced by Donald Trump back in April on Liberation Day.

8:30And the assumption was that this was going to be a real hit to the American economy. It was going to drive up inflation. It was going to make it harder for the Fed to bring down interest rates. It was going to have a knock-on effect on unemployment in the country. And that was why you saw that initial market reaction. But this weekend in the FT, they were saying two questions really. Did the forecasters get it wrong about these policies and their impact on the American economy? Or is it just that there really will be a knock-on effect of these tariffs in terms of supply chains and good coming into the country and therefore or inflation.

9:04We just haven't felt it yet, even though we've started to see already that shipment rates are down, container rates are down coming into the US, into US ports. Where do you stand on that, Anthony? Do you think that actually the forecasts of predictions of serious economic problems because of the tariffs were wrong? Or do you think we still haven't seen the impacts of these policies? I'm going to answer it in a way that people are probably not going to light because it's a little bit of both. And I'm not trying to hedge, but the implications for the economy haven't gone through the economy yet.

9:42So the tariff, let's call the economy a large python, and the tariff is the prey that the python's going to eat. It's not gone through the python yet. So it's very hard to tell. I think the flip side though is this is the irony. Trump would never say this, of course, but he got left a very good economy from the Biden administration. And remember, the Biden administration had a lot of measures in place to fix the COVID side of the economy and the damage that was done from COVID. So Trump inherited a fairly robust economy. So when I read that article over the weekend, I wanted like three more paragraphs in the article.

10:24And paragraph one would have been that Biden really did a good job. Gene Spurling, others, in terms of understanding what corporations needed. As an example, they're the ones that accelerated all the depreciation. So, corporations are like, okay, we're now going to spend this money, take a one-year depreciation. So, for example, if I had to buy a piece of capital equipment, let's say it cost me$10 million, I could write that off of my revenue line caddy and get an immediate tax break on that. That was something that Biden's came up with, where the Biden ministry came up with has really helped the economy restart after COVID.

11:02Examples like that. Paragraph number two would have been that the tariffs are being absorbed by the corporations. You know, GM printed a$1 billion loss in their quarter and people said, well, what happened? They said, well, we had to absorb the the tariffs. So Trump got that right. Okay. So one piece was the Biden administration left it with a great economy. The second piece was whether you like Trump or dislike him, corporations, large and small, are biting in and absorbing some of the tariff costs. And then just quickly, the last piece of this is we are in a productivity boom. People don't realize how much of a productivity boom because they're not focused on it.

11:48We don't We even spent a lot of time on it in punditry, business punditry. But we've got automation, improvements of software, improvements of energy. We're in a productivity boom. So all of this stuff is going to offset some of the nonsense associated with the tariffs. But I just want to make this point. This was a coerced compromise. I'm sure the EU economic officials are walking out of this thing saying, woo, we don't have a 30 % tariff to deal with on August 1st, but 15 is a heavy price. And they didn't win anything here. And by the way, the Americans didn't win anything here either. It's just going to be a slowdown of some levels of consumerism in America, which is going to slow down the economy.

12:31I think on that point about businesses eating the cost of the tariffs, I guess the question with the EU deal, which is a little higher than the UK deal, it's the same as the Japan deal is will businesses and therefore the European economy eat these costs? I mean, the speculation is that this is going to knock, I think, half a percentage point off European growth prospects because of these tariffs and it's going to be hard for them to pass on to the American consumer. They're just going to have to take them, which has an impact. And particularly if you're a country like Germany, which is a big exporter and of whom very much is being asked at the moment.

13:08When I was in Germany and they lifted the debt ceiling in order to expand their military capacity, one of the things that a political scientist there said to me is, look, the Germans are being asked to basically fund the rearmament of Europe. They're being asked to fund the armament of Ukraine, at least for a defensive position over the next few years. They have to have massive economic reforms in the country. They've got to boost growth in Germany because growth is moribund. And they've got to do all of that under the threat of a tariff war from the United States on their primary sector. And we know that it was the Germans that were lobbying the EU to get this deal done because the uncertainty for the German car sector, a bit like the uncertainty for the UK car sector, was enormous.

14:00So I think it puts a very heavy burden, not just on German automakers, but on all of those knock-on effects that Trump wants European defense self-sufficiency. He wants European countries to spend more on their defense. But if you squeeze those European countries too hard and those auto manufacturers in Germany start to feel this, if they start having to raise prices of cars in Germany, if they start having to lay off labor in Germany, the knock-on implications of that for the German population, you're going to make it harder to achieve the very things that the United States, it seems to me, wants Europe to achieve.

14:42So, I don't know how much of the long-term gain this is to the kinds of things that Donald Trump is trying to achieve. Yeah. Well, listen, if an American president comes in less MAGA than Donald Trump, he's going to reverse some of this stuff. This is going to to be too onerous for both economies. And onerous weights have political consequences. Yeah, no question. So, but let's go to, and I'm going to probably mispronounce your name, so forgive me, everybody, but it's President Ursula von der Leyen. Is that what you say? Ursula von der Leyen. I want to ask you this question because I've met her, former U.S.

15:16Ambassador Phil Murphy, who's now the governor of New Jersey, very close personal friend, introduced me to her. And we had a conversation a few years back when she was being honored by the Atlantic Council in D.C. She strikes me as a very sharp-minded institutionalist. I would describe her that way. She used to be Germany's defense minister, too, by the way. So she really knows the German defense sector. Yeah. So she's a very smart policy wonk. She's a very measured person. She's got great diplomatic skills. She's an elegant person. Describe her feelings sitting there in the Orange Maniacs golf course and the buzzsaw, the orange buzzsaw whipping next to her.

15:59I knew you were going to ask. Take me through it. Go ahead, because I'd like you to analyze that for all of us here as I'm sitting here looking at her and she's shaking my head. But go ahead. Tell me what's going on in her head. You're so right to point it out. I watched the video last night of the two of them sitting there in Turnbury, Scotland, with a kind of, you know, golf club behind them. And there she is sitting in her kind of, you know, off pale gray jacket, just looking like, I mean, sort of sphinx-like in her refusal to show any emotion as Donald Trump is describing what is going to be incredibly difficult for the European Union.

16:36It's not a win for the European Union, talking about what a great deal this is and how no one else could have done it. And she kind of, she has her legs crossed and her arms crossed in her lap. And you can see that she has just decided to go in there and not take the bait. That she has watched, we know this because the Europeans went and spoke to all of the Japanese negotiators just in the last couple of days, that she has watched every other world leader. And what she's thinking is, how quickly can I get out of here? How quickly can I get out of here and get away from these cameras? Because these situations with Donald Trump in front of the cameras are very dangerous situations for foreign leaders.

17:15That was my reading of her expression. I have a follow-up question. A follow-up question. So the only thing that we're talking about in the United States is the Jeff Epstein file and the very famous Elon Musk description of what's in the file. DJT, you're in the file. Thank you and have a good day. Okay. So we know he's in the file and we know they're going to try to cover this up. And there's speculation here that they're meeting with Ghislaine Maxwell to see if they can get her to say that he's not in the file. I don't know what they're trying to do, but there's a full-faced open cover-up going on.

17:49And Donald Trump said he was in a bad mood. Okay, there he is. He's sitting at his golf course. He's showcasing his golf course,$10 million of U.S. taxpayer money to park his ass up at his golf course to showcase it and to bring these world leaders up to him. But he's in a bad mood, Caddy. Why is he in a bad mood? Oh, do you think it's because he's been accused of cheating at golf? That was one possibility. Do you think it's because he cannot get rid of this Epstein story? We do call it the Trump foot wedge here. It's like British football. Trump has a foot wedge. He kicks your ball into the sand and he kicks his ball into the fairway.

18:29And of course, Trump's golf cart is moving at four or five miles an hour faster than yours. So he can get down the fairway ahead of you and start doing his shenanigans. Everybody knows that that plays golf with them. And so they just roll their eyes and say, okay. And there were like little video of that from this weekend. All right. So I think that's expected. Everyone knows that's expected. But the heat's on Donald Trump a little bit, right? I mean, again, I think he's going to survive it, but it's on, right? Or no? No, I think as we spoke about in the episode on Thursday that we recorded on Thursday, as I said, the heat was on him more than I expected.

19:06That I don't think he can think that he can go away and suddenly the phones are going to stop, that people are not going to be ringing in about this. The story has followed him. He was asked about it by the press corps. As he landed in Scotland, he says again, there's nothing to see here. This is boring. Let's move on. But people are not moving on. and they aren't going to move on. And I don't think interviewing Ghislaine Maxwell, just even having Ghislaine Maxwell's name back in the press in the way that it has been over the last few days because of the deputy AG's meeting with her doesn't help this story go away.

19:42And members will come back in September and we'll still be asking about this story. I don't think it brings Donald Trump down. I mean, I don't know what's in the files. There's going to be lots and lots of names. Apparently, Vera Wang's name is also in that birthday book. She also sent a message to jeff epstein in that birthday book so there are a lot of powerful people in new york who will also have their names um in that birthday book and the fact that donald trump's name is in the files doesn't mean he's on some list as having done something nefarious with jeff epstein but this is hanging around him and he's clearly not happy about it and it's following him to scotland but what okay what did you make of ursula van der lyen sitting there i want to channel i want channel the guy, okay?

20:20Because he's obviously hangry. He gets hangers and moots. He's not being lathered in praise. And he's got a lot of concerned aides around him. Now, they're trying to flatter him the way they do every morning. Oh, you're great, Mr. President. But they're also trying to talk to him about a way to cover this thing up or do, let's say, tamp it down. And he's very, very annoyed by that. And so he's sitting there in his own mind saying, I'm getting these big historic wins for the U.S. There was one thing in that deal, and I went through the deal last night in preparation for this. I just want to remind people that we got an exemption.

20:59The United States got exemptions on certain elements of the chemical industry, all of the aircraft industry, which means Boeing for us, and which is going to help Boeing in the EU and frankly, help Boeing stimulate growth around the world. So, there were a couple of nice things in there for the US and he's not getting any credit for that. And it's bothering him. And so we know that about his personality. We know that about his nature. But the Epstein thing is going to linger here. Dan Bongino, deputy FBI director, put out an ominous tweet. He said, the stuff that I've seen in this file has changed my life forever.

21:39And people are betwixt there. It's like a Sphinx-like statement. So is Trump in the file or Trump not in the file? Trump's former buddy, Candace Owen, who's been very critical of him, said, you know, come on, Dan, we all know what's in the file. I mean, just spill the beans. So listen, Trump is going to probably get away with this. I think we've maintained that. Of course, if we're wrong about that, I'll come back on the air and say I got it wrong. But I just think that he survived so many things like this, it would be hard for me to see him fall from this. Before we go to the break, I have to ask you to address one other thing, because the great man of distraction put out a picture of OJ's Bronco.

22:21Just remind people what that is. OJ was accused of murdering his wife. Him and his buddy got in a white Bronco and were riding down the freeway and the cops were chasing them. And so now we have this meme of Donald Trump in a cop car chasing Barack Obama down the freeway. But interestingly enough, in a secondary cop car was J.D. Vance. And of course, J.D. Vance's picture was the big fat J.D. Vance, the big meme, the cabbage patch doll of J.D. Vance, where his head looked like the size of a pumpkin. Now, of course, J.D. is laughing about that on the internet. But trust me, he's crying on the inside.

23:05He's not liking that. Yeah. Trump is humiliating J.D. Vance in that meme. So go. You give me the analysis of that. Epstein distraction, but that's another half of a leg in the wood chipper for J.D. Am I wrong? Yeah. It's the Epstein distraction. And it's a reminder to J.D. that don't start getting ahead of yourself. Don't start counting, you know, measuring up the drapes in the Oval Office because I'm still the president. I'm going to survive this one and remember which side you want to be on. And it's also a reminder to JD that you came out a little slowly in support of me on this. There have been a couple of moments in this scandal where JD was conspicuously silent and it took him a bit of time to come out in defense of his boss.

23:48And I think Donald Trump doesn't forget that. Okay, we're going to take a quick break, come back and talk a little bit about Gaza, which we have not spoken about on the program yet, which is It's a huge issue here, I'm sure, in Italy as well, where you are. It is in the UK and it is now actually cutting through in the US as well.

24:09This is a paid ad for BetterHelp. In moments of stress, we tend to turn to whoever's in reach, that flatmate in the kitchen, the barista on a slow morning, the stranger who simply asks you how you're doing. It can help, but being heard isn't always enough. and the more confidently people speak, the more we mistake it for wisdom. But if you're dealing with anxiety or loss or something that's been weighing on you, what you need isn't noise, it's actual experience. Somebody who really knows their craft. BetterHelp has spent over a decade helping people find that match. A short questionnaire sets your preferences and they'll connect you with a therapist who fits.

24:45It's completely online, it's fully flexible and if your first counselor doesn't really feel right for you, you can switch at any time. There's no pressure, no extra cost. As the largest online therapy provider in the world, BetterHelp gives you access to credentialed mental health professionals with a wide range of expertise. Our listeners get 10 % off their first month at BetterHelp.com slash TripUS. That's BetterHelp.com slash TripUS.

25:17Welcome back to this Monday edition of The Rest is Politics. And we're speaking Monday morning, UK time. And later today, the Prime Minister, Keir Starmer, will be meeting with Donald Trump. And on his list of things that he wants to talk about, we are told are, of course, trade, Ukraine, he wants to talk about, but he also wants to talk about the situation in Gaza, specifically, the famine that is happening in Gaza right now. Now, and it's been interesting, Anthony, being in London for the last few weeks, because this has been a story that has been all over the British press, is getting a huge amount of attention in the UK.