The discussion revolves around Trump’s trade policies with China, particularly a recent 90-day trade agreement involving reduced tariffs. The speakers debate the motivations behind Trump’s actions, potential economic impacts on both the US and China, and the broader implications for global trade and investment. They also touch on related economic factors like interest rates, debt, and unemployment.

Highlights

•  Trade Truce: The US and China have agreed to a 90-day trade agreement, reducing tariffs, which some see as a potential backing down by Trump, while others view it as the beginning of negotiations.
•  Economic Impact: The speakers discuss the potential economic pain caused by the trade war, including inflation, unemployment, and the impact on businesses and consumers, with differing views on whether the US or China is more vulnerable.
•  Bringing Back Jobs: The conversation explores whether Trump’s goal is truly to bring manufacturing jobs back to the US or to open up the Chinese market for US goods, questioning the feasibility and desirability of bringing back jobs in a globalized economy.
•  Debt and Interest Rates: The discussion touches upon the US national debt, the strengthening dollar, and potential interest rate adjustments by the Federal Reserve in response to the trade situation and unemployment concerns.
• ️ Conflicting Views: The speakers present contrasting opinions on Trump’s strategy, its effectiveness, and its long-term consequences, acknowledging the complexities and uncertainties surrounding the trade relationship between the US and China.

TRANSCRIPT:

Trump just folded on his economic plan to bring jobs back to the U.S., and we’re going to explain why that matters. Greetings from Florence, Italy. It’s late here, but we wanted to break this down because international media is reporting this story very differently than the U.S.

Yesterday in the UK, the headlines said Trump has made a mess of everything. But here’s what really happened: the U.S. and China struck a 90-day trade agreement. Both countries agreed to drop their tariffs—ours going from 130% to 30%, theirs from 130% to 10%. Essentially, it’s a truce.

This might become permanent because both sides are feeling the economic pain, especially Trump. It gives him an exit strategy, and China is on board. It’s being framed as a civilized negotiation, but it’s clear Trump is backing down.

Trump’s strategy follows what he wrote in The Art of the Deal—aim high, then settle. Tariffs originally went to 145%, matched by China, and now we’re back to 30% and 10%. This is likely just the beginning of a negotiation.

For over 20 years, U.S. presidents have been frustrated by China’s refusal to open its markets to American goods. Trump is trying to change that—particularly around issues like intellectual property theft. This week’s “win” is that China has agreed to open its markets to U.S. products. That’s a small but important shift.

Trump’s goal might be bringing U.S. products into China, not just bringing manufacturing back to America. But there’s debate about whether Americans even want those jobs back—many are low-wage and may be replaced by AI anyway. Meanwhile, China’s economy is hurting: in 2023, the U.S. imported $570 billion in Chinese goods. China was facing factory layoffs and couldn’t afford to continue.

Trump has to consider reelection. Unlike Xi Jinping, he faces political consequences. Americans don’t want to pay $200 tariffs on $200 products. It’s not necessarily about what’s good for the country—it’s about what voters want.

Trump has said, “The biggest thing to me is opening up China. I think it would be fantastic for our businesses if we could go in and compete.” That aligns with this temporary deal, which lowers tariffs and opens up trade.

Lower tariffs, however, likely won’t bring jobs back. Businesses would rather pay a 10% tariff than move production to the U.S. Instead, they’ll shift to countries like Vietnam or Taiwan. Trump’s rhetoric about “jobs roaring back” seems to be softening.

Still, he might be looking for symbolic wins. If getting U.S. goods into China was part of his goal, this deal helps him save face. He’s known for shooting high and then backing off slightly.

China needs the U.S. more than we need them. We imported $580 billion from China last year. China also owns about $1 trillion in U.S. debt—roughly 7% of our total. So they’re economically entangled with us.

Some say this is all about bonds and debt. As U.S. debt matures at higher interest rates, it becomes more expensive to renew. This puts pressure on the government. A lot of our previous debt was issued at 1-2% and will now reset at 5% or higher.

The bond market matters. Treasury yields are rising, and that’s not great for real estate investors. The 10-year yield jumped this week. The Fed recently said it won’t make any changes, but rate cuts may come sooner if unemployment rises.

This trade deal may allow the Fed to stop focusing on inflation and start worrying about jobs. Lower tariffs could reduce inflation fears, freeing up the Fed to cut interest rates. With debt maturing in June, they may act quickly.

Interestingly, the U.S. dollar hit a one-month high against the euro and yen. That’s good for foreign exchange rates while traveling, but it’s temporary.

Looking ahead, the key metrics to watch are unemployment and government focus shifting from inflation to debt. This could signal a shift in Fed policy.

We think this is just the beginning of a deeper economic battle with China. Trump has always been about getting wins—whether with law firms, universities, or international deals. Whether you agree with his methods or not, he pushes hard.

For 20–25 years, U.S. presidents have failed to crack open China’s market. This week’s move may be a step in that direction. It’s a 90-day pause in what was becoming a trade war. Trump may come back hard after this.

That said, does he have the support to escalate? Higher tariffs could drive the U.S. into a recession. Stockholders, real estate owners, and everyday consumers don’t want inflation or expensive goods.

Ultimately, Trump wants manufacturing back in the U.S. But companies can still manufacture more cheaply abroad. We’re already seeing companies shifting from China to other nations—or even back to the U.S.—as a result of these trade tensions.

However, bringing back jobs without unions raises questions. Are these even high-paying jobs without union support? It depends on the industry. Auto manufacturing, for instance, involves parts made globally but assembled in the U.S.

Historically, the U.S. was a manufacturing powerhouse—cities like Detroit and others in Ohio were top economic centers in 1949. Outsourcing began as domestic costs rose and global wages stayed low. Half the world still lives on $2 a day, making foreign labor attractive.

Tariffs, though controversial, are meant to rebalance that. Trump’s goal is to bring jobs back, even if it means short-term inflation. The big question is whether that’s economically sustainable or politically viable.

Trump also values public approval. He needs the economy strong heading into the election. If voters feel financial pressure from inflation, tariffs, or fewer job opportunities, that may hurt him politically.

Right now, the Republican base is divided—even conservative media outlets are critical of the tariffs. Many expected other countries to negotiate with the U.S., but aside from a small UK deal, that hasn’t happened.

If you’re feeling uncertain, we’re bringing in Jim Rickards to speak at Limitless this year. He’s the author of The Currency Wars and a former government advisor. He’ll be breaking down these very issues.

Limitless is happening July 31st–August 2nd at the Gaylord Texan. Alongside Rickards, we’ll have George Gammon, Robert Kiyosaki, Jeff Snyder, Brent Johnson, and more. It’ll be a lively debate with some of the top economic minds out there.

Also, check out our podcast—we release new episodes every Thursday, now available on YouTube as well.

This week’s tariff deal was a major event. It marked a de-escalation between two of the world’s biggest economies. While the U.S. and China are very different today than they were 50 years ago, they still depend on each other.

In the UK, headlines read “Trump is making a mess of our economy.” Whether or not you agree, it’s clear that what happens in the U.S. sends shockwaves around the world.