Financial markets have tanked as angry allies and adversaries alike retaliate against America after President Trump announces drastic new tariffs.

These tariffs are going to give us growth like you haven't seen before.

It will be something very special to watch.

It's certainly something special to watch tonight.

We'll try to make sense of Trump's trade war and Trump himself.

Next.

Good evening and welcome to Washington Week.

So, just like you, I'm trying to make sense of all of this.

My main question, is there any possible way these new tariffs make things better for average Americans.

It's hard to find an economist right now who answers yes, but this is a question we'll explore, uh, tonight with my guests, Steven Hayes, the editor of the Dispatch.

David Leonhardt is the director of the editorial board at the New York Times.

Kayla Toshi is the senior White House correspondent for CNN and our old friend Nancy Yousef is in national security correspondent at The Wall Street Journal.

I don't mean you're old, by the way.

I just mean like I see you a lot.

Thank you.

Yeah, you're welcome.

Um, just wanna make sure everybody's clear on that at home.

Um, before we go to tariffs, which are kind of this feels like at least a world historical event, at least if you are looking at your 401k today.

It feels like a world historical event.

Um, I want to talk about a couple of national security issues.

Nancy, um, you're in the Pentagon, um, uh, Last Night, Thursday, the president fired the head of the National Security Agency and cyber command a dual-hatted position, uh, General Timothy Hogg, um, after Laura Lumer, who is this well-known far right conspiracy theorist and ostensibly close friend of Donald Trump's told Trump that he was disloyal, but just general, uh, because he was appointed by Mark Milley, who is obviously not a favorite of Donald Trump, and she also recommended and The recommendation was received that Trump should fire various other mid-level officials of the National Security Council.

Um, We both cover national security issues.

I don't remember anything like this ever happening before.

What is going on inside the defense establishment.

So we should start by talking about what the NSA does.

It's responsible for signals intelligence.

It provides um key intelligence in the presidential daily brief, and the reason you put a general in there is that it's apolitical because intelligence should be apolitical and the and the ideas that the president should get unvarnished intelligence to make the best national security decisions that a general who served for three decades was fired, uh, ostensibly because he was not seen as loyal enough to the president, politicizes that position.

It politicizes the military.

politicizes intelligence.

And this idea, uh Laura Lumer and her tweet about it said that this was because he was close to Mark Milley because Mark Milley had named him.

Well, Mark Milley named a lot of generals in that time.

So this the the the political tie that they're making him doesn't really hold you're successful in the Pentagon, every presidential administration, you're going to get a promotion of some sort and the chairman of the Joint Chiefs of Staff might sign off on that, but there's no indication that their careers overlapped in any significant way or that there was any sort of alliance between them, and so all of that is sort of to your question as really raised fears within the Pentagon that they will be measured not to their um willingness to sign it to honor their oath to the Constitution, but to their personal loyalty to the president.

Has this ever happened before, to your knowledge?

It hasn't, but also I think perhaps even more consequentially, Trump said that Laura Lumer not only recommended people to fire, but also people to hire.

So who will be coming into these positions in these people's places.

A lot of the folks that they fired were people who were doing legitimate relative nonpartisan work.

I mean, apart from what happened at the Pentagon, I mean there were folks at the National Security Council who are helping to work on the deal that they were actively negotiating between TikTok and ByteDance and China, that being David Fei, who works on technology and national security and so there are real near term consequences to the people who are being removed from these positions, and that deal obviously getting scuppered in the last couple of days, needing to be extended yet again, but who she recommends to hire in their place is what I'm focused on.

And go ahead.

There seems to be an ideological component of this, which is the people who Laura Lumer is recommending for firing seem to be more isolated, seem to be more hawkish, and the people she wants in there are more isolationist.

And it actually comes back to your group chat, uh, in which we saw the JD Vance, um, wing of the Republican Party think of it as Mike Waltz's group, Fahrenhe fair enough.

You were just visiting.

Mike Waltz's group chat in which we saw JD Vance representing really the, the, the isolationist wing of the Republican.

Why would we do this?

What's in it for us?

Yes, and Mike Waltz and some others.

being more hawkish on things like Russia.

And so from a national security standpoint, I think it's concerning that you imagine the Trump administration will have even more people who are dovish toward Russia.

Steve, I'm sorry to do this to you, but who is Laura Lumer?

Yes, Laura Lumer is a well known far right conspiracy theorist who's thought of as so far right that Marjorie Taylor Greene thinks she's racist and crazy.

So it's alarming that she's recommending people to get fired and people to be hired, but it should be said she's not the only one doing this and to David's point, there is a sort of system more systematic effort happening inside the Trump administration to push out people who have sort of more Reaganite views.

My colleague Michael Warren reported on this 3 weeks ago.

Sergio Gore, JD Vance, acolytes, people who are in the sort of super mega part of the, the White House, part of the movement.

are making lists.

They have their, they have an email chain, a text chain where they are recommending people who might be disloyal they're purging even as they hire, I mean, Sergio Gore hires his job is to hire people in the administration, but they're already looking for blocked signs of disloyalty or both.

They're, they're blocking a number of people, some of whom Mike Waltz wanted to hire.

They blocked those potential hires, and they are already looking for people who are insufficiently insufficiently Nancy, the on this Mike Waltz question for one minute.

So he's the national security adviser.

um Laura Lumer, um, who Steve is memorably memorably described as to the right of Marjorie Taylor Greene, not That's not an everyday a lot of room, by the way, yeah, no, I mean, I think there is, but it's still way over there, obviously, uh, so, so she comes in and says, To the president, Mike Waltz says all these people who are bad and you should get rid of them, so the president just gets rid of them.

What does Mike, what does Mike Waltz done in the last 24 hours?

Does he defend his people and his institution?

Well, let's back up.

We don't even know how she got into the White House, who authorized her to go to the White House at whose request did she go there?

Then she's given interviews where she said that she provided a dozen names, um, and that she had done her sort of own research on their loyalty or lack thereof to the president and Mike Waltz was part of these conversations.

wasn't able to defend his people.

Now I can tell you at the Pentagon the sort of shock was not just that it was Laura Loomer as it was, they were worried about Elon Musk getting rid of people in their department and now there's this new name emerging.

They don't know the standards, they don't know the qualifications, and what it signals to your question that Mike Waltz doesn't have the kind of control over national security or his own staffing if somebody can come in sort of unannounced to the staff and make such dramatic changes to very key positions in national.

Security.

Yes, to Nancy's point, you know, people were surprised when Laura Loomer showed up in the Oval Office.

This was not something that was well known.

Susie Wiles, the president's chief of staff, who also served in a senior position on his campaign, intervened at one point because Laura Lumer was flying around the country on Donald Trump's plane and set up sort of a system whereby she would be excluded.

Um, the responsible people in the White House don't want Laura Luom around.

They don't want her talking to the president the way that he's talking.

So they set up these systems to sort of block her to keep her out and those systems failed and I think that's been alarming to people in the West Wing.

I think it's unclear whether it's been a massive gatekeeping failure, ala when she appeared on Ground Zero at 9/11 when she is a 9/11 conspiracy.

She's a 9/11 conspiracy theorist and she was at Ground Zero with then-candidate Trump and at that time there was such an uproar that there was a backlash to make you think that it would never happen again.

And so that leads me to think, well, Was her visiting the White House this time, was that actually a lapse or was this some sort of dog whistle to the far right where they're indicating that they're still keeping the far right's preferences and something that the president wanted?

I mean, if you go back to those those post-election days when Sydney Powell was, people were trying to keep Sydney Powell out remind us of Sydney Powell was was the um election conspiracy theorist lawyer who kept sort of appearing at the White House or in Donald Trump's ear, floating these conspiracy theories, telling him what he wanted to hear.

and people were alarmed at that time and she's been very active in a bunch of his stuff lately.

I mean, she also is one of the most aggressive people on social media saying really nasty personal stuff about any judge who issues some sort of ruling that Trump doesn't like, so I want to get to tariffs, but David, one more question.

Um I mean you've been around Washington for a while.

This is.

Alice in Wonderland stuff at a certain point.

Where are we going?

Yeah, I mean, look, a lot of presidents have relied on advisors who make their other advisors uncomfortable, right?

We can all kind of do the list.

But this is just still a completely different level, because, because it is getting in with the military as Nancy was pointing it out, and it really gives real reason to have concerns about national security in ways that we just haven't seen before, right?

And Nancy's point is a very important one that the NSA, they're supposed to be, they're supposed to be honest brokers.

might want the intelligence to mean this, but it actually means that based on actual experts, actual experts are telling you, so if you're picking an intelligence chief based on loyalty, you're going to get the intelligence you want.

But not intelligence that might correspond to reality.

That's right.

And that's when you get into serious trouble.

Let me, um, uh, 11 more note on, on defense.

I just wanted to ask Nancy about this because it's important.

The army is, uh, transferring the remains of 4 soldiers killed in Lithuania in a training accident, um, late last month.

The 4 soldiers, I, I'd like to mention them were, they were assigned to the first armored brigade combat team with the 3rd Infantry Division, Sergeant Troy Nuttson Collins, Sergeant Jose Duenez Junior.

Sergeant Edwin Franco and Private First Class Dante Teetano, um, they died in a horrible accident, um, and thousands of people lined up in in in Vilnius in Lithuania, thousands of Lithuanians up into including the president to pay their respects as they are being transferred.

I want to note, um, that the President Trump is not, as far as we can tell, meeting their bodies at Dover Air Force Base, and he is in Florida playing in a Saudi sponsored golf tournament.

You're in the building.

all the time.

How does this, how does that sort of thing uh affect people in the defense apparatus.

Well, let me begin by saying not every president goes to every dignified transfer, OK. Having, having said that, you know, if you've never been to a dignified transfer.

It is one that remains come back to this country.

For the first time it's a, a very moving ceremony, um, and for the civilians and those who attended, it is a very direct reminder of the consequences of their decisions and the families are actually right there.

The families are there, um, it's a, it's a heartbreaking um experience and so it's important for those who make those decisions to see that there's risk associated with it, not just in combat but in in in training as well as in this case.

NATO training exercise.

That's right, and, and we know how some people in the White House, as David alluded to feel about NATO training exercises generally.

That's right, you think there's a political quality to this decision?

Well, look, those conversations between the president and some of those families can be very, very painful.

They are seeing their loved one come back.

There have been really, really confrontational discourse between them.

Having said that, as you noted, what happened in Lithuania was really remarkable.

I've covered the beat for 20 years.

I've never seen something so moving thousands of people lined up, children carrying flags to American flags, yes, to show their gratitude for the service of these troops, and so, um, I, I think it's a very stark contrast this week and, and for service members, um, lost and the civilian leadership not being there will be noted by the building because this week the building.

was changed and following and mourning the loss of these four service members, it's it's a tragic situation.

I, I, let's talk about the, the tariffs and let's listen to President Trump for a moment on the rationale.

For the for the new tariffs.

For decades our country has been looted, pillaged, raped, and plundered by nations near and far, both friend and foe alike, but now it's our turn to prosper.

David, um, First, if I'm not mistaken, We are the richest country in the world.

We are by many measures, by many measures, so compared to other countries, we are prospering.

Put that aside for a second.

Bring it back if you want, but I, what is the best argument that Donald Trump has and his team for making these.

making these new tariffs.

So let's start with Donald Trump and his team's diagnosis for what's going wrong.

I actually think that's their best argument.

Their best argument is that we have had a high trade economy, expanding trade for decades.

Just think about it as the 21st century, roughly.

And although the United States is in many ways the richest country in the world.

The bottom half, the bottom 60%, the bottom 70% of Americans by income haven't been doing well.

We all know that, right?

Many towns have been hollowed out.

Income inequality.

has soared.

Life expectancy in the United States is the worst of any rich country in the world and so trade has not delivered the benefits that economists and politicians of both parties have been promising for decades.

And so the idea that we might want to look at our economy and say, wait a second, it's worked for highly educated professionals, but it isn't working for blue collar workers.

We should do something different with trade.

I think that argument, you can debate it, but that argument has substantial support for, right?

What's the argument against these tariffs?

I mean, the argument against these terrorists is they're shambolic, um, they're extremely high, um, no one knows whether he's going to take them back the next day.

If you decided that our economy has not benefited from trade in the ways I was just suggesting, and you wanted to use tariffs as a way to try to bring more jobs back here.

You would do it in an orderly way.

You would try to get your allies on your side.

You would say we're going to put them in place starting in a couple of years.

people can plan.

The idea that Donald Trump brought out a big board with massive tariffs, and no one really knows what's going to happen.

That's why we see the markets tanking.

That's why we see even Trump's allies anxious about this.

And so there is an argument for tariffs, and there definitely is an argument against the kind of economy we've had over the last couple of decades, but I, I have yet to hear anyone who puts together a cogent argument in favor of his approach, right?

I want to talk about the reaction to this in a minute, but Steve, take us back.

Um, can you explain?

President Trump's singular Preoccupation with tariffs.

Yes, I think it's fair to call it an obsession.

Um, I, I was having, uh, lunch with somebody who worked very closely with the president.

Just over the past couple of months, I mean this person worked with him in the first term, and this person said the single issue hears most about in terms of policy, actual policy is traded tariffs.

He loves tariffs.

He says this about himself.

I'm a tariff man.

I love tariffs.

And if you go back and look at interviews with Donald Trump in the 1980s.

He was talking about tariffing Japan, and they were eating our lunch.

This was terrible and Japan was, you know, they were making a mockery of us.

And I think this is basically best understood as Donald Trump's grievance politics gone global.

He always thinks somebody's ripping him off.

There's a they when he talks about it in conspiracy terms and in domestic policy.

But when you talk about this, somebody's always ripping us off, and I think there's sort of a fundamental misunderstanding of what trade deficits are.

You've seen this, if you followed his, uh, arguments about this is rhetoric about trade deficits over the years where he talks about trade deficits as if it's an actual deficit as if other countries are coming in and, and pulling cash out of our national.

Hill rather than something that can sometimes be advantageous, correct, correct.

So I think it's it's sort of all of those things combined, but what makes it scary is that he seems not to really understand why he's doing what he's doing other than this sort of grievance.

Kayla, what are you hearing?

I think you spent part of the week, obviously talking to people in the White House, but you're also talking to business leaders, including business leaders who are sympathetic to the president.

Yes, and many of them are.

On the phone trying to get anyone on the line in the West Wing that they can to try to talk to about how this happened, how they can fix it, whether they can get an exemption.

There, I mean, there's some gallows humor about whether they need to start hiring Trump friendly lobbyists to get an exemption from some of these tariffs, but the real rub for them is that this seems like a solution in search of a problem, and there's no real strategy, there's no real endgame.

How long will these be for?

What are you hoping to get out of this?

It is really just a blunt instrument that the president initiated with very little cogent math behind it, and they're all calling each other, all of these executives trying to figure out, should we sue the White House?

Should we?

Develop a counter proposal that we can get them to agree to, or should we just tell them that this is not going to work and one executive told me that that strategy has been unproductive because they called the White House and said, Well, if you do this tariff, I would rather pay $5 million in tariffs or $20 million in tariffs and spend a billion dollars to move this factory back to the US and the White House's response was, well then the tariffs need to be higher.

They want this manufacturing to come back to the US so badly that it is a strategy that is going to be implemented at all costs.

But there's an asterisk there, which is that Donald Trump very much cares about what happens to the market.

He says he doesn't, but he very much does.

And he's been watching the market very closely, and I spoke to one of his closest advisers today, and I said, where is the breaking point?

And this person said, we're getting there.

We're not there yet, but we're getting there.

That's why he's on the phone with all of these world leaders, Vietnam, Israel, India trying to get These, you know, 11th hour deals before the tariffs go into effect April 9th, whether he can get them with some of the major powers.

I think it's probably a foregone right now trying to make their own side side deals.

I want to stay on the, on the issue of reaction to this, and, and I thought this comment, I want you to listen to from Senator Ron Johnson of Wisconsin, very MAGA, especially for the Senate, is, is kind of interesting.

Let's listen.

Well, I think the president and his advisers should be listening to what the stock market is telling them.

I know for my part we're talking to constituents who quite honestly realize that tariffs are a double-edged sword.

We'll see whether they recover or not, whether people view this as a buying opportunity, that things uh uh level out.

Or if not, I would hope that this administration is going to react to the realities on the ground.

So Nancy, uh, That that's, that's notable because he's uh slowly backing into Homer Simpson style a little bit backing into a bush there.

Um, and Kaylab mentioned that, you know, there's, there's a lot of anxiety.

Do you see this administration, um, folding anytime soon, or do you think this is a kind of situation where it's just doubling and tripling down.

Well, I thought it was interesting what you were describing is that they're looking for a face saving measure.

We've, they've said to you see a lot of countries are retaliating or negotiating and that each side is sort of deciding which way they're going to go the the polling would suggest that there's going to have to be some adjustment.

The Wall Street Journal just released one, and it started uh March 27th through April 1st, the day before this announcement, and in that poll, 54 to 42% supported tariffs before this announcement and over time it showed a growing unease with Trump's handling of the economy, the thing that he campaigned on and so the question becomes how long they will stick to this policy and what will be the breaking point and it's not just the stock market, but we've seen the value of dollar rise signaling that the international community is potentially looking for alternative markets or uh currencies to to reserve against like the euro, David, this is a, I mean, it's, it's sort of an unfair question, so I'll definitely ask it.

How bad can it get?

I mean, you're, you're, you're in an economic specialist among other things.

How bad can this get?

It can get bad, and I think one of the reasons why the Democrats want to get it so bad that it becomes good for them, I think if Democrats were honest, they would say the last couple days have been good for them, but they won't say that because it makes it sound like they're rooting against the economy, but the Democrats don't have enough power to do anything to really affect us anyway, part of the reason this can get bad is markets, as we all know, are driven by psychology as much as they're driven by anything else.

The stock market heading into this period was extremely expensive by the fundamental measure of prices relative to corporate profits, extremely expensive.

1990s level, expensive.

Late 1920s level expensive.

That doesn't mean we're going to have a stock market crash.

But when you put that level of stock market expense and you combine it with something that freaks people out, um, uh, I'm not predicting that it's going to get bad and you shouldn't listen to anyone who tells you what the market's going to do, right, but it has the potential to be quite bad.

I just a basic level once these tariffs go in.

All goods become more expensive if the president's plan comes to fruition and factories are here and things are being built in the United States.

Prices will stay up.

There's not an off ramp where you see prices drop, and one of the things that Americans have asked for is to see inflation, um, address and prices come down.

It's, it's a reminder that the details matter.

I mean, when Ronald Reagan came to Washington, he came with all these conservative policy intellectuals who had spent years thinking about what they want to do.

The same was true of Barack Obama, Bill Clinton of to be pushed and the Trump people have some broad theories that you can imagine putting in place, but they're just doing it in the slapdash way that the odds of it working out are really small.

Well, they have theories and then the president steps in and says this is well, I want to last 20 seconds, I want to ask Kayla this question.

The Treasury Secretary, highly respected guy.

He's Going along With this, he's giving interviews to Tucker Carlson saying that he's going along with it.

Where where does a guy like that fit into this scheme in Southern parlance, he tried his darnedest.

He had a different strategy that obviously didn't prevail here, so now he has to own it and he is trying to figure out behind the scenes how he can find that off ramp and make this better.

Fascinating.

Not the last time we'll be talking about this.

Um, we are going to have to leave it there for now.

I'm sorry to say, but I want to thank our panelists and our viewers for joining us.

For the latest on the tariffs crisis, please visit the Atlantic.com.

I'm Jeffrey Goldberg.

Good night from Washington.