Why There's So Much 'Cognitive Dissonance' In Trump Charging Nvidia & AMD 15% For China Chip Sales

Forbes

On "What's Moving Your Money with Spencer Hakimian," Spencer discusses President Trump charging a 15% fee for all sales by Nvidia and AMD to China.  0:00 - Introduction: Nvidia, Gold Tariffs, & Inflation Data 0:52 - Nvidia's China Deal: A Dangerous 'Moral Hazard' 2:48 - Trump's 'Medieval World View' & the China Tariffs 4:18 - The Worst of Both Worlds: All the Uncertainty, None of the Benefits 6:01 - The Swiss Gold Tariff 'Fiasco' 8:12 - A Microcosm of Careless & Sloppy Policy 9:56 - What to Expect from This Week's Inflation Numbers  Subscribe to FORBES: https://www.youtube.com/user/Forbes?sub_confirmation=1  Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more:  https://account.forbes.com/membership/?utm_source=youtube&utm_medium=display&utm_campaign=growth_non-sub_paid_subscribe_ytdescript  Stay Connected Forbes newsletters: https://newsletters.editorial.forbes.com Forbes on Facebook: http://fb.com/forbes Forbes Video on Twitter: http://www.twitter.com/forbes Forbes Video on Instagram: http://instagram.com/forbes More From Forbes:  http://forbes.com  Forbes covers the intersection of entrepreneurship, wealth, technology, business and lifestyle with a focus on people and success.

Transcript

00:00hey everyone it's spencer akimian welcome back to another episode of what's moving your money

00:05and on today's episode we are going to be covering a lot we're going to be talking about nvidia

00:10getting a license to sell h20 chips to china again in exchange for a fee to the u.s government

00:17we are also going to be talking about the debacle that happened with the swiss gold tariffs and the

00:24inevitable cancellation of those tariffs then we're going to be talking about the extension

00:29another extension of all the tariffs on china and finally we're going to be talking about the cpi

00:36and ppi numbers that are coming out this week and what you can expect and where we are already

00:41beginning to see some early warning signs about the pass-through effect to consumers and producers

00:48on tariffs so sit back tight i hope you guys enjoy and let's get right into it

00:53so the big news that happened yesterday was that it came out that nvidia is now once again allowed

01:01to sell h20 chips ai chips to china on a new export license granted by the united states government

01:09in exchange for a 15 fee on all revenues that will be generated from china now nvidia earns roughly a 40

01:18profit margin on these chips so if you were to consider this a tax this would essentially be

01:24roughly a 35 to 40 tax on nvidia's chinese sales of these products now beyond just the you know the

01:34cognitive dissonance of charging consumer companies a lot more to be selling products like those ai chips

01:41think about the moral hazard that this creates for not just nvidia not just for other companies but

01:48for the united states as a whole if it is getting into the business i'm talking about the united states

01:54government if it is getting into the business of telling companies what they can and cannot sell

02:00but then going one step further and then allowing companies to sell what they cannot sell if they get a

02:08surtax on top of it could you imagine a scenario where lockheed martin would be allowed to sell

02:13nuclear weapons to iran in exchange for a fee could you imagine a world where drug cartels in colombia

02:20would be allowed to sell fentanyl legally in the united states in exchange for a fee i look at where

02:26this can go if you keep letting it trickle down in your imagination there is a reason we have laws in

02:33our country there is a reason that the united states government is not supposed to be a business

02:39it is in the industry it is in the sector of providing laws and safeguarding our society there

02:45are enough people in this country that are in the private sector looking to make money the government

02:50is not there to earn a surtax by giving favors to businesses the government is there to make sure the

02:56rules are being followed in the best interest of all american people not just in the best interest of

03:02one publicly traded company look we also have to get into the extension on the chinese tariffs because

03:10i think this is becoming a little bit silly here but beyond the fact that it's silly i mean i got all

03:15the taco noise and everything it really shows something i think that is really important deep down

03:22in trump's heart in his mind he knows these tariffs are not the best idea he knows it is crazy to be putting

03:29these insane tariffs all across the board he has this rather medieval world view that the only way that

03:37he can achieve some of these objectives that he's trying to achieve with these countries is by strong

03:42arming them essentially by bullying them he lives in a dog eats dog world right and yes that works quite

03:49well on a country like sri lanka yes that works well on a country like cambodia that works well on a

03:57country like lesoto which he famously mocked a few months ago but it doesn't work well with an equally

04:03sized mammoth as us which is china right because we cannot strong arm them their economy grows faster

04:10than ours they have four times the population that we do they have a much more structured and organized

04:16and effective government at this point in time than we do they do not have midterms to win or lose

04:23so there's so much in this sense that trump is handicapped against shein and it keeps causing him

04:30to extend these tariffs but with all of that being said the uncertainty that this is causing nonetheless

04:38and keep in mind we still are charging roughly a 30 percent 33 35 percent tariff on china plus

04:45a 20 percent fentanyl surcharge that some companies supposedly are paying none of this is clear which

04:51is pretty interesting also with all of this uncertainty we are not getting any of the potential theoretical

04:57benefits of tariffs such as incentivizing onshoring such as collecting excess tariff revenue we are just

05:05getting the uncertainty doesn't that seem pointless even if you support tariffs doesn't this seem a little

05:10pointless to you that we constantly are delaying changing redoing refining all these tariffs why

05:18don't we just put something in place if we believe in it so much i clearly don't believe in it but if

05:22trump sincerely believes in it why don't we just go ahead with this one time and see where it goes

05:27one because he knows he can't strong arm them and two he knows how bad the effects would be on the

05:32american people and he doesn't want to use them because he really does care about his popularity

05:38deep down now another just crazy tariff dilemma that happened over this past weekend was the gold

05:46tariff fiasco for lack of a better word with switzerland it was announced that we would be

05:52charging full 50 percent tariffs on any gold that was coming out of switzerland that was above a kilo

05:58now that is particularly important because 70 to 75 percent of all of the world's refining capacity

06:06for gold comes from switzerland there are five refiners in switzerland that handle three-fourths of the

06:14world's volume gold is mined in south africa in russia in canada wherever it may but it ultimately has

06:21to get refined into a usable product such as gold bars such as gold coins such as gold jewelry wherever

06:27it might be through switzerland they are the linchpin they are the choke point for the rest of the gold

06:36industry now on top of that gold was a very important place and still is a very important

06:42place historically for central banks around the world to store their gold because they are politically

06:47neutral they are not in the eu they are not in nato they are not in any uh you know clearly one-sided

06:55partnership agreements with countries they are a neutral country that does not seek to get involved

07:01extensively in world affairs other than as a mediator or as a neutral zone where two opposing countries

07:09can come and meet up now this was a perfect place for central banks to store their gold because they

07:15knew that switzerland would not sanction them they knew that switzerland would not bar them from taking

07:20their gold out of the safes in and the vaults in switzerland they knew that switzerland with their

07:25money and their gold was safe there now if there is a 50 tax to take your money in this case your gold

07:32from switzerland into united states what is that going to do for investment demand into the u.s from all of

07:39those foreign investors that were temporarily storing their funds in switzerland so with all of these

07:44questions gold spiked but what happened next is that trump comes out this morning and he truth socials

07:50there will be no tariffs on swiss gold thank you for your attention to this matter but this gets to my

07:57point of the carelessness and the sloppiness of all of this anyone could tell you how incorrect of an idea

08:05tariffing swiss gold is anyone that has the slightest clue about the swiss gold industry and how important

08:13gold is to the rest of the world particularly to central banks would have told you don't do this

08:19he is impulsive he does things without actually going through to see what the consequences are

08:25and then thankfully there are people in the white house that are telling him this does not make all

08:30that much sense and cancel it and thankfully he listens some of the time to them but look that is

08:37a problem that was sorted but i think it's just very topical and it's a microcosm of all the other

08:44stresses we've needlessly dealt with revolving around tariffs global trade flow global foreign

08:50direct investment flow all of the above in the past let's call it three to four months now to finish

08:56off today's episode i want to talk about cpi and ppi numbers that are expected in this week on tuesday

09:02and on thursday they are going to begin showing some of the pass-through effects of tariffs you will see

09:09it in core cpi you will see it in month over month headline cpi you're going to see it in producer

09:17prices particularly core producer prices which is x energy and other goods and then beyond that

09:23we are also going to get the breakdown of where inflation is rising the most now one thing i want

09:31to caution about these numbers is due to the the bls methodology oftentimes it looks like inflation

09:38is rising less or sometimes more at that current month than what was actually happening right

09:46because there is a little bit of a lag for these to feed through into specifically cpi prices famously

09:51shelter in 2022 was like this so i want you guys to look when it comes out and i'm going to break it

09:57down on on wednesday's episode but there are going to be some categories where it's going to look like

10:03inflation is not rising like as an example food but that is clearly and evidently wrong because you

10:10can walk into any grocery store and see those prices rising but this is not a case of fraud this is not

10:18a case of the government lying to you this is simply a case of this takes time to feed through and this

10:24is a timing issue rather than a you know incorrect reporting issue which by the way there are often times

10:31of that but it may not specifically be here so with all that being said i hope you guys enjoyed today's

10:36episode you can watch it on forbes website on forbes youtube page you can watch shorts of it on my

10:42tiktok my instagram my twitter page uh and i hope to see you guys again soon

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