#97 How Trump's Return Shakes the Global Economy

Ready to uncover the economic tremors set off by Donald Trump's return to the White House? This episode dives into how his administration's policies are reshaping not only the U.S. economy but also sending ripples across the globe, particularly in Australia. 

We discuss the revival of American manufacturing, illustrated by Trump's controversial decision to skirt a $1.6 billion auto plant project in Mexico in favour of investing in jobs back in the U.S. This shift is not just a local affair; it has significant implications for Australia, where economic experts and politicians are contemplating a rekindling of domestic manufacturing to bolster the economy and create jobs. 

This episode also highlights the lifting of tariffs on Australian wine exports to China—a reversal that could revive a once-booming sector devastated by political tensions. As we unpack this narrative, listener engagement is fostered by thought-provoking discussions about government spending, especially with the introduction of programs like "Doge," aimed at eliminating wasteful expenditures.

Moreover, we raise pressing questions about public sector growth, pointing to an astounding 82% of new jobs being created in government roles, leading to concerns about long-term sustainability and the fiscal health of the Australian economy. 

Join us as we explore these pressing themes, illustrate the interconnections between U.S. policies and Australian economics, and foster a conversation on the future we want for our industries and economies. Interested in these topics? Subscribe, share, and leave a review to help us grow this important dialogue!

DISCLAIMER:

The information in this podcast is general in nature and does not constitute personal financial advice. It does not take into account your individual objectives, financial situation, or needs. Always consider whether the information is appropriate for you and seek advice from a qualified professional before making financial decisions.

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Chapters

• 0:00 Trump is back and the global economy is shifting fast
• 3:51 Manufacturing in the US: A revival under Trump
• 9:11 Impact of tariffs and government programs on the economy
• 27:29 The Australian connection to US manufacturing policies
• 39:37 The significance of China's tariff removal
• 1:06:49 The growing government employment and its risks

Transcript

Speaker 1: 0:00

Trump is back and the global economy is shifting fast. He's ramping up US manufacturing, china's scrambling to repair trade ties and Australia's caught in the middle. Today, oscar and I are breaking it all down why Trump blocked Mexico's biggest auto plant of $1.6 billion and how that's going to impact Australia, why China just lifted tariffs, and how government efficiency programs like Doge are saving taxpayers billions. Let's get into it. Welcome back to another episode of the Finance Bible Podcast. You're joined with myself, zeke and your co-host, oscar. But before we get into it, please note that nothing in this podcast should ever be considered as personal financial advice. But if that is what you are seeking, get in touch, let us know and we will hook you up with the correct professionals. Sit back, relax and enjoy the show. Let's get into it, jumping straight into it. Oscar welcome, yeah, I was going to say first before we get into it. Oscar, well, welcome, yeah, I was gonna say first before we get into it. We're back in person. We are, if you've been following the podcast religiously, thank you, and you probably noticed there's been quite a few single episodes coming out. It's going to be a big thing of this year 2025. There'll be quite a few single episodes coming out, a little bit of one-on-one action, yeah, but you know what? It's good to be back together again. We'll probably come back, probably every month and a bit on average I'd say, yeah, we'll see what's happening. See what's happening.

Speaker 1: 1:34

But today we're talking about the economy. As you heard earlier, trump is back in office. If you've been living under a rock, you probably still have heard it, because it's been over every news platform and people are talking about it for the good reasons, bad reasons. I don't think I've seen or if you don't like him On Channel 9, like just if you have it on the background or whatever. I don't think I've seen a story not related to him or like random I did, and a positive one, a positive one. The other night I was going to message you about it. Wow, I've only seen one other story, but you go ahead first. We've always talked about this.

Speaker 1: 2:07

There was a. I think it was after the tennis. It was a tennis on channel nine, yeah, yeah. So it's after the tennis one night and it was about trump's victory so far, wow, in his first week in office. That is a full hour and a half of literally on channel nine, on channel nine, what we're going to talk about I? I was shocked as well, because what the heck? Because they're mainly like mainstream news platforms they are owned by the left. Yeah, and we're not this podcast is about being on the right or the left. It's just saying what's going on. Just got to put that out there because people get sensitive about it. Whatever side of the fence you're on, it doesn't matter. It's what's happening, it's actual facts. You've got to be aware of everything that's going on, because you're living in a time when Trump is president for the second time Correct, and what's he done so far? Or what's going to impact Australia, and that's the main point of this podcast.

Speaker 1: 2:58

We're going to talk about a few things happening in America, how they correlate to Australia, what we can learn from them and learn from that, how they correlate to Australia, what we can learn from them and learn from that. So, first of all, manufacturing revival. He's brought it back to the US, for example, what I said before he absolutely prevented the biggest auto plant in Mexican history $1.6 billion worth and instead got basically $700 million invested in Michigan through Ford, the company, and was able to create 700 jobs. But if that $1.6 billion plant went ahead in Mexico. How many people would have lost jobs in Detroit, because they're obviously largely autofocused. And then what repercussions would that have around the world, like in Australia, we've seen it. We used to have Holden right, they were a big manufacturer here and we've lost all manufacturing there. So now we have to import everything. There's tariffs, there's costs, so it's really negative. And he's prevented that over there. So that's one really big positive effect. Yeah well, I think that alone created 700 jobs in Detroit itself from investing that into Michigan. So that alone is massive. And that comes back to you know why does this work and the actual impact on the economy. So number one is stronger local jobs. So you're getting more middle class individuals in America getting those jobs instead of in Mexico, which, if you're an American, we're not, but if you're an American, that's great. You want to make sure that America is a powerhouse that it used to be and come back to where it should be realistically. As well as that, there's more investment into US factories for this. So this is obviously due to the manufacturing stay in Detroit rather than going offshore.

Speaker 1: 4:35

And then I guess the main thing, we're Australian. Why does this help us? How does this actually help us? Yeah, well, one of the ways is, if they're doing it, what we notice in Australia is we don't actually do anything ourselves, right? Everything that happens here, we follow suit, whether it's UK or America. We back say what happens and then we just literally follow Same in the stock market, same in the big. Yeah, that's right. So if they're doing something like the, chances are that we're going to look at that and think about it.

Speaker 1: 5:03

But more US manufacturing, simply put, allows more Australian exports. When they're building all these things and they've got factories to operate they need iron ore, they need steel, they need things that we produce, like even energy, lng, coal, that kind of thing Then they end up in a position where our exports are going to be higher if they're manufacturing it, whereas if it's manufactured in Mexico, it's not going to be coming from us, it's not going to help us at all, it's not going to help america. And then if america and us aren't doing well, then you know who is. There's no one that we want to be doing well. So that's one way and I guess could, could we rebuild our manufacturing industry? You know, if trump is prioritizing manufacturing, should we follow soon? Do the same. Like history shows up, as you just mentioned, we do follow. So I wouldn't be surprised if we start following and taking notes, because we've lost, you know, so many of our own industries and it is time to bring it back, like as an australian it's you know, you, you want it in australia.

Speaker 1: 6:01

I don't know if you actually you would remember back in the day when you'd be watching tv or you'd be shopping or something. You have the australian maid symbol. Yeah, yeah, the kangaroo. The kangaroo, you rarely see that these days. We don't do anything anymore. We suck. You see, you see it like very rarely.

Speaker 1: 6:17

Yeah, I'm like little toys I see sometimes in the supermarket. Obviously I'm not buying them, or you never know. You know you might be, but I don't buy them. But I do see some of them, but it is so rare. And the funny thing is on Facebook, when I get ads on things, if they are Australian-made, that's their selling point, because there's no Australian-made products or services out there or products out there these days.

Speaker 1: 6:39

Yeah, that's exactly right. So it's just bizarre, although we right. So it's just bizarre, although we might not be in a position where we can bring back, like car manufacturing, there's things that we can definitely start producing here that we don't need to import, like there's so many different things where we could just go. Well, why are we actually spending the money to import this where we can just produce it, make it better, do a better job, sell it here, increase our economy? But hopefully that helps, like trump's forcing the us companies to stop outsourcing, to rebuild american manufacturing and australia needs to be taking a lot. No, it's like we've lost our own industries. It's time to bring them back.

Speaker 1: 7:11

Just like, bring back the beef and footy, bring them back. Right, you're saying exactly what I said. We must have been thinking the same. Well, bring back the beef, bring back yeah, I know you nrl fans out there. Well, it was a big thing, wasn't it? Even in your AFL, surely they used to have Biff they could bring back. Yeah, that's true, biff means a fired punch on for anyone who isn't following the lingo, that's true. But yeah, mate, sport itself. Let's get a bit sidetracked here. Sport's gotten very soft. Yeah, the top Australian leagues. I'm not talking like overseas, like Australian, I'm not even talking overseas.

Speaker 1: 7:43

I was watching for the American listeners out there. You'd be getting very excited at the moment. Super Bowl is coming up, but I was watching the Bills and the Chiefs like what two days ago? Yeah, good game, that one. And I saw a penalty for unnecessary aggression and I was like, oh, I wonder what's happened here. I was like there's a flag on the pitch, let's have a look what's going on. And the replay was one young man walked up to another young man where they wear helmets and rubbed his helmet on his helmet. Yes, horrible. There's a few dodgy calls that the Buffalo Bills fans have been talking about Fair. But moving on, moving on Tariffs yes, all over the news, all over the news.

Speaker 1: 8:21

We love a good tariff, yep. So the tariff? Well, the China's tariff has been removed, yes, which is great. So what happened? Basically, in 2020, china crushed the Australian wine industry by imposing up to 212% tariff, which is huge.

Speaker 1: 8:39

Wine exportation for us was one of our biggest things in Australia, especially to China, and they just started absolutely demolishing us. Well, yeah, before tariffs, I believe it was around $1.2 billion Australian wine exports. Yeah, we were huge. Yeah, and then, after it, it's been less than $1 million in 2023, which is ridiculous. How bad is that? That is insane. Yeah, it's a 1.24 bill to less than one mil To less than one mil. That is outrageous.

Speaker 1: 9:07

But the good news is the tariff has been lifted. That is true, and we can talk about why and that kind of thing, which we will. But first of all, in the first month that it was lifted, we did $86 million in exports. Yeah, just in one month, which is ridiculous. Yeah. So we're back. Our wine industry is going well. We're rebounding. The Aussie wine industry is about to rebound yes, it is which is perfect. And the reason that's happening I mean you can use a bit of coincidence, I think not.

Speaker 1: 9:39

Logic here is we saw it happen with China last time Trump was in power. We saw a lot of tariffs come in, a lot of problems with trade, and China's well aware of the fact that they're going to need to be in a position where they can bargain with other people and start trading. So if they come in and go, hey guys, we're going to remove your tariff, you can go and start making billions more. Then bang, here we are. They've just magically removed the tariff right as Trump's in office. I don't know why that would happen. It's good for us. That helps Australia. They know they're in trouble. They know they've got to pull their finger out. Yeah, so now we've got leverage. Like Beijing is coming to us, australia's got leverage. You know we should negotiate smarter trade deals while China are actually needing us at the moment. Like take advantage of it. Like let's actually get it going and bring it back. Yeah, bring it back and start relying on other countries too. Like stop doing everything through China, go to India, go to Japan I mean, we already do a bit of work with the US, but just start doing everything. China's not just lifting their tariffs out of the kindness of their heart, they're scared that Trump's going to be a big plus for Australia and the actual industry as well, which would be perfect.

Speaker 1: 10:58

One of my favorite topics to talk about on this one actually is government efficiency. We're all aware of Doge, the Trump strategy, where Mr Elon is out there running amok and shutting down stupid parts of government and saving taxpayer money. I hope we talk about the $50 million. We will. We will be talking about the $50 million scam. I can't believe that. It's the funniest thing I've ever seen. That is insane. If anyone knows what I'm talking about, or if you don't, you'll know in a minute. Yeah, just wait and see. But basically, doge the Department of Government Efficiency. Who's made Doge. Yeah, the Department of Government Efficiency Already saved $450 million in taxpayers Already. Already, that's in like a week, two weeks. Yeah, basically a week and a bit.

Speaker 1: 11:46

So what does that actually do? And I mean, how did they do it? First of all, one of which they shut down a bunch of useless offices that weren't doing anything, spending millions of dollars with no actual measurable benefits. They were just dumb. They're going yep, have a company here, have this there, have that there, employing certain people to do certain positions that shouldn't exist and never should have.

Speaker 1: 12:07

And the condoms, the condom, the condom scandal, the 50 million to gaza sham of condom shipment. Yeah, so they were sending 50 million dollars worth of condoms to gaza. Now, as to why that is, you can speculate. Um, I mean, the common sense answer is people use condoms for sexual activity, but I don't know like what sexual activity would have been going on right, the last? No, obviously what was happening was pretty bad, but why were they giving, like shipping 50 million dollars worth condoms to gaza? There was an argument that they were using them a as flotation devices, which is just outrageous, because the condoms are going to help you float. What are you going to? Blow it up and tie it up and float. But they were also actually using them to like, preserve stuff. Yeah, right, so they would like wrap stuff up in them to stop them from like going rusty and stuff.

Speaker 1: 13:03

But why is the US government sending $50 million worth of condoms to Gaza? Why are they providing it? Yeah, and $50 million, like, come on, yeah, send them bubble wrap or something, if that's a problem, literally, or something which actually floats, yeah, or a couple floaties. And why this is such a big thing is number one they're saving so much money $450 million already in one to two weeks. Imagine how much money they're going to save in just this year alone.

Speaker 1: 13:36

Yeah, and even if they don't fully, just go all right, well, don't spend that money, because what you, what you could do the us government's in a lot of debt, right, like trillions of dollars. They could take that off and use it to repay the money instead of spending it elsewhere. But also they could put it in defense, security, infrastructure, roads, which I think they will especially defense. I think, yeah, el, I think they will especially defense. So I think, yeah, elon and trump will go straight there. Yeah, there's so many more things. The ai race like. There's so many things the government could focus on, but also they do need to pay down that debt because it's getting up, oh yeah, and I think we'll see a bit of that.

Speaker 1: 14:03

And then it makes you think, like, as as a country in australia, are we spending too much on literal, useless programs? I think we are. Oh, absolutely, there's so many. We do need our own dose to eliminate wasteful spending, because in Victoria, for example it's ridiculous we have the most debt by far of any state in the country and the government there is just. If you're Victorian, you'd understand what I'm talking about, but no one is happy with the government there. It is ridiculous.

Speaker 1: 14:34

What's going on there? Yeah, we need to figure out. We need a doge and we need to figure out foreign aid versus actual Australian issues. Like, we need to start figuring out all right, well, why are we sending X amount of money here or there or wherever, when we have our own problems? And why are we putting money into this and that and certain schemes? Yeah, and why are we funding programs that don't actually benefit Australians? Yeah, even our contribution to the World Health Organization or being part of the Paris Climate Agreement that's exactly right. You compare our population with China, then we shouldn't even be paying a tenth of what they are. No, and guess what? We are.

Speaker 1: 15:11

So lots of stupidity in the government. But even if you just take all that into account, we're still not even breaking the surface. Like if we actually sat down and audited where every single dollar our government spends went, we wouldn't even we'd be shocked. In fact, when you do your tax return, you get a breakdown. There's actually a section on there yeah, really yeah. So it'll say, like you know, x amount went to defense and x amount went to, like um, social security, x amount went to um. I don't know what another example is, but there's a whole bunch but on that sheet, along with 20 stupid things. That money shouldn't go places is just other, yeah, good old other, yeah, if you've got the capability, let's actually open the doors of this other. What's behind the doors here? Yeah, if you're breaking down pension versus health, versus infrastructure and all of that, what is other, yeah, what is other, yeah, anyway, ridiculous.

Speaker 1: 16:12

Moving on, we'll get on to other things going on in the world. One of the big ones, which I believe is the next one, is the ceasefires, the hostage releases and the global stability that's actually caused. Finally, it's been a while, and the funny thing is You're absolutely right it all started one man, mr President, at the moment. On one interview, he said one hefty threat that I think he was going to follow through on. And the people on the receiving end of the threat well, we should probably release some hostages here. Well, that's all it is. It's all about having the strong leadership and showing stability and that you're actually going to do things that you say you're going to do. So that's why this has happened so quick, after or just before he got in. So it's under Trump. The world sees a strong leader which benefits economies everywhere.

Speaker 1: 17:05

With this getting done, it's unbelievable because you've got the commodity market stabilising, you've got investment confidence increases and, you know, less economic uncertainty, which equals a better long-term financial planning for literally. Well, not just for any of the world, but more importantly for, which is great. Yeah, it's absolutely amazing that the hostages were held captive for between 460 to 480 days before their release, and then he comes in and all of a sudden, bang, hostages are getting released. Everyone around the world is watching and going all right, there's a bit more stability, everything's going to start calming down. So it's really good to see.

Speaker 1: 17:46

And then you've literally got to the next point interest rates are looking to come down. Now it's funny, everything kind of comes at once. So you've got with the australian. You know inflation trends as well. So in the december 2024 quarter, our cpi rose by 0.2 percent, which marks an annual increase of 2.4%, which is good. Well, within the goal. Yeah, because it's a decrease from 2.8% which was in September, and the goal is 2 to 3 anyway. Yeah, exactly right. So it's like being in the middle.

Speaker 1: 18:17

And I was listening to a podcast today by AMZ. They do a I think it's 10 points every morning, their 10-minute podcast, and they were saying, well and truly, we're looking pretty positively for a rate drop next month, start next month, which will be great. And it's just funny how this has happened after everything that we've talked about earlier. And now Trump's back in power, the whole world, and we saw with the stock market for that first week when Trump got back in on the election, the crypto market yeah, crypto market, the day of Day of when it was actually happening. It's just ridiculous how much power America has and the leadership and the stability that one person can actually show, and then we just follow suit. So it'll be very interesting to see what happens with the Australian election at the end of this year or middle of this year actually. That will be good to see. That'll be very interesting.

Speaker 1: 19:07

I'll be extremely shocked if, either February or March, we don't get an interest rate drop. I think I'll lose the plot. I do think in February we'll get a drop, which I'm very excited for, and then with that rate drop comes increased property prices, more lending power, so on, so on, so on. The world goes around. Everyone makes money. It so on, so on, so on. Yes, world goes around, everyone makes money. It'll be funny seeing everyone kind of jump back into the property market, like everyone will be like I want to buy on about hurry up, hurry up, even though they're looking for, you know, 25 basis point reduction. It's not, let's say, massive um, and there may only be two or three this year, but it's a. It's a good start and people will start feeling more confident with what they're going to do. Yeah, exactly.

Speaker 1: 19:47

And then on to the final point to really talk about here. I mean, there's so many different things we can talk about, right, but one of the final ones is the odd double-edged sword called the government and their surge in employment. I think, and a lot of people don't understand this, but there's a major risk with us at the moment in the government, because public sector has been growing exponentially, right Like between August 2022 and 24, 82% of new employment in Australia was in the public sector. 82%, so that's nearly 700,000 people in government jobs. That is insane, isn't it? So that means that only 18% of it was not government. Oh, yeah, and so now the actual sector share of the workforce has gone from about 12% to just shy of 20%.

Speaker 1: 20:41

If you've got one-fifth of the population working in government, then what does that actually mean and what we need to think about? There is okay, well, how? What does that actually mean? And what we need to think about there is okay, well, how does the government get money? First of all, tax. How do people pay tax? They get paid. If you've got a majority of the population or a large portion of a population getting paid by the government, who then pay tax to the government as, as a cancel, cancel it, yeah, it doesn't do anything.

Speaker 1: 21:12

So if we continue 82 percent, yeah, if we continue at that 82 percent numbers man is, he's got me here because I didn't know these numbers. This is, yeah, that's one. I've been. That's alarming. I've been brewing on that for a while. Yeah, I was watching it very closely and I was like I don't know who it was. I was having a conversation with someone about it the other day and they're like, was that a bad thing? I was like what, what do you mean? It was a bad thing If 82% of the workforce in a two-year period, like new workforce, was government.

Speaker 1: 21:41

Imagine if that continues for 10 more years. How bad would that be. And then how does the government end up making money? They're paying people to pay them tax, but obviously one's a loser because they can't generate enough. Yeah, so I guess what could happen is our tax might go up, yeah, well, and it doesn't Literally defund it all. Yeah, it falls back on the actual private sector people, the people not working for government, the business owners and the small business employees. Yeah, like, look, look the place, it's a great tax on all the citizens who aren't in the job. Yeah, literally. Yeah, exactly, because even even like gst, if the people majority of the people paying gst work for the government, then they're just giving money back to the government that they're getting from the government yeah, it doesn't matter. Cancels yeah, it's the dumbest thing in the world that needs to be stopped.

Speaker 1: 22:29

We need more privatization in australia. Um, I don't care where it is, I don't care how it happens, but we need it. Whether it's roads, whether it's hospitals, whether it's, um, anything, literally just get the government out of it. That's yeah, it's as simple as that, yeah, and then not only do you have the financial side of it, you got the got the control side of it too, which I mean, no one really views as a problem in Australia, because we've never really had it as a problem, but you can see more and more of the control that's coming. So it's an interesting one. It's not one that I'm overly excited about. No, like, yeah, sure, it can stimulate the economy, it can, like, provide wages and stuff, but long term it's just a huge problem. So, yeah, all in all, australia needs to wake up to themselves on every front.

Speaker 1: 23:16

Well, I guess it's good time that the election is coming. You know, america is starting to lead the the world again, as they should, and we're about to follow suit, hopefully. And you know, take on what they've actually benefited from this transition that they've already had in one or two weeks. Yeah, because they've made a lot of moves, and I'll tell you what. What they've done in one or two weeks is probably more than what Australia's done in the last 20 years. Oh, it's outrageous.

Speaker 1: 23:41

One of the funny things actually that came out of it was Doge came out and they said that in 2023 alone, illegal immigrants cost the government 150 billion dollars. That is insane. So in a nation where you're a trillion dollars in debt that needs to be sorted right. You throw that in with everything else and it's only been two weeks. Imagine the long-term impact if australia had department of efficiency. Imagine. Imagine the outcome. Imagine the tax you can save. Imagine. Imagine easier, because we're not in that bad of a situation compared to America with their debt. No, apart from Victoria yeah, victoria aside, I mean as a nation yeah, then we could actually really start making moves, build up Australia, get the economy going and turn it into a thriving, prosperous country instead of a I don't know how to put it a sissy state. Yeah, a sissy state makes sense at the moment.

Speaker 1: 24:32

Yeah, but if that episode resonates with any of you or you know, you're out there watching China do news, watching us make moves, watching America make moves, wanting manufacturing to happen here and government spending to change. Share this around with your friends, your family yeah, share it around. Make moves watching america make moves, wanting manufacturing to happen here in government spending to change. Share this around with your friends, your family. Yeah, share it around. If they don't know the problem, they can't help contribute to fixing it. And the more you share it, the more the podcast grows, and the more it grows, the better guests will actually be able to get on the podcast as well and to to talk about their actual professions and to share their knowledge.

Speaker 1: 25:07

So, share it around. Have a conversation with your friend about it. Yeah, bring me, have a conversation with me. I'd love to talk about it. Yeah, pop your number in the show notes. That's it. Numbers in the show notes. I will not take those calls, but we'll catch you all next time. Dale, ciao, as always, we hope you enjoyed the episode and if you did, you know exactly what needs to be done. Hit that follow button, subscribe, share it to friends, family or even your co-workers, as sharing this podcast helps not just us but everyone in the world to learn about their finances. Thank you, dale.