Trump Trying to Get Best Deal on Both Sides With Tariff Rates, Non-Tariff Trade Barriers: Analyst

The Trump administration has reached a deal with Switzerland. What does it mean for Americans buying Swissade goods and joining me now to discuss these latest developments is Doug Flynn, co-founder of Flynn ZTO Capital Management. Doug Flynn, thank you so much for joining us here. >> Great to be here. Now, the US and Switzerland have now reached a trade deal, and as part of it, the US will lower the tariff on them from 39% back down to 15%, which matches the rest of the European Union. Why did the US have such a high tariff on Switzerland? And what is the US getting out of all of this? >> It it's all about trying to get the best deal that that uh Trump can on both sides. And sometimes it's not even the actual tariff rate. uh they can vary and and and be enforced. A lot of times it's non-tariff barriers that are in place and and and this is a negotiating tactic to kind of get those removed and those could be things like, you know, it could be a higher degree of uh of um you know, health things that they want to put on to slow down or they have quotas or there's a lot of these things that they do that aren't breaking the rules so to speak, but they they put these things on there that really make it difficult for us to export to them. And so a lot of this I think removes a lot of those uh non-tariff barriers more than anything else than just getting a percentage although the percentage is still higher than it had been before. >> And how about the aspect of Swiss companies investing in the US? We know that a lot of Trump's deals have uh worked to get foreign investment into the US. >> Yes, I mean Swiss the the banking industry and and whatnot is, you know, they they do want to increase that. we don't really have a lot of that per se other than a couple of of banking uh situations that we have. So I think it's all about look we have these trade deficits in a lot in a lot of countries and and around the edges I think in all of these it's about how do we sell more to other people and how do we allow them to uh bring more here but make more money off of it. And right now I think the the estimates are that they've already brought in about $200 billion in tariff money uh through se the end of September. And so annualized that might be $300 billion a year globally. And each of these pieces adds up to be part of that. And it's just one by one trying to do that which a lot of these tariff deals that's exactly what they are. They're one by one trying to get to something negotiating negotiating it not just you know getting a framework but getting it all the way through to completion. Now, in terms of this trade deal with Switzerland, how will this impact American consumers when it comes to Swiss Swiss chocolate or watches, the Switzerland things? Yeah, I mean, cocoa prices have gone up. There's been a number of things that even though inflation hasn't really uh come up a lot from tariffs overall, there are definitely things out there that have spiked. You you see meat, bananas, cocoa, you know, coffee is up a lot. So, you know, trying to keep those things down uh are certainly something that that they want to do. And so anytime they get an opportunity to do that, they're going to do it. So I think that's where it comes in is those things that have spiked. And that will then go a longer way to keeping the inflation number lower, which is really what we want overall. We don't want the high inflation that we have had in the past, even though we're not quite all the way at the Fed's target. It's been stubborn in and around 3% inflation, but they want to get it a little bit lower than that. >> Another major trade development this week deals with Argentina, Guatemala, Ecuador, El Salvador. How is this going to impact the prices of goods like coffee and beef? >> Oh, that goes right to it. Um, you know, they've maintained the 10% tariffs on a number of those countries, although Ecuador they kept at 15%. So, so here's a classic example of those tariff percentages remain in place. And so, while they're they're they're definitely easing certain parts of it and this is a framework for that. This gets right to they they've had a number of those those uh you know those tariff you know non-tariff barriers if you will for us to export for our farmers to them. And so this is to help us export more to them because of those non-tariff barriers. And they've kept those tariffs in place even though they've also eased the things that we want to import that we mentioned there. the bananas and and and the other things that have really gone up a bit. >> And these non-tariff barriers to help us just understand a little bit more about what they are. Are they all related to things like ESG standards? >> Um, not necessarily. It could be just things like every country wants to have a little bit of protectionism, but they don't necessarily want to run a foul of the, you know, the arrangements they've had. So, it could very well be something like putting permits in, you know, on their end that we have to get through. So, it's just, you know, it's just bureaucracy and things like that that slow down our ability to sell to them. So, it's less free tradike, if you will. They're not breaking the rules. They're just putting these things in there. You you see it a lot with a lot of our our goods that we want we want to export agriculture outside. They say, "Well, they don't pass European standards or other countries standards. Our goods don't." And so then we we you know, even though they're not keeping us out, they in effect are. And so there are negotiations in here uh and that's the part of this that reduce those non-tariff barriers that make it more free trade like to get us back to where it really should be. >> And all of these deals are aimed at receiving uh and achieving reciprocal trade. Why is this such an important goal for the Trump administration? He says that these countries have been ripping us off for years. Yes, of course he likes to use words like that, but at the end of the day, we're the largest consumers in the world. And then our economy, as you know, 70% of our economy is consumer-based spending. So, so we're big buyers of a lot of stuff. We don't make nearly everything we need, and we probably never will. And that's okay. We're allowed to buy things from all over the world. You just want that to be free flowing. We want to be able to buy things uh you know and make it more uh free and fair, but also then we want our industry to be able to sell more freely to other countries. They're more worried about that because, you know, a quick example is in Canada, even though they don't say they don't allow us to do banking there, they in effect don't. And and part of it is because I think they're afraid that if we really let all our banks, you know, do whatever they want in Canada, they could effectively take over the banking industry. So they don't want that and and and and that makes sense from a protectionism standpoint, but we just want to move it a little bit closer, move it a little bit more down the line towards more free trade. And that's a benefit to us and and them, but really to us, I think, is the main the main goal here. >> Doug Flynn, thank you so much for your insights here today. Really appreciate it. >> Great to be here. Thanks.