Joe Lonsdale: Tariffs, Trump's Economic Endgame, Market Chaos, Bitcoin Reserve, CoreWeave IPO

The episode opens with the host, who introduces himself as Jason Calacanis, presenting Chamath Palihapitiya and David Friedberg, with David Sacks expected to join for the second half. The guest is Joe Lonsdale, introduced as a venture capitalist and founder of 8VC, which is described as having $6 billion in AUM. The introduction also credits him as a cofounder of Palantir, OpenGov and Addepar, an early investor in Anduril, and an investor in Oculus, Wish and Oscar Health.

The host then runs through the news since the last taping. The Epstein file release is dismissed as a "big nothing burger." On Friday, Zelensky was "dressed down and kicked out of the White House," and markets fell and then recovered. On Sunday at 9:24 a.m. Eastern, the president named Solana, Cardano and XRP for a first government strategic crypto reserve, then added Ethereum and Bitcoin in a follow-up post. The host cites gains of 70% for Cardano, 32% for XRP and 25% for Solana. He also describes one trader who went 50 times long on BTC and ETH, a $200 million position on a $4 million investment, and he leaves the trader's identity to speculation.

The rest of the timeline: on Monday, significant tariffs on Canada and Mexico were announced, markets fell, and the tariffs were walked back a few hours later. At 2:38 p.m. the same day, the president announced a $100 billion TSMC investment in American fabs, with David Sacks making a 15-second appearance at the podium. Tuesday's State of the Union is called the most chaotic the host has seen, with 13 mentions of Biden. Wednesday brought news that the Doge effort might slow down, and a 5-4 Supreme Court decision backed a federal judge who had ordered the administration to pay out $2 billion to contractors. On the Thursday of taping, markets were down 2% on more tariff news, and at 11:30 the president announced that tariffs on Mexico were off. Mentions of leaving NATO and closing the Department of Education are played as a joke and then retracted.

A panelist adds stories the recap left out. OpenAI released GPT-4.5, which in this panelist's view was "not really that well received." Alibaba's open-source model (transcribed as "Quen") released a new version that "seems actually really best in class," and a report said Meta's open-source LLaMA was "going sideways." The same panelist calls the markets "the craziest I've actually seen in 20 years of following the markets," pointing to the Magnificent 7 converging toward the rest of the S&P 500 and "this insane trade away from Europe."

Another speaker brings up Trump's "Shalom Hamas" post, which they call a big deal for people who care about that region, and describes it as a strong threat. The panel notes that "shalom" means both hello and goodbye, and that the post left the reading open.

To frame the main topic, the host says he asked roughly 400 people across four group chats what Trump is trying to do with tariffs that keep going on and off. The answers varied. Some said he is throwing things at the wall, some said it is about the border, some said he is "trolling the 10-year note" and does not care about stocks, and some said the goal is onshoring manufacturing.

The first answer on the panel is that the tariffs are a negotiating tactic tied to fentanyl. The speaker describes being a guest in the Senate dining hall, where several other guests had lost children to fentanyl. The speaker says the U.S. has lost "tens of thousands of young people recently to fentanyl" and claims Canada "has done nothing about their border." The speaker adds that they import goods widely and want to know what the rules are, but still calls it reasonable to use tariffs to force other countries to crack down.

A second answer treats this week as the first real split in how people read the administration. This speaker says Trump and Elon had been in a honeymoon period, and that on X one camp now says Doge is deranged and Trump is "lighting the world on fire," while the other says he is sticking to the plan. The speaker describes the November election as a fork in the road. In their framing, Democrats wanted lines to stay blurred on gender, race, merit and fiscal and monetary policy, while Trump and Elon promised to make those lines clear, and a majority voted for that.

The same speaker says the hard part is now implementation, because tariffs are "very nuanced and complicated." They list effects on the dollar, on U.S. bonds and bond markets, and on how countries manage foreign reserves. They also point to the cycle in which markets react to a tariff, the tariff is withdrawn, and markets snap back, which they call "this weird set of boundary conditions." Asked for a definitive answer, they reject both fentanyl and finance as the main goal:

I think what tariffs allow us to do is rebase the long-term reliance on the U.S. dollar. It allows us to rebase our ability to fund our own deficits, and it allows us to rebase the long-term ability for American companies to be economically vibrant.

Another panelist gives a larger theory and says up front that they "don't sit inside of Trump's head" and have no direct line to the people writing the policy. They present it as the most optimistic reading of a possible master plan. In this view, tariffs work together with lower income taxes and lower government spending: "three actions, three legs on a stool."

The tariff leg is illustrated with LED lights for the speaker's greenhouse, whose price "just went up by 25%." The speaker says they asked the CEO of an LED company why they don't make LEDs in the U.S. They argue that tariffs create a crossover point where domestic production starts to make economic sense, and that without tariffs, supply chains move offshore to the cheapest producer. Domestic production would make U.S. supply chains more secure and create demand for workers.

The income-tax leg is meant to free up capital. Lower corporate and personal income taxes would, in theory, send money into new businesses making textiles, metals, materials and cars instead of to the government. The speaker also describes a related idea they expect to hear more about: moving the U.S. from taxing income to taxing consumption, so people are taxed when they spend rather than when they earn. They say some see this as fairer and better for growth. They stay neutral on whether it works. They would not oppose trying it as an experiment, but they note it "has not been done in 150 years" and that economists disagree on it.

The spending leg addresses where the workers would come from. With government at "30% of the US GDP today," cutting spending would move workers into private industry. The speaker argues this would also offset the inflation that tariffs cause: "there's a lot of inflation because of tariffs. And by reducing government spending, that's the offset to inflation."

The host raises two caveats. First, he says lower income tax combined with higher consumption-style taxes is already being tested in states like Florida and Texas, where he says people pay much more in real estate taxes. Second, he says unemployment is at 4%, which he calls the lowest of their lifetimes, and asks where the new workers would come from. He also asks what legacy Trump wants, since he is not running for reelection.

A speaker agrees with the stool theory and argues that the economy looked fine over the last four years partly because the government was "hiring like mad." As an example of unproductive work, they describe an audit that had run for three years and recently closed with no findings. They propose moving "a million workers out of the consulting class around D.C." into productive jobs. The same speaker says that although they are "not a huge fan of tariffs personally," tariffs make sense for defense and for negotiating, and they are pushing some of the speaker's companies, and the speaker personally, to build more in America.

One panelist separates cases. Where domestic alternatives exist or the goods are basically commodities, tariffs can bring production back to the U.S., which this speaker calls "a slam dunk." Another speaker adds an environmental argument. They say they don't want their daughters growing up with polluted air and water, and argue that countries like China and Indonesia damage the environment when they manufacture. In their view, it is unfair for U.S. producers to pay more for doing it cleanly while production moves to places that don't.

The first panelist then describes "the other side of the tariff knife." When a product is innovative and has only one maker, a tariff can push its price "very, very high," which is inflationary and slows consumption. That matters most when the product is a must-have. The examples given are innovative drugs, technologies with a single vendor, and specialized ASML equipment for making chips, where a 25% or 30% cost increase passed downstream would make things "a little bit more fragile." Autos are the opposite case: with manufacturers around the world, a tit-for-tat tariff seems reasonable.

Another speaker warns that exceptions bring their own risk. If every industry lobbies to be exempted, the result is "this very crony system." The first panelist agrees and changes the question. If Trump wants everything tariffed, the debate should be about when rather than if, with some sectors given "a much longer glide path" so inflation doesn't spike suddenly and American businesses and consumers aren't held back.

The host draws two points from this: reciprocity and predictability. On reciprocity, he says U.S. cars sent to the EU face a 10% tariff, while EU cars entering the U.S. face 2.5%. He says he doesn't know how the gap arose and suggests simply matching rates: "You say 10. We say 10. You say 2.5. We say 2.5."

On predictability, he argues that tariffs cannot go on and off every week. Otherwise, a business like the LED maker considering a domestic factory has no basis for deciding whether to invest $10 million in it.

The host says the growth in government employment is "not as bad as people make it out to be," since much federal spending isn't on employees. His figure is about 1.3 million employees added over the last two administrations, not counting contractors. He adds that it is unclear what USAID was doing through NGOs and contractors.

A panelist disagrees. They argue that direct federal employees are "a fraction of people that are employed indirectly by government spending," because agencies pay contractors, subcontractors and service providers who do the hiring. Those workers never show up on federal payrolls, but the speaker says a large share of the U.S. workforce depends on federal dollars. The host replies that he was talking only about direct employees.