The trade war that President Donald Trump kicked off on April 2 with an avalanche of new American tariffs has the potential to impact his foreign constellation of properties. Forbes money in politics reporter Kyle Khan-Mullins joins "Forbes Newsroom" to discuss.
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00:00Hi, everybody. I'm Brittany Lewis, a breaking news reporter here at Forbes. Joining me now
00:07is my Forbes colleague, money and politics reporter Kyle Kahn-Mullins. Kyle, thanks so
00:12much for joining me. It's great to be here, Brittany. Thanks for having me.
00:16If you have listened to Donald Trump really at any time over the past decades, you would know
00:22that he is pro tariffs. So this tariff whiplash really comes as no surprise. He promised them
00:28on the campaign trail. He's been saying for decades now that the United States has been
00:32getting ripped off. He was even pro tariff as early as the 80s. He unveiled his largest tariff plan to
00:39date on Liberation Day, which was April 2nd, where he introduced sweeping reciprocal tariffs on dozens
00:46of nations. We also know that the Trump Organization has been making deals abroad for years. So before
00:52we dive into some of the specific countries that were impacted, give us the 30,000 foot view here.
00:57How are tariffs going to impact his businesses abroad?
01:02Literally. Tariff impacts on Trump's businesses abroad, they're not going to come from the tariffs
01:06directly. Trump's hotels, the Trump branded hotels in Philippines or Indonesia or Dubai or the United
01:13Kingdom, they don't export a bunch of things to the United States. So their businesses are not going
01:19to be impacted dramatically by higher tariffs, right? How they will be impacted is if an upending of the
01:26global trading order, which seems to be what Trump and his advisors are aiming for, ends up upending
01:31the global economy. And if the global economy takes a hit because of this, well, tourism is one of the
01:37most vulnerable industries. It's seen as a very discretionary kind of spending by most people.
01:41Um, so people are going to be, you know, but that the business that is overly exposed to the tourism
01:48industry, like the Trump Organization is going to be hit pretty directly by it.
01:54The Forbes money in politics team has been reporting really for years that President Trump was so
01:59polarizing, even his in his first term, that that was bad for his business. Before the tariffs, how have
02:05his international properties been doing? Are they all turning a profit? Are some of them in the red?
02:09What does that really look like? So let's break this into two buckets, because you've got
02:14properties that he actually owns, and then you've got licensing deals. And those are a whole separate
02:18category. But the properties he actually owns, you've got a golf course in Ireland, two golf courses in
02:23Scotland, and a mansion that he rents out in French St. Martin. Most of those appear to be doing well.
02:30You've got one of the Scottish courses and the Irish course are profitable. You got one of the
02:34Scottish courses that isn't profitable. And then the first thing, Martin Manchin, as far as we can tell,
02:39we don't know whether it's profitable or not, but it does seem to be renting well. He rents it for
02:43about $60,000 a week in the high season. That's certainly going to bring in a hefty chunk of change.
02:49And then let's talk about his licensing deal, right? Those are his basically situations where
02:57the Trump organization partners with an organization abroad that is building a hotel or an office tower
03:04or an apartment building of some kind and says, you can use the Trump brand for this. And sometimes
03:11we'll manage the building for you. So you own it, we'll manage it. The vast majority of these are
03:16licensing deals. That's basically pure profit for the Trump organization. You know, when they're basically
03:21saying you can use our name, and there's not that much cost associated with that. So we consider
03:26that almost pure profit. And then there are a couple of management deals. It's hard to tell
03:30whether exactly those are profitable or not, but he has someone in Istanbul, for example.
03:34So overall, this has been a pretty reliable cash stream. And they've announced a number of deals
03:39just in the past year or so, including one in, I think it was Oman that brought in two and a half
03:45million dollars for Trump. So you're looking at a pretty sizable amount of cash flowing into the
03:51Trump organization's offers. As you said at the top of this conversation, travel is extremely
03:56discretionary. Your vacation is usually the first to get cut if the economy is in real turmoil.
04:03President Trump, as we know, is also making good on another campaign promise,
04:07tougher immigration policies. So how are his hotels worldwide taking a hit when it comes to
04:12his America first perspective, paired with this real crackdown on immigration?
04:16So I can't speak to Trump's hotels in particular, but I can say that there's certainly been speculation
04:24that if tough immigration policies in the United States are leading to bad headlines and a bad
04:29reputational hit for the United States and Trump around the world, that his properties might be
04:35disproportionately hit in that situation. We don't know. That's kind of speculation for now,
04:39but we'll see. We'll have more information as the year goes on and as these policies continue to
04:44take effect. But what I do know is the U.S. tourism industry has definitely shown signs of
04:49weakness. You're seeing fewer tourists and fewer students coming to the United States who are
04:53abroad. Just one statistic that really stuck out to me, airline bookings from Canada are down 70%
04:58for last year. Now, obviously, Canada has been the focus of Trump's ire. He's talked about annexing
05:04Canada. He's talked about making them the 50% state. That's provoked kind of a nationalist
05:09upsurge in Canada. And so and then just more broadly, industry groups in the United States
05:15are predicting a slump in tourism this year, especially internationally. So again, we'll see
05:21if that takes effect. But right now, these are mostly projections. When President Trump unveiled
05:25his sweeping tariff plan, global markets lost trillions. President Trump himself lost $500 million
05:32from his fortune. Is there any indication that because of his tariff plan, he's poised to lose any more
05:38money? So that's going to come down to that broader economy question. If all of this trade
05:44uncertainty plunges us into a recession, because businesses are feeling like we can't invest if
05:50we don't know what the tariff rates are going to be and what the international market is going to look
05:54like, if that all leads to an economic downturn, I would expect to see his net worth drop, his
05:59properties, his social media company, his digital assets. We'd expect to see all of them lose at least
06:04some value. But this is all to be seen. You know, we will chuck back into his net worth in a couple
06:10of months at the Forbes 400. And at that point, we'll have a good sense of where he's at.
06:16You're reporting on how President Trump's tariff policies could impact 13 countries where he struck
06:21deals. As of now, how are those leaders of those countries reacting to the tariffs? Are they
06:26retaliating? Are they remaining silent? Are they trying to negotiate? I mean, what does that look like?
06:31So yeah, my most recent reporting is really focused on these countries where he has these
06:37licensing deals. And most of the leaders of these countries are going the negotiation route,
06:41the vast majority, you know, Vietnam, South Korea, the United Kingdom, the leaders are talking about
06:46let's not retaliate. Let's try to stay on Trump's good side, maybe see if we can strike a deal with
06:51them where the tariffs come down. Let's see. Let's see what happens. The one partial exception is the
06:57European Union, which I think is interesting because he actually owns multiple properties
07:02in the European Union. You've got his French, St. Martin, Manchin, and you've got the Irish
07:06Gulf, of course. And the European Union was preparing retaliatory measures. But they held
07:12off when Trump announced this pause, this 90-day pause on his so-called reciprocal tariffs. And we
07:18saw that 10% base tariff that's worldwide. We'll see if that holds. But the European Union was
07:23prepping retaliatory measures, and they held off. I think that's interesting.
07:27But one of the countries that Trump does have some business in is Vietnam. And Vietnam is one
07:32of those countries that had the highest reciprocal tariff rate at 46%. What's going on over there in
07:38terms of President Trump's business?
07:42But Trump has a golf hotel and residential deal. He claims it's worth about $1.5 billion overall.
07:49And that's up for a big development southeast of Hanoi. It was only announced in October. And I could
07:56see development being delayed there if Vietnam ends up hard hit by all these tariffs. You know,
08:01we'll see whether they're trying to negotiate. So we'll see whether or not they end up with a
08:05better deal. And maybe their economy doesn't do so poorly. But Vietnam's economy is really dependent
08:11on exporting to the United States. They've been seen as one of the biggest alternatives to China.
08:17So tensions with China have been ramping up for like eight years now, at least, since Trump
08:21got elected the first time. And so a lot of companies, Apple is a good example, Nintendo is
08:26another example, have been moving their manufacturing from China to Vietnam. And then, of course,
08:32they're seeing Vietnam's high tariffs. So we'll see whether or not Vietnam's able to avoid the worst
08:37of these economic impacts. But if they end up getting really hard hit, I could see the development
08:42timeline on that Trump project getting extended. One of President Trump's most vocal allies,
08:49even in his first term is India's Prime Minister Modi. India was slapped with a reciprocal tariff
08:55that was more than double that baseline 10% tariff. Talk to us about President Trump's projects there.
09:01And how has India's Prime Minister responded?
09:03Yeah, so India, again, another one of these countries that's seen as kind of an alternative
09:08to China, you have a lot of American companies that have been moving business there. And then
09:12all of a sudden, India is hit with a 26% tariff. Of course, that's on pause right now,
09:17they're hit with the 10%. But that, you know, same thing, same thing as always. India is interesting
09:21because it has the most Trump branded projects outside the United States. And again, all these
09:26licensing deals, same as Vietnam, by the way. And so Trump's skin in the game is kind of limited.
09:30Uh, he doesn't own the property in India. He just has this licensing deal. So whether or not he's
09:38going to lose out a ton is up in the air. But what we do know is India is trying to negotiate a deal.
09:45Um, Modi has been an ally of Trump in the past, so maybe he'll be able to leverage that relationship.
09:49We will, we will just have to see. Um, but I imagine again, if these tariffs take effect and if
09:55India's economy is hurt, uh, Trump name branded hotels are probably going to take a hit too.
10:00What about those countries that were just hit with the baseline 10% tariff? We know that that
10:05is still into effect. That hasn't been paused. Does anything stick out to you about the Trump
10:09businesses there or how those countries have chosen to navigate the tariffs?
10:15But this is a list of countries that the U S had trade surpluses with. And so under this
10:20kind of convoluted odd methodology that the Trump administration used to calculate the tariffs,
10:25they only got 10%, right? Um, and this list is interesting. Uh, the ones that are,
10:29that Trump has deals in, you've got multiple middle Eastern countries, Oman, Saudi Arabia,
10:33the United Arab Emirates. You also got the United Kingdom. You got Trump's only Latin American
10:37property left in Uruguay. Um, there are a couple of broad things you can say about these. I think
10:42the most interesting case is the Gulf States. Um, so they're going to be, you know, again,
10:47we're assuming potentially that there's an economic down. If there's an economic downturn,
10:51the Gulf States could be hit by that. And then they could also be hit hard specifically
10:55by the fact that oil prices tend to slump dramatically in an economic downturn. And
10:59a lot of these countries are still very dependent on oil and hydrogasm. Um, one thing I'll be watching
11:05for when it comes to the Gulf States, the Trump organization announced two projects in Saudi
11:09Arabia, uh, last year and early this year. Um, and one of them was in Jena, uh, the big port in
11:14Saudi Arabia. And it's already, it's got, they've got sketched out plans for that. Um, it's already a
11:18mock-up of the tower and all that kind of stuff. Um, so that's in development,
11:21but they didn't really announce any details about a supposedly planned tower in Riyadh.
11:28All we got was a statement from, I think it was Eric Trump who said that I can tell you there will
11:32be a tower. Uh, and so what I'll be watching is if they don't end up announcing any more details
11:38about that tech planned potential tower in Riyadh, the capital, that'll be a sign that maybe these
11:45development deals are running into some snags with the slowing economy and maybe their timelines
11:50are getting extended out a little bit. You're saying that a lot of things are up in the air
11:56if there is an economic downturn. And even with this tariff pause, as of now, economists have not
12:03put a recession off the table. They still have recession fears. They're not as elevated, but
12:09they're still high up there. And the tariff rate as we have it now with this pause still is higher than
12:15tariffs were before the great depression. So was there anything you're specifically looking out for
12:20between now and when the tariff pause expires in 90 days?
12:24Anything I'm looking for is if we actually get some deals announced between the United States
12:31and these other countries. Um, you know, China might be a whole separate issue. Um, that's
12:34obviously very important, but let's put them aside for a minute. Um, if the United States is able to
12:39come to an agreement with Vietnam to keep those tariffs down, you know, India to keep those tariffs
12:44down, South Korea to keep those tariffs down. I think those are the things I'm going to be watching.
12:48You know, I'm, I'm old enough to remember the 30 day pause on tariffs, uh, on Canada and Mexico
12:54that were announced early in this administration. And what happened? Lone ball, 30 days went by and
12:58then the tariffs went into effect. So there was no deal really between Mexico and the United States
13:03orbiting Canada. So again, that's what I'm going to be watching for. Is Trump actually able to make
13:10these deals? Are these other countries actually able to make these deals or are we looking at a much,
13:14much higher tariff baseline for the economy going forward for years? There's certainly a lot of
13:20uncertainty and that's certainly a lot of deals to be made between dozens of nations in 90 days.
13:27Now we are even less than 90 days. So certainly a lot to look out for between now and then Kyle
13:32Conn Mullins. I'm sure you will be reporting on it all. Thank you so much for joining me.
13:37Thank you. Always great to be here.