Ana Swanson
Appearances
The Daily
A Conversation With the Architect of Trump's New Trade War
That's right. And this time, he is even more empowered to totally transform America's trade relationships.
The Daily
A Conversation With the Architect of Trump's New Trade War
So Peter Navarro believes that tariffs are a very important tool to balance out America's trading relationships. That, as we talked about, countries like China have been cheating international rules by making products more cheaply than they should and stealing intellectual property. Mm-hmm. And basically, they're putting out goods that American businesses just can't compete with.
The Daily
A Conversation With the Architect of Trump's New Trade War
And so American businesses need kind of a shield from those products. And that shield is tariffs. How exactly is it a shield? Well, a tariff is a charge on a good when it comes over the border. So if companies are making their products outside the United States and they want to sell them inside the United States, they pay that extra fee.
The Daily
A Conversation With the Architect of Trump's New Trade War
So the thinking is tariffs will incentivize companies to make their products inside the United States so they don't have to pay that fee.
The Daily
A Conversation With the Architect of Trump's New Trade War
So I asked him about that, and he was pretty clear about his position.
The Daily
A Conversation With the Architect of Trump's New Trade War
He said that tariffs will not hurt consumers. So I did want to push back on some of the economics of tariffs and also get your response. So, you know, first, there were quite a few studies that showed that American consumers did bear the brunt of the China tariffs that much of that cost was passed through. But then secondly, even more basically, I mean, stay with that.
The Daily
A Conversation With the Architect of Trump's New Trade War
you know, a lot of very prominent economists, New York Fed, but other academic economists as well.
The Daily
A Conversation With the Architect of Trump's New Trade War
So recently I went to see him again with two colleagues from The Daily.
The Daily
A Conversation With the Architect of Trump's New Trade War
And you feel that the American people are on your side with that assessment that economists don't know what they're talking about?
The Daily
A Conversation With the Architect of Trump's New Trade War
We met him at the Eisenhower Executive Office building, which is just west of the White House. And we sat down with him in his office to understand how he came to have these ideas about trade and tariffs.
The Daily
A Conversation With the Architect of Trump's New Trade War
Setting economists and think tanks aside, I mean, even sort of common sense, right? So tariffs work by raising the price of foreign goods. And when the price of foreign goods go up, you know, that is what encourages people to buy domestic goods. I mean, isn't that the way that tariffs work?
The Daily
A Conversation With the Architect of Trump's New Trade War
I asked him this question a couple of times. Aren't tariffs supposed to increase prices? Because that's how tariffs work. They make the foreign good more expensive so people buy American goods instead. But Navarro didn't really give me a direct answer.
The Daily
A Conversation With the Architect of Trump's New Trade War
So your assumption is that they would lower their prices?
The Daily
A Conversation With the Architect of Trump's New Trade War
Instead, he talked about how Chinese companies would absorb some of the cost of the tariffs to keep prices low. Your goal is to help U.S. factories. But a lot of U.S. factories do buy components and parts from abroad. And, you know, I've talked to a lot of manufacturers who say that would raise their costs. It would make them harder, you know, harder for them to make things.
The Daily
A Conversation With the Architect of Trump's New Trade War
Does that kind of backfire on your agenda?
The Daily
A Conversation With the Architect of Trump's New Trade War
I also asked him about U.S. manufacturers who are buying parts from abroad and whether tariffs would hurt their business. And he didn't seem all that concerned with what I've been hearing from some American manufacturers. He just kept coming back to the idea that ultimately tariffs will incentivize both American and foreign companies to build factories in the U.S.,
The Daily
A Conversation With the Architect of Trump's New Trade War
Which he believes will then lead to higher wages for Americans.
The Daily
A Conversation With the Architect of Trump's New Trade War
And he said these tariffs aren't happening in a vacuum.
The Daily
A Conversation With the Architect of Trump's New Trade War
And now that he's in the role that he's in, what his ideas could mean for the country. So, Dr. Navarro, you are synonymous with Donald Trump and his agenda. But not all that long ago, you were a Democrat. So tell us that story. Where does that story start?
The Daily
A Conversation With the Architect of Trump's New Trade War
He argues that if the Trump administration is able to get the price of oil down, if Elon Musk and his team are able to cut government waste and red tape, and if Trump keeps taxes low, all of these moves together would reduce inflation and help the U.S. economy.
The Daily
A Conversation With the Architect of Trump's New Trade War
But what Navarro said is the most important part of all of this, why he's so focused on tariffs and bringing manufacturing back to the United States, is that it all comes back to national security.
The Daily
A Conversation With the Architect of Trump's New Trade War
I don't think that he believes in those negative consequences, no. He doesn't believe in what most experts are saying, which is that all of these tariffs could end up really hurting Americans.
The Daily
A Conversation With the Architect of Trump's New Trade War
You know, he and the president are embarking on imposing tariffs at just a vastly bigger scale than we've seen in this country in many decades. And so it is kind of like a grand experiment really to see if they're right about how tariffs will play out for the American economy.
The Daily
A Conversation With the Architect of Trump's New Trade War
So when you started talking, what did you learn? So he talked about being raised by a single mom, how he was a latchkey kid. He also loved school, and he did well, and he goes on to Tufts University. And after he graduated in the 1970s, he's thinking he wants to see what the world is like and travel a little bit.
The Daily
A Conversation With the Architect of Trump's New Trade War
And then one day, kind of randomly, he's walking around the Berkeley campus and this guy asks him, hey, want to go to Thailand?
The Daily
A Conversation With the Architect of Trump's New Trade War
And that guy happened to be recruiting for the Peace Corps.
The Daily
A Conversation With the Architect of Trump's New Trade War
Yeah, he says he wanted to learn about different cultures and got to travel a lot around Asia.
The Daily
A Conversation With the Architect of Trump's New Trade War
And when he came back, he ended up at Harvard studying government and economics in the 80s. He finished his Ph.D., he moves out to Southern California, and he starts teaching economics and public policy at UC Irvine. And then he decides to run for mayor of San Diego.
The Daily
A Conversation With the Architect of Trump's New Trade War
He loses that election, and over the next several years, a couple of huge economic policy shifts happen that really shape his thinking. First, in 1994, comes NAFTA, the North American Free Trade Agreement. And this is a really important moment for the U.S. economy because this was the first time that the U.S. was engaging in a free trade agreement with a developing country, Mexico.
The Daily
A Conversation With the Architect of Trump's New Trade War
And then in 2001, China enters the World Trade Organization, this other big moment in trade that really shifts the politics of trade in America.
The Daily
A Conversation With the Architect of Trump's New Trade War
That's right. And it's after these big policy shifts when Navarro starts to see something happening with his students that bothers him.
The Daily
A Conversation With the Architect of Trump's New Trade War
He's trying to figure out what's going on, and he lands on something that he calls the China price. And what's that? So he's observing this strange ability for Chinese firms to offer prices that are so much lower than other competitors. And he's saying that is starting to put U.S. manufacturers out of business. So he does a study to try to understand just how they're getting their prices so low.
The Daily
A Conversation With the Architect of Trump's New Trade War
So one way companies could get their prices low is by paying their workers lower wages. But Navarro finds that China is doing a lot more than that.
The Daily
A Conversation With the Architect of Trump's New Trade War
And he's so troubled by this that he ends up writing three books on China. The first was called The Coming China Wars. It just got skewered in the financial times.
The Daily
A Conversation With the Architect of Trump's New Trade War
He's right that a lot of people agree now that the Chinese government was not playing by international trade rules. But even if they were, I think the entry of basically a billion people into the global economy would have been a huge shock either way. And it ends up being kind of complicated in terms of who benefited and who lost. Okay, so let's talk about that.
The Daily
A Conversation With the Architect of Trump's New Trade War
Tell me what some of the benefits are first. So the first benefit is that you do have a lot of Chinese people lifted out of poverty. So hundreds of millions of Chinese people who are moving out of poverty into the middle class. And then you have basically the American standard of living today created. How many people do you know who love Costco, who love to buy inexpensive things off of Amazon?
The Daily
A Conversation With the Architect of Trump's New Trade War
A lot of that is made possible by this China price, by Chinese factories making cheap goods. But there were definitely a lot of downsides as well. So you have a lot of US factories going out of business because they can no longer compete with the cheap prices that Chinese firms are offering. And you have millions of US manufacturing jobs that were destroyed.
The Daily
A Conversation With the Architect of Trump's New Trade War
in that process, economists have found. And I don't think they anticipated just how hard the people on the losing end would be hit. There was this assumption that people who lost their jobs to trade could be helped to move to find other jobs or go through retraining programs that would give them even better jobs in this new economy.
The Daily
A Conversation With the Architect of Trump's New Trade War
And they didn't anticipate, I think, that this transition was a lot more disruptive and painful. And the pain was really localized and vivid and sharp, particularly in the industrial Northeast and Midwest, where people now are really hurting because they don't have factory employment anymore. And economists have found that then other problems follow, like drug addiction.
The Daily
A Conversation With the Architect of Trump's New Trade War
And these are all things that Peter Navarro was focused on, too, actually.
The Daily
A Conversation With the Architect of Trump's New Trade War
So Trump at this point has been complaining about China and its trade practices for a really long time.
The Daily
A Conversation With the Architect of Trump's New Trade War
At one point, Trump is asked by the L.A. Times, what are some of your favorite books on China?
The Daily
A Conversation With the Architect of Trump's New Trade War
And he mentions one of Peter Navarro's books. So they start corresponding and... One thing led to another. Ultimately, then candidate Trump decides to bring Navarro on to his campaign.
The Daily
A Conversation With the Architect of Trump's New Trade War
Trump wins the presidency, and Navarro is given a job in the administration working on trade policy. But he's still kind of an outsider. There are a lot of other more influential advisors in the administration at that point who are opposed to the idea of imposing broad tariffs. on foreign products.
The Daily
A Conversation With the Architect of Trump's New Trade War
And so you come to a point where, you know, most of the other advisors are saying to president Trump, we can't do that. You know, we shouldn't impose tariffs.
The Daily
A Conversation With the Architect of Trump's New Trade War
And Navarro prevails. And he helps to draft tariffs on China and on steel and aluminum from countries around the world.
The Daily
A Conversation With the Architect of Trump's New Trade War
So they had really changed the American terms of trade with the rest of the world. They had imposed a lot of tariffs on things like metals and washing machines and over $300 billion of products coming in from China. And they had also signed a trade deal with China and reworked the North American Free Trade Agreement into a new deal. Wow. But then there's an interesting wrinkle to the story.
The Daily
A Conversation With the Architect of Trump's New Trade War
So Trump's orbit has changed a lot through the whole first term. New advisers have come in. They get fired. You know, people are in and out very quickly. But Peter Navarro, even though he's sometimes sidelined, is there the whole time. Yes. And when the January 6th hearing comes, Navarro is called to testify, and he shows his loyalty to Trump by refusing to hand over his notes.
The Daily
A Conversation With the Architect of Trump's New Trade War
And then he is sent to prison for four months for failing to honor the subpoena.
The Daily
A Conversation With the Architect of Trump's New Trade War
Right. So I met Peter Navarro when I was covering trade policy in Trump's first term. And he's an interesting person because he had a very unusual journey to the White House. And he had views about trade in China that were considered pretty unconventional and unpopular. But over time, these views have become one of the driving forces of Trump's trade policy. Exactly.
The Daily
A Conversation With the Architect of Trump's New Trade War
And he gets out of prison on the day of the Republican National Convention, and he flies directly from prison to the RNC to give a speech.