Oren Cass
Appearances
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
It's only when you're talking about policies that are not their ideological preference that they suddenly sort of zoom in and are focused very heavily on the immediate short-run transition costs. And so I certainly acknowledge there are short run costs, but I think they're worth it not only to your point about the other things beyond GDP that we might accomplish.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
I think they're also worth it because they point in the direction of a much stronger and healthier economy in the long run. And so I think we're asking sort of looking across the next generation or two. What trajectory is the right one for the American economy?
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
I absolutely think that we will be much better off if we make a commitment to reindustrialization rather than saying, you know, well, according to the economic model, we should just be happy with everything being produced in China because it's more efficient there and we get cheaper stuff.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
Well, so I certainly appreciate your point about the but-for case, and I think you're absolutely right. What I find so funny is that when you say, hey, globalization has had a lot of costs, all of the biggest pro-globalization fans will just post a chart of GDP going up and say, well, you see GDP went up, so obviously globalization was great.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
I think it's important to sort of offer the corrective that if you actually look at performance during this era, it has been weaker, not stronger. You're absolutely right that the U.S. economy has been performing well relative to a lot of other developed economies. And I think that's a function of a few things.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
One is there are a lot of other things that, for all of America's challenges, we still get right. And whether that is in the flexibility of our economy, the way that we do embrace innovation in a lot of areas, what is generally a lighter regulatory environment. You know, those are all great things.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
At the same time, and this kind of goes back to that question about the business cycle, I think if we sort of step back and look at the indicators of social well-being and how the kind of typical working family is doing, yeah, they do have more stuff. I don't question that. But I think there is a lot of very well-placed frustration with the bargain that was struck with globalization.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
I do. I would split it into two pieces, though, which I think also is helpful in understanding a lot of the policy in your discussion, which is there's sort of the China out step and then the into the U.S. step. Because to the extent that what we're concerned about is kind of the over-dependence on China... you know, we can just impose tariffs on China and try to push supply chains anywhere else.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
Say we're happy to get it from India or Mexico or, you know, other countries we expect to be allied with as long as it's not China. And I think that's actually a really important thing to do, the sort of decoupling side of things. And that's where particularly high tariffs on China are valuable. The other question is, what do we actually want to have made in the United States?
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
And that's where, as you framed the question exactly right, some of that is just the basic manufacturing case for all the other reasons we just discussed. But one piece I would add to it on the national security side is I think it's really important to recognize that you can't maintain a strong defense industrial base independent of a strong industrial base. We've essentially tried to do that.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
We've said we still need to be able to make our own aircraft carriers and submarines and fighter jets and so forth. But the other stuff, it doesn't matter because it's not, quote, national security.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
And what we've seen is that's not a stable equilibrium, that you can't believe that you're going to just be able to remain good at that sort of very high-end end of the supply chain stuff if you let all the basics go away.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
So obviously I'm a very strong supporter of industrial policy. I think where we identify something in particular that is absolutely critical, like, you know, advanced semiconductors, industrial policy absolutely makes sense.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
I think the problem is that when you're talking about a strong industrial base broadly, there isn't some narrow set of most important things that that's all you have to worry about, right? If you actually want to be an industrial power, you You need, first of all, the actual materials themselves. You need to know how to make the tools that make the materials, right?
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
Things like machine tooling, the actual excellence in engineering that's going to lead to efficient production, and so on and so forth. And so, you know, it's funny, I was just doing a discussion with Congressman Ro Khanna, who was making this exact point that we should have very narrow targeted tariffs in
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
and be using industrial policy to support the kinds of factories we want because otherwise we don't have a plan for the factories.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
And I sort of smiled because I think this actually gets at an interesting left-right divide where the left of center tends to have much more confidence that, yes, we can figure out all the things we need and design a sort of broad range of industrial policies to support each of them.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
You know, I always emphasize that I actually see tariffs as the much more free market position because, yes, they are a significant intervention into the market, but they are a relatively simple, broad, and blunt one. And once you've inserted that rule, once you've changed the constraints such that domestic production is relatively more attractive—
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
you then are able to leave more to the market to figure out, okay, under these conditions, what else do we want to produce here and how do we do that effectively?
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
And so I'd much rather see us pick a few things that we know really matter for industrial policy and then support that with a broad tariff policy that creates the conditions, generally speaking, to promote reindustrialization rather than look to Congress again every time we realize there's another, you know, product that we need.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
So I guess the first thing I'd say is I think tariffs can be a significant revenue raiser. It's just important to be clear on what your vision for the tariff is. So if you're proposing a tariff as a negotiating tool and you're saying, we hope we can take this away when the country behaves the way we want, obviously you shouldn't count that as long-term revenue.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
When you're talking about an actual permanent tariff, let's take something like the kind of 10% global tariff that Trump seems to want to have as a permanent tariff. That, I think, is a significant revenue raiser. And it's worth keeping in mind that it will be for the long run because the equilibrium you're headed toward is not one where we shut off trade.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
Well, I think you described where we were in the business cycle quite well, but I think it's really important to distinguish the business cycle from the long run sort of secular trajectory of the economy. I've used the metaphor of bumps on a downward slope.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
It's one in which there's more friction in trade so that there's a preference for domestic manufacturing. But at the same time, you're still likely to have quite high levels of trade with a 10% tariff. The goal of permanent tariffs is not to achieve autarky and shut off trade.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
So I do think we should celebrate the role that they can play in raising revenue and also recognize how that therefore reduces the cost of the approach. Because I think one thing that really frustrates me when folks talk about, you know, all of the costs associated with tariffs is they tend to sort of assume we're collecting all this money and just sort of setting it on fire. I mean, the U.S.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
Fair enough. It could be spent very poorly. But, you know, if you think sort of, okay, by default— Hypothetically, yeah. Well, look, by default, if we collect all this revenue and all that means is that deficits are lower, that has substantial upside. And you were just elaborating some of that.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
The flip side, as you just mentioned, is that some of these tariffs, certainly that Trump is using, do seem intended to be used for negotiation, with the goal not being that they are permanent, but the goal being that they bring countries to the table to reach other arrangements.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
And there, you know, I think the most constructive agreements we're likely to reach are around pushing toward balanced trade and around pushing toward getting China out of our markets. I think we can make a lot of progress there. I don't think we're going to sort of solve our deficit problems through those negotiations.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
And I say, you know, if you're sledding down the hill, you can even go over a really big bump and go soaring through the air and, you know, scream, wee! And then you do still land even further down afterward. And I think what we've really seen in the U.S. economy for going on 50 years now is exactly that dynamic.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
Yeah, I think that's a quite good summary of my general views on this. I think the tools that the administration is using here are the right tools that can do a lot of good. The question is sort of how do you use them?
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
And I have a few concerns, quite serious concerns, with what the administration has done, again, at least in this first few days after the announcement, where I think one real issue is with phase-in. I think, you know, it is important to be credible that you are, in fact, doing these things.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
But snapping them all in immediately imposes all the costs up front long before it's plausible to expect anybody to have actually adjusted. So if you think reasonably it's going to take a couple of years to actually—even if everyone starts moving today—
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
to actually be bringing new capacity online domestically, to be moving supply chains and so on and so forth, you want everyone to firmly believe that the tariffs will be in place by then. And so they'd better start moving immediately. Yes. So I think phase-ins are very important and something that we don't have right now. The other one on the flip side is just the predictability and the certainty.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
I think, you know, you need much clearer guidance on, okay, what if this is going to be permanent versus not? and a real sense of where we're going. What is the ultimate end goal that we want people planning around?
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
Is it, you know, my hope, the way I've articulated a goal that I think is consistent with what folks in the Trump administration have said, is we want to have a large U.S.-centered economic and security alliance. You know, obviously Mexico and Canada, obviously other core allies. We want to have very low tariffs within that group. But unlike in the past, we have some conditions or some demands.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
We want to see balanced trade within that group so that we reshore and reindustrialize significantly in this country. And we want to see a common commitment among all these countries to decoupling from China.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
And I think if we communicated that clearly, we said that's where we're going toward, here's what's going to be permanent, and we're phasing in in that direction, then there would be costs, absolutely. But the costs would be much lower and more manageable, and you would induce much more of what you want.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
You would get more of the kinds of investments that you're trying to create the incentives for. So, you know, look, these are all things that the Trump administration could still be moving toward. But it's really important to actually get there, I think, if we're going to achieve the kinds of things that we're talking about.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
Obviously not in terms of, you know, overall GDP or economists' favorite measures of wealth and material living standards. But when we're looking at the actual well-being and flourishing of the typical working family, their ability to achieve middle-class security, the sort of various social measures that I think are fairly tied to economic opportunity and outcomes, we've seen real decay.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
Well, I think there are a couple of problems here.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
I don't think that the idea of these tariffs proportional to the size of deficits is daft. I think you're right that the idea of an end state where we have perfectly balanced trade with every partner is daft. That's not what we need to be pushing toward.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
But to me, anyway, what the Trump administration was is pushing toward with these reciprocal tariffs was something quite obvious that I wrote about a couple of months ago. And, you know, look, maybe the word reciprocal is too confusing and they should have called them proportional tariffs. But but possibly wouldn't wouldn't that have been a good idea?
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
That seems like it would have been a good idea. Just putting that out there. But the thing about the reciprocal tariff is that if your goal is just, look, we want your tariff down and our tariff down, then kind of holding up a mirror to other countries might make sense. As the Trump administration has made clear, it is deficits they are concerned about.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
So that basic reciprocal tit-for-tat model was never actually going to be responsive to what they were describing. or concerned about. If what they're concerned about is the trade deficits, particularly with our very large trading partners, then creating tariffs that are proportional to the size of those deficits is a good starting point.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
And you're right that in a healthy, balanced economy, we could have surpluses with some and deficits with others. But the reality is that that is not our system. We essentially have large deficits with all of them, which should be a red flag that there are real imbalances in the system that are not what the economists envision and are not healthy.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
Thank you. Thank you. Thank you for watching. Thank you. Thank you.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
And I think that helps to explain why somebody like Donald Trump has become as successful politically as he has. And it's a problem that has been decades in the making and is going to take a long time to turn around and recover from.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
But I think it would be a terrible mistake every time we're at the top of a business cycle to say, well, unemployment is below 4%, therefore the problem is solved, where unemployment has been there at the top of every business cycle throughout this period. And that hasn't changed the picture of the broader challenges that we have.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
Thank you. Thank you. Thank you for watching. Thank you. Thank you.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
Thank you. Thank you for watching.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
Yeah, I think there's a few things they're missing. One is when you're looking at these household income numbers, it's important to notice, for instance, the extent to which they rely upon the household having two earners, the extent to which they actually find themselves more reliant on government programs than they would have in the past.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
And also, I think just the factor of rising inequality, which conservatives have traditionally poo-pooed, certainly in the last 40 years. As long as you have more stuff than you did 40 years ago, you're not supposed to have any right to complain about the broader shape of the society.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
But I do think we've seen a very clear divergence in the fortunes of the typical worker who still does not have a college degree and the upper middle class
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
And so, you know, one thing that we look at at American Compass that frustrates economists because it's not the standard inflation measure but that resonates with a lot of people because it speaks to the reality of their lives is that if you actually look at the cost of attaining the sort of basics of middle-class security, you know, health insurance, housing, transportation,
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
being able to pay to send your kids to public university, basic basket of food. It has become much harder for the typical worker to afford that, you know, certainly on one income.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
And so I think what we have is a problem where, you know, particularly for the right of center that has sold this idea that a rising tide lifts all ships, embrace our model, and, you know, we all march forward together into the brave new future. What people are seeing instead is that some people got to march ahead into the brave new future, and a lot of folks did not.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
I mean, and for particular groups, you know, maybe this is somewhat narrow, but I think it's really important to look at something like young men, if you want to know how your society is doing.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
And even very kind of optimistic groups like at American Enterprise Institute, you know, their research shows that young men ages 25 to 29 really are earning the same or less than they would have been 50 years ago. And so I think it's hard to kind of sell that as a successful economy or one that's likely to produce a flourishing society.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
What does trade have to do with it? I guess if you'll give me a bit of patience, I realize to answer that I have to highlight one other element of what's gone wrong in the economy. We were talking about the sort of very broad statistics. I think something else that has gone wrong is the deindustrialization of the economy.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
You know, what we have seen really going back even into the 90s after NAFTA, but certainly after welcoming China to the World Trade Organization, is a real hollowing out of the manufacturing sector. The loss of manufacturing has been a serious problem. And so trade is at the heart of that.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
And figuring out how to make it relatively more attractive to make things here in America is therefore becoming a really big and correct focus for policymakers.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
I think that's approximately right descriptively with the caveat that a flatlining in the manufacturing sector in what is otherwise a growing economy domestically, globally, is in effect a form of collapse that weakens the American ability to essentially keep up in all sorts of vital areas. And as a result, as you just said, leads to a real loss of opportunity for people.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
Well, I think it's important to say that there's nothing especially valuable sort of in the abstract about a manufacturing job. That being said, in practice there are things that are notable about the manufacturing sector and manufacturing jobs. One thing that's very good about manufacturing jobs is sort of where they tend to be located. If we want a sort of
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
broad prosperity with diffusion across the country, it's important to have strength in a variety of sectors that are going to make sense to be in different places, not just knowledge work that's going to agglomerate in a few big cities. And so it happens that based on, you know, logistics, access to natural resources, the need for a lot of space, the need in a
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
You're a lot more likely to see manufacturing in a lot of the areas that do not have finance and technology and media and so forth. And so they provide an incredibly valuable diversification in that respect. A second thing that's really nice about them is the kinds of people who tend to work in them and excel in them.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
For one thing, again, I would say there's nothing inherently important about a manufacturing job. It is nice to have a pluralism in our economy where people who prefer to be making things and doing that kind of work have good opportunities, too. On top of which, it's the case that if you want to have good, highly productive jobs that pay a good wage—
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
Just empirically, what you see is that those opportunities exist, especially for people with less levels of formal education in the manufacturing sector.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
Thank you. It is indeed a pleasure to be living in interesting times.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
So while it's true that the average manufacturing job doesn't pay more than the average services job, if you zoom in on one type of worker, let's say without a college degree, what are the comparable service jobs they would otherwise have, the manufacturing jobs do tend to be better.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
I think, generally speaking, the answer is yes. And one good place we have to look to understand what this sort of highly advanced manufacturing would look like is what's starting to happen with the CHIPS Act and where you see the sort of high-end chip makers locating and who they're hiring.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
And so if you look at TSMC locating outside of Phoenix, Intel locating in the middle of Ohio, Micron focusing on upstate New York, Obviously, those aren't sort of rural agricultural places necessarily, but they're the kinds of places that otherwise have not been the beneficiaries of a lot of the other kinds of growth we've seen in recent decades.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
And if you look at who they're hiring and how you're doing it, what you see is, you know, yes, there is some kind of very high skilled employment, very sophisticated employees. And I think it's also a good thing to bring more people with those types of skills to those communities. But then on top of that, you're seeing a lot of what gets typically called mid-skill jobs.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
You're seeing the companies partner with community colleges to equip people with the kind of training they need to be the technicians, let's say, in jobs. in these factories. You see a lot of partnerships with labor unions. You're seeing the same thing from the big tech companies as they need to build out data centers.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
Suddenly they're very interested in electricians and figuring out how to work well with labor unions. So I think that's all to the good I think the caveat that's fair but also unfair is to then focus on the specific example of, okay, you know, let's talk about the person who has been so harmed by deindustrialization, people in these left-behind communities who are out of the workforce entirely.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
Are those the particular people who are going to be able to take these jobs? In some case, the answer is probably yes. In some case, the answer is probably no. And I think we, therefore, have certainly a lot of other work to do to think about how to engage those folks. But what having this will do is make sure that the next generation has a lot more opportunity than this past one did.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
And so the fact that it doesn't necessarily resolve every problem we have today, I think, is certainly not an argument against building in this direction going forward.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
Well, so first of all, yes, I think that is a trade-off we should be willing to make. But I think when you're asking, you know, what is the effect here, I would really separate the short run from the long run. You know, there are absolutely short-run costs associated with this sort of transition.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
The funny thing, of course, is that when we were talking about short-run costs of globalization, economists just waved them away and said— oh, don't worry, let us tell you about our long-run equilibrium model that says someday this will be for the best.
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Just Another Orange Monday
Sure. So I think the problem with the free trade consensus was that free trade in the real world was not operating the way that everybody seemed to think it would on the economics blackboard. I think actual trade between countries where we specialize in different things and we sell things to them and they sell things to us, that's
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What we have in the globalized economy, especially after embracing China, which is a non-market, authoritarian, communist, state-controlled economy, bears no resemblance to that.
Pod Save America
Just Another Orange Monday
We have trading partners that pursue active policies to shift manufacturing out of our country to them, not so that they can sell to us and buy something else from us, but so that they can sell to us and not buy anything from us. And that sort of strike one is the way that that hollows out our manufacturing sector.
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Just Another Orange Monday
And then strike two is that it's not that we get the stuff for free, instead they take back our assets. So they take ownership in our corporations, our real estate, they take our debt, which is just pieces of paper saying, we'll pay you for this stuff some other day. And so we simultaneously hollow out an important sector of our economy. basically mortgage our future.
Pod Save America
Just Another Orange Monday
And that's not a model that I think has been working very well at all.
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Just Another Orange Monday
Yeah, I think that's very well put the way you've sort of separated that out. And so I would say China is its own problem. And regardless of what we do elsewhere, I think decoupling our economy from China is what I call is, I think decoupling sounds too nice. I would say really a quite hard break with China, recognizing that Free trade with China does not promote a free market.
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It distorts our free market. That's kind of bucket one. I think when you get beyond that into our trade with the rest of the world, I think you're right. A trade surplus or a trade deficit with any one country is not necessarily a problem at all. In fact, you would expect those to emerge naturally. The problem is that we have large systemic trade deficits with virtually all of our trading partners.
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And that is, to a large extent, a function of policy. To some extent, it's a function of our policy. Running huge budget deficits here does not help, and we should do something about that too. But when you see countries like Japan, Korea, Germany that are explicitly pursuing an economic model that calls for them to be doing large amounts of exporting,
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to pursue growth, and they're adopting policies to achieve that, we shouldn't then scratch our heads and say, gee, I wonder why the thing they said they wanted to do and made policy to do is therefore happening. And so I do think it's fair to say, yes, in a healthy free trading system, you'd have surpluses and deficits.
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But what we have is a much more systemic imbalance where essentially most of the rest of the world is all expecting to do more producing, and then we do the consuming on credit.
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I think it's actually useful to start from the other end and think about what the actual goal is. What is the end state we want to get to? Because frankly, a lot of what is going on here is at that, it sounds grandiose, but grand strategy level where the US has been pursuing what gets called liberal world order for a long time. We want to advance markets everywhere.
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When we were welcoming China, part of the theory was this was going to liberalize them, democratize them. Obviously, we make a lot of defense commitments around the world. And the idea was that, yes, we would absorb a lot of excess production from other parts of the world. We would subsidize a lot of defense costs. But ultimately, as the hegemon, we benefited from that.
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Just Another Orange Monday
We could have a longer discussion about how much that was ever true, but I think what certainly folks in the Trump administration would say today is that we no longer benefit from it. Part of the problem is that we are moving into a multipolar world. We can't be the hegemon even if we want to be. Secretary Rubio has talked a lot about how China is going to put aside trade.
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China is going to assert its own influences in the world and is going to have its own sphere. And then in the economic context, we are obviously not in the position we were in in the post-World War II years as the dominant industrial power. We frankly have a lot of problems in our own economy.
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And so I think what the goal is, is to say this sort of liberal world order needs to be replaced for the US's purposes with more of a US-centered policy. ideally economic and security block. Now, we want to have high levels of free trade with allies in that block, but we would like to see overall trade within that block balanced.
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So we are on overall both buying and selling in relatively equal measure, just as you don't worry about your deficit with the hot dog stand, but you do need to earn enough money from someone else to buy the hot dog, right? You can't just take out credit cards to buy the hot dogs. And for that to work, we're also going to then need everybody to agree to keep China out.
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We can't keep China out, but have Mexico welcome them in and then have free trade with Mexico. And so I think if that's the goal, big block, balanced trade, China out, how do you get from here to there? I think tariffs play an important role in that potentially, and that's what you see the Trump administration trying to move toward.
Pod Save America
Just Another Orange Monday
Well, I would say two things about that. One, I agree with you to the extent that I think sort of how we treat our allies matters and we should be engaging with them constructively. And there is definitely room for improvement on that front. That being said, I do both think that that reporting, I think, was rather overblown.
Pod Save America
Just Another Orange Monday
And even in just the last few hours here on a Monday afternoon, we've both seen China announce It is potentially planning retaliatory tariffs leading to more retaliatory tariffs from the US while Japan has announced, or I think it was Secretary Besant just announced, he's delighted that Japan has come forward to proceed with a constructive negotiation.
Pod Save America
Just Another Orange Monday
So in fact, I don't think it's the case that countries like Japan and Korea are thinking about siding with China. I do think it's the case that we owe our allies very clear explanation of where we are trying to go, what our expectations are, and that we give them a fair opportunity to work that out.
Pod Save America
Just Another Orange Monday
Well, I guess I don't worry about that broader dynamic that you just described. I mean, I've been writing about the need for the United States to start a trade war with China in particular and use tariffs for more than a decade now. It's certainly where I see that the free trade consensus went wrong and we need to take a different approach.
Pod Save America
Just Another Orange Monday
Even with something like these reciprocal tariffs, it was interesting. I wrote a piece, I guess it was back in February, looking at just what the Trump administration was saying and inferring, I don't think it was that hard to do, that clearly what they meant was not tit for tat. reciprocal tariffs based on tariff rates, what they meant was they were going to focus on trade balances.
Pod Save America
Just Another Orange Monday
They were going to try to induce those countries to change their policies. By the way, just to give a concrete example of what that looks like when it works, this is what Reagan did in 1981 with Japan, under threat of heavy tariffs from Congress. Reagan got the Japanese to self-impose a quota on exports of Japanese vehicles to the United States.
Pod Save America
Just Another Orange Monday
And the result was the Japanese auto industry in the US South. So I share many of your criticisms about the details of how this is being executed. But I think it is important to separate the question of sort of tactics from strategy in a sense and work on getting the tactics right.
Pod Save America
Just Another Orange Monday
And I think there are a lot of opportunities to get these tactics right and, in fact, achieve changes that are worth making.
Pod Save America
Just Another Orange Monday
What I would say is, and maybe even the term strategy sort of is two different things, because when I think about strategy, what I'm talking about is the way that we're defining and recognizing this as a problem at all. which is, I think, a really significant shift.
Pod Save America
Just Another Orange Monday
And that goes a little bit to your point about even before the current Trump administration starting to see a new consensus developing on that point, the fact that we are actually now recognizing that this model of hyperglobalization is a bad one and we need to change it, the fact that we're recognizing that manufacturing matters, that trade deficits matter,
Pod Save America
Just Another Orange Monday
and that we should do something about those things, I think that's really important and a positive step.
Pod Save America
Just Another Orange Monday
The fact that the tools we're talking about to do something about that, that we are talking about having a low stable global tariff, the fact that we are really talking about very high tariffs on China, we're taking seriously the idea of disentangling from them, and the idea that we're trying to actually get to more balanced trade
Pod Save America
Just Another Orange Monday
I think those are the right things we should be doing and the tools we should be using. So I don't think that it would be fair to say, well, look, I don't like the set of things he announced on Wednesday. I'm not even sure kind of what the punchline is. Therefore, forget about the whole thing.
Pod Save America
Just Another Orange Monday
I guess that strikes me as maybe a bit overdramatic. Just to give you a very concrete example, let's say we took essentially this policy that the administration is pursuing and we said it would make a lot more sense to phase tariffs in than snap them in on day one.
Pod Save America
Just Another Orange Monday
It takes a decade to do some things. I think we should be a little skeptical of people saying that it takes five to 10 years when we've seen that when businesses really... I mean, it did not take that long, for instance, to massively offshore... production to China, right? I mean, take a look at the drop in US manufacturing employment, and you will see how quickly these things can move.
Pod Save America
Just Another Orange Monday
And so I think we said, look, frankly, I think the 10% global tariff is something that you do sort of do. And among other things, that conveys that you really mean it, you're serious, and that this is going to start changing the equation. I think something like the tariffs with China Ideally, you do phase in.
Pod Save America
Just Another Orange Monday
By the way, there's very good bipartisan legislation in Congress right now to revoke permanent normal trade relations with China and go all the way up to 100% tariffs on strategic goods, but do it over five years. If you think about the 60% that Trump is talking about at that point, if you did that 20, 20, 20 over three years, I think that would be a fairly reasonable approach.
Pod Save America
Just Another Orange Monday
And I think when you then talk about these negotiations with specific countries, again, you make a very good point that we have obviously built up these relationships over a long period of time. If we're not happy with how they're behaving, we've certainly tolerated it for a long period of time.
Pod Save America
Just Another Orange Monday
I think if we say, look, this is what the consequence is going to be if we don't have a plan to fix this. Here is a period of time for having an initial negotiation and seeing if we have a way to fix this. If we can't agree, half of this goes into effect. A year from now, if you're just out on this project, then we do go up to the full level. I think that would be a reasonable way to proceed.
Pod Save America
Just Another Orange Monday
It's an interesting question. Obviously, this is a very significant question, do you snap it into place or do you phase it in? I think there is still a lot of room to take these ideas and say that there is actually a path forward here that accomplishes some really important things. Last question.
Pod Save America
Just Another Orange Monday
Well, we just talked about a piece of it, which is phasing things in. I think the phasing makes an enormous difference in minimizing the cost because basically what you're saying is you want the costs that you're imposing are intended to be an incentive. You want those to come into play as quickly as it is reasonable to expect people to change their behavior.
Pod Save America
Just Another Orange Monday
If you impose the cost faster than that, you get the cost, but you can't get any faster change in behavior. So I think phasing these things in is a huge potential piece of the puzzle on the front end. And then I think the flip side is just greater clarity and certainty. Well, greater, yeah.
Pod Save America
Just Another Orange Monday
Well, we know one demand, which is more balanced trade. And we know that they just prepared an enormous report documenting the unfair trade practices that countries are engaged in. So I think there's a start there. But I absolutely agree with you on both of those. And that's why I say these are the two things. One, the phasing in to reduce the costs.
Pod Save America
Just Another Orange Monday
And two, a much clearer description both of where we're trying to go and what we're asking people to do So that there is some certainty and some credibility of this is what the long run is going to look like. People can be reasonably expected to act accordingly.
Pod Save America
Just Another Orange Monday
And at the end of the day, the actual benefit we're trying to achieve is a different pattern of investment, getting people to invest more in the United States. And if you want them to do that, you have to give them the stability and certainty about what the long run is going to look like.
Pod Save America
Just Another Orange Monday
Well, again, that's a lot crasser than I would tend to be. I work on improving policy, and that's what I'm doing.
The Charlie Kirk Show
What the Trump's Tariffs Mean for You, Today and For The Future
Well, at the end of the day, I think tariffs are important because making things matters. I've found you have to start all the way back there because we've gone through 30 or 40 years where economists and policymakers said making things doesn't matter. We're going to have a free trade system where we are perfectly happy if all of our manufacturing jobs go to China.
The Charlie Kirk Show
What the Trump's Tariffs Mean for You, Today and For The Future
They'll make cheap stuff for us and we'll find something else to do. And what we've seen is that's a terrible model. It is terrible for working people who see good jobs leave and not so good jobs replace them. It's terrible for the economy. We've seen less innovation, lower growth. And it's certainly terrible for our national security.
The Charlie Kirk Show
What the Trump's Tariffs Mean for You, Today and For The Future
If you can't make stuff, you know, you can't defend the country with bowling alleys. And so the entire argument for free trade and just saying you don't care where things get made, if that's not right, then in fact, you probably do need some sort of tariff. You need a finger on the scale that says all things equal, we would rather things be made here.
The Charlie Kirk Show
What the Trump's Tariffs Mean for You, Today and For The Future
And by having a tariff, you change prices a little bit so that people deciding where to build, where to make things will think harder about doing them here in America.
The Charlie Kirk Show
What the Trump's Tariffs Mean for You, Today and For The Future
Well, tariffs are a tax, but at the end of the day, you have to raise revenue from somewhere. So if you have more revenue coming in from a tariff, you can also reduce some other tax instead. You can also reduce our entire, you know, our enormous deficit if you want to. So I don't think we should choose, yes, we do want a tariff or no, we don't based on the fact that it's a tax.
The Charlie Kirk Show
What the Trump's Tariffs Mean for You, Today and For The Future
We should think about the goal that we have. And if the goal that we have is to encourage people to find ways to make things here and then we do want that to show up in prices. And what we've seen historically is that when you actually do this, the result is that people do come make stuff here. And once people invest here, they can make it very efficiently. I mean, look at Japanese cars.
The Charlie Kirk Show
What the Trump's Tariffs Mean for You, Today and For The Future
They all used to be imported from Japan. It was the Reagan administration that basically forced Japan to send Honda and Toyota to come build cars in America instead. No one's walking around complaining that Toyotas and Hondas are too expensive. We're happy that we have them investing here and hundreds of thousands of jobs as a result.
The Charlie Kirk Show
What the Trump's Tariffs Mean for You, Today and For The Future
Well, I think it's important to notice that there are kind of three different tariffs that he's pursuing. One is China. And, you know, he has at this point come in and put very high tariffs on China. They're getting up toward 50 or 60 percent. He has also endorsed Trump.
The Charlie Kirk Show
What the Trump's Tariffs Mean for You, Today and For The Future
And this is a bipartisan position at this point that we should revoke what's called permanent normal trade relations, that we should sort of permanently say we don't We don't want free trade with China. China is an adversary. China is not a market economy. And so I would expect to see that trading relationship go downhill. And frankly, I think we should want it to go downhill.
The Charlie Kirk Show
What the Trump's Tariffs Mean for You, Today and For The Future
That doesn't concern me at all in terms of what the long-term strategy is. The second piece is the kind of global 10% tariff. And that's the piece that I think fits the view that I was describing at the beginning, that if we have a preference for making things in America, then we should want to have some sort of tariff that puts a finger on the scale.
The Charlie Kirk Show
What the Trump's Tariffs Mean for You, Today and For The Future
And if other countries want to do the same thing, I think we should say that's reasonable. Tariffs at that level will create some friction that I think we should want in the system that encourages domestic production. It's not going to ruin the global economy or whatever else.
The Charlie Kirk Show
What the Trump's Tariffs Mean for You, Today and For The Future
And then the third piece, which I think is the most complicated, is what they're calling these reciprocal tariffs, where they went country by country and looked at how big a trade deficit do we have with the country? How big is the imbalance? And the bigger that imbalance is, the bigger the tariff we're going to put on you.
The Charlie Kirk Show
What the Trump's Tariffs Mean for You, Today and For The Future
And I think my interpretation is that that is clearly what I would call a negotiating tariff. What they're saying is, look, if we can get trade back to balance, we would love to get rid of these tariffs. We would love to have no extra tariff on you and have balanced trade with you. What we're not going to tolerate anymore is this situation where we have highly imbalanced trade.
The Charlie Kirk Show
What the Trump's Tariffs Mean for You, Today and For The Future
And I think what you'll see and what will be in the best interests of other countries is they would much rather work that out and have balanced trade than have a trade war. That's better for them and it's better for us. is, look, we can have a big free trade zone of market democracies that all commit to balanced trade, that have very low tariffs, and that keep China out.
The Charlie Kirk Show
What the Trump's Tariffs Mean for You, Today and For The Future
And that would be a much better economy for the United States. And I think it would be a very good arrangement for our allies as well.
The Charlie Kirk Show
What the Trump's Tariffs Mean for You, Today and For The Future
Yeah, I think it's really interesting to look at how all the sort of what I call very serious people who spend their time pontificating about our politics, they usually say, oh, our democracy is broken. Politicians don't make hard choices. They won't accept costs or ask people to make sacrifices to pursue the common good. And here you have the Trump administration doing exactly that.
The Charlie Kirk Show
What the Trump's Tariffs Mean for You, Today and For The Future
They're acknowledging that there are costs to this, but they're saying it's worthwhile because we have very big challenges and it is going to take real effort to get out of them. And I think the last time we really did that was when Ronald Reagan came into office. We were in this period of what was called stagflation. Inflation was very high. Growth was very low.
The Charlie Kirk Show
What the Trump's Tariffs Mean for You, Today and For The Future
And what Reagan and the chair of the Federal Reserve, Paul Volcker, did was they shocked the economy. The interest rate went up to 20%, if you can imagine that. Unemployment went up to about 10%. The S&P 500 went down 40%. This was all early in Reagan's first term. And it actually took a long time to turn back around.
The Charlie Kirk Show
What the Trump's Tariffs Mean for You, Today and For The Future
By 1984, on Election Day in 1984, the market was lower than it had been on Election Day in 1980. unemployment was still above 7%, and Reagan won probably, I believe, the biggest reelection landslide since George Washington.
The Charlie Kirk Show
What the Trump's Tariffs Mean for You, Today and For The Future
I mean, if you explain to people what the problem is, what it's going to take to solve it, and then you actually do what you say you're going to do, and you can show that you're on the right track, I think that's what the American people want, and it's what we should want from our leaders.
The Charlie Kirk Show
What the Trump's Tariffs Mean for You, Today and For The Future
So I think the best resolution is that we get to balanced trade. And what that means is that trade is working the way it's supposed to, the way that we have sold it to workers all along, right? When you hear politicians or economists tell people we should have free trade, what do they say?
The Charlie Kirk Show
What the Trump's Tariffs Mean for You, Today and For The Future
We're going to have better opportunities for better American jobs, making more things for the rest of the world. We're going to specialize in the things we can make best. Other places will specialize in the things they can make best. That all sounds great. I would love for that to be the case. That's not what we got.
The Charlie Kirk Show
What the Trump's Tariffs Mean for You, Today and For The Future
Instead, we got a world where we stopped making things and those jobs and those factories moved to overseas. The rest of the world made stuff for us, but we didn't get to trade that for stuff that we made for the rest of the world. And that's not some weird fluke or magical effect. It's really because of policies that other countries choose. Policies
The Charlie Kirk Show
What the Trump's Tariffs Mean for You, Today and For The Future
that they are pursuing because they want to make things, they know that making things matters, and they want to sell them into the American market. And so what I'd like to see us do is use these tariffs, the reciprocal tariffs for negotiations, to make it very clear that that kind of arrangement that was not good for Americans is no longer an option.
The Charlie Kirk Show
What the Trump's Tariffs Mean for You, Today and For The Future
If countries try to pursue that, they are going to see real consequences. But there is another way that would be better for them, and it would be better for us, and it would look like them changing their policies.
The Charlie Kirk Show
What the Trump's Tariffs Mean for You, Today and For The Future
Instead of pursuing policies to try to take advantage of the U.S., to try to take the jobs into their countries, to grow by exporting into our country and not buying anything from us, what they should be doing is asking, what are the policies we can pursue that create balanced trade? Maybe that's like in the case of Japan. We're actually going to tell some of our companies and create policies that
The Charlie Kirk Show
What the Trump's Tariffs Mean for You, Today and For The Future
lead them to go invest more in America. Maybe it's going to be they pursue policies to buy a lot more from America. There's a lot they can do if we make it so that that's what they want to do. And I think that should be the goal.
The Charlie Kirk Show
What the Trump's Tariffs Mean for You, Today and For The Future
So my best estimate, and actually we looked at this kind of before you got the biggest COVID inflation, because that obviously threw things off in a lot of ways.
The Charlie Kirk Show
What the Trump's Tariffs Mean for You, Today and For The Future
But if you take the kind of core basics of middle-class security, which I would define as health insurance, housing, sort of, you know, typical average housing, transportation, operating a car, being able to pay for tuition at a public university in your state, and affording the food that your family needs.
The Charlie Kirk Show
What the Trump's Tariffs Mean for You, Today and For The Future
And if you ask how many weeks of work for the typical male worker does that take, in modern America now, it's well above 52. It's well above 60, in fact, which is a problem. They're obviously only being 52 weeks in a year. And it didn't used to be that way.
The Charlie Kirk Show
What the Trump's Tariffs Mean for You, Today and For The Future
If you go back and look at the 1980s, the sort of comparable package of stuff that you needed for middle-class security, you could buy with about 40 weeks of work.
The Charlie Kirk Show
What the Trump's Tariffs Mean for You, Today and For The Future
Well, I think for one thing, it's really important to focus on what I would call the supply side. So, you know, tariffs obviously created incentive to come in and build more here in the United States. We also do a lot more to then help people do that. And some of that is things like better tax policy. We need to deregulation. We also need a lot of workforce training.
The Charlie Kirk Show
What the Trump's Tariffs Mean for You, Today and For The Future
I think education is one of the most important places that we can be doing a lot better. Right now, we have a model that sort of just says, look, we're going to try to get you into college. And we hope that works for you, but that's pretty much all we do. And the reality is that that does not work for the vast majority of people.
The Charlie Kirk Show
What the Trump's Tariffs Mean for You, Today and For The Future
Either they don't go to college at all or they don't complete college, or even if they do, a large share can't find a job that's the kind of job that is typically for people with a college degree.
The Charlie Kirk Show
What the Trump's Tariffs Mean for You, Today and For The Future
And so I think what we need is to invest much more heavily in other pathways that actually connect people to jobs that help cover the cost of their training, that put them into community college programs that actually give them real skills. And obviously that's going to be very good for them.
The Charlie Kirk Show
What the Trump's Tariffs Mean for You, Today and For The Future
That's going to ensure that those younger workers are getting pretty quickly to a place where they feel like they can start a family. And it's going to be incredibly important for the employers, for these companies that we're asking, please come build here. I'm not sure we can do that and then just say, but all we have for you to hire are college dropouts and English majors.
The Charlie Kirk Show
What the Trump's Tariffs Mean for You, Today and For The Future
I think it will speed along this transition if we have the right program so that we make sure we're preparing workers to be productive in this kind of economy.
The Charlie Kirk Show
What the Trump's Tariffs Mean for You, Today and For The Future
Well, if you're talking about investments in the stock market, I think it's important to say that there is certainly a sort of adjustment going on here. I mean, everybody knows that globalization was very good for corporate profits. If the goal was to maximize corporate profits and telling companies they could you know, just shut down their American operations.
The Charlie Kirk Show
What the Trump's Tariffs Mean for You, Today and For The Future
They could stop dealing with American workers and they could just set up shop in China. There's no question that that drove a lot of profit and that drove a lot of appreciation in stock prices. And so if we're turning that around, if we're reversing that, we should expect that to have an effect on corporations.
The Charlie Kirk Show
What the Trump's Tariffs Mean for You, Today and For The Future
But just as it had a really negative effect on workers, I would expect this to have a much more positive effect on workers. And the reality is that if you look at the long term, it's not that whatever is good for corporations is good for America. It's that whatever is good for America is going to be good for corporations as well.
The Charlie Kirk Show
What the Trump's Tariffs Mean for You, Today and For The Future
And if we can get our house in order and actually have a more productive economy, a growing economy, and a healthier nation and a healthier society, I think in the long run, that's going to be plenty good for introduction in order first.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
Yeah, I think that's right. They're outside the beltway. So they're a little more eclectic, do a lot on urban policy and so forth. But definitely in that conservative think tank world.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
Well, it's an issue that American Compass has been working on since we started in 2020. Generally speaking, we sort of see the excesses of globalization as one of the major problems with the U.S. economy, something that has harmed a lot of workers and communities, something that both political parties, that economists ignored for much too long.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
And so, you know, I think it's very important just to have a clear diagnosis of why this is a problem, right? Everybody said free trade was going to be great. And why might that not be the case? And then to have a clear idea of, okay, well, then what would you actually do about it?
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
Because it's, you know, some people would say you sort of have a toothpaste out of the tube situation where you can't just go back on what we may have decided, even if it was a bad decision. And so-
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
You know, we have developed sort of a broad range of policies and a pretty comprehensive agenda, I think, for what we call reindustrialization, which is the idea that we have to rebuild American industry for the sake of communities and good jobs, but also for the sake of economic growth, also for the sake of national security. And tariffs are an important piece of that.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
So the idea of a global tariff is one. The idea of confronting China in particular and decoupling from China is another. And then there's a lot of other stuff. So conceptually, I would say we are very much on the same page and have been very encouraged by the direction the Trump administration has gone. In the specifics, I think as we've seen, there have been a lot of costs that I think are
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
are too high and higher than they need to be. And that's where we would depart on the specifics.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
That's right. I think the phase-in concept is a really important one because it goes to the heart of what do we actually expect tariffs to do. And at the end of the day, what matters for a tariff is not what is the value on day one because... no one can change how they do business on day one. On day one, it's just going to be something you pay.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
What matters is what is the tariff going to be in years three through 10? Because the investment decisions that people make today are based on what they expect policy to look like over that timeframe. And so my view is that if you want to make this sort of long-term structural shift in the economy, You want to keep the upfront costs as low as possible.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
You want to say, look, we are going to give time for businesses to adjust, for other countries to adjust. But we also want to be as clear and credible as possible that this is happening, that if you don't start adjusting as quickly as you can, you are going to get hit.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
And so that's where I think some of what the administration has done in being quite sort of abrupt and I think shaking people out of their stupor in a sense has been helpful. But when you think about across all of those trade partners, when you think about with China, what is going to be the key to the success?
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
The key is that we have a credible and sustainable policy and that people really believe three years from now, there are going to be high tariffs. And that's where I think the Trump administration has already made some good course corrections, but especially on China where there's probably still more work to be done.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
Well, it's interesting. I would say that's just wrong about Romney. I think on a lot of issues, that's absolutely right. I think he was a very sort of conventional pre-Trump conservative. On the trade issue, he wasn't. And that was really my entry point into it. I still remember the meeting when we brought him the sort of standard briefing on, OK, here's what a Republican says about trade.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
And he kind of looked through it and said, yeah, that's fine. But what are we going to do about China? And at that time, that was sort of a very strange question to ask. I remember the senior economic advisors said, well, you don't do anything about China. What's the problem? We have free trade.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
And I think Romney brought a much more sort of pragmatic business view to the issue, which in many cases argues for a very free market approach. But when it comes to China, it really doesn't. That the kind of economic relationship we had with China was clearly just not... a functional one, if what you cared about was business success in the United States.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
And so that kind of got me sent off on a journey to figure out, okay, what can we say about this? How would we approach it? And what I found was that in the right of center, there was just nothing.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
That what had begun back in Reagan's day as some kind of very thoughtful economic reforms had just sort of ossified into this kind of market fundamentalism that just said, well, free trade is always good and we don't have to think about it any more than that. It's interesting.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
No, maybe I'm confused by the question. I don't know what the size.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
Well, I think if you're looking around the world, there are certainly a lot of people in China who benefited greatly from the Chinese Communist Party's exploitation of the global trading system. But I'm not sure what... what role that plays in the assessment that you'd want an American policymaker to have of the kind of policy that's good for the United States.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
And here, I think it's really important to say that, yes, the economy has continued to grow during the period of globalization. It doesn't really tell you anything about globalization. I mean, the economy was growing in the period without globalization as well, right? In fact, growth has slowed significantly over the past couple of decades. Productivity growth has slowed.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
We see investment declining. And so if you actually look at the tradition of American economic policy, certainly up until World War II, high tariffs were the norm. the Republican Party began as the party of tariffs. And so I think it's a little bit lazy to say like, well, the economy- No, but back then I would argue the reason- The globalization must be a good thing.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
That's not really an economic analysis.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
I mean, I'm pretty sure Abraham Lincoln wasn't a tariff guy because that's what the U.S. Chamber of Commerce told him. No, I'm not saying that.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
Well, that is certainly true to some extent. I mean, it's interesting to see actually that trade was in many ways much higher in the early 20th century than in the mid 20th century. My point is just that the sort of market fundamentalism and the assumption that free trade is always good, regardless of how other countries are behaving,
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
It is a sort of very weird and recent point of view that, again, not even Ronald Reagan held. I mean, look at how Reagan approached the Japanese on a range of issues.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
It was always very well understood that free trade can be a good thing, that trade that actually entails the trade of things you make for things that others make can benefit everybody, but that there are also an awful lot of ways that it can go wrong. And I think what we really lost, especially in the post-Cold War period, when people sort of thought, well, the U.S. is now the lone superpower.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
It's in our interest to preside over this liberal world order that's going to benefit everybody. Of course, the real case for embracing China was that this was going to somehow lead them to liberalize and democratize.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
Right. And so the question now, if you just say, okay, well, let's say you could go back from 2025 to 2000 and say, hey, guys, if you do this, here's how it's going to look. This is what China is going to become. Would anybody, would the economists like Larry Summers, who were pounding the table saying this is the most important thing we can be doing,
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
would they say, yeah, this is still a great idea, even if this is the direction China is going to go? There are a few sort of really crazy libertarians who would still say, yes, free trade no matter what. But I think virtually anybody would say, no, it obviously makes no sense to try to pursue free trade in this way with such a totally incompatible economic and political system.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
And we are living with the consequences of that error. And I think fortunately, we're now starting to unwind it.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
Well, I mean, first of all, it's the EU that is going to regret if it cuts the deal with China like that. But I think more broadly, it's important to say this isn't just about China.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
We were just talking about China for the last 10 minutes because I had been describing how going all the way back to 2012, that had been an issue that even somebody like Mitt Romney was starting to look at and say, wait a minute, this is not working.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
No, I think that's certainly not the case when you look at the Trump administration's approach. And if you go back all the way to the order that they issued on day one, America First trade policy, the focus was on balance. And the idea that balanced trade is a very valuable and productive thing, but that imbalanced trade where we run massive trade deficits in the long run is not a good thing.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
And China is the quintessential illustration of this. You look at the relationship with China and how imbalanced it is, and you say, oh yeah, it makes sense that there's something wrong there.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
I'm trying to just not have a bigger consumer market than we do.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
That's right. In theory, the case for free trade, and again, if you go back to what people were saying in the year 2000 was, yes, there are lots of jobs that will go over there where they will make things that we used to make for ourselves, but we will get just as many new opportunities to make things for them. And that just did not happen.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
That being said, even if you zeroed out trade with China, the US would still have a massive trade deficit. China doesn't even account for the majority of our trade deficit.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
Well, why would that lead to a trade deficit?
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
Yes, but... That's not, I'm sorry, that's not how it works.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
I think that that can be very well true of very small developing countries. But we're not talking mainly about small developing countries.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
Yes, and there are some very real problems with leaving them out. And one that we see is what's called transshipment, which is- Totally get that, the cheat, the cheating, where they- Yes, okay, so you do get it. So I understand that aspect. Yeah. Okay, but this is what drives me nuts is the frequency of just like, well, let's find something to poke at and score a point on.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
And then you back and you're like, no, no, actually, I understand it does make sense. No, look, I understand the theory behind it.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
So let's focus on the other major companies like Japan, like Germany. The massive imbalances that we have with those countries, more recently with Mexico as well, in part because a lot that used to come from China started coming in through Mexico instead. Right. Those imbalances are not explained by some theory of we have a bigger consumer market than they do.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
At the end of the day, if you go all the way back to Adam Smith, you go back all the way to the economists who first made the arguments about why trade works, the entire premise is that you are trading stuff for stuff, right? The word is trade. And so what's so important to recognize is if you say, well, okay, but why you don't need to have balanced trade, it could be imbalanced.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
And maybe, you know, because someone's market is bigger than somebody else's, it's important to recognize that it's not like they're just giving us the stuff, right? if we're not trading stuff that we make for stuff that they make, what we are trading instead is our assets. So what happens is countries like Japan and Germany and China send us enormous amounts of stuff that they produce
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
And instead of in return receiving things that we produce, what they receive from us are assets. They receive ownership of our corporations and real estate. They receive lots and lots of debt, meaning pieces of paper saying we will pay you for this someday. And there are lots of really interesting reasons why they like that trade as well.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
But the end result of it is therefore a double hollowing out. In the short run, you would say, hey, it's great. We got to consume a lot of stuff and didn't even have to make anything. But that comes at the expense of the strength of our economy, the opportunities for workers, the kinds of investments we do or don't make. And then in the long run, of course, we've essentially mortgaged the future.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
We have handed over all of those future claims on our prosperity to other countries in return for the consumption today. And so, you know, again, this is something that Warren Buffett actually wrote a fascinating piece about this all the way back in 2003, when these trends were first just emerging. But you know, just in very common sense terms,
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
If you want trade to actually work, it has to be trade. And that, I think, is the core of the argument that the Trump administration is making. And one that's absolutely correct is that we would love to have robust trade with Japan, with Germany, with the rest of the world broadly.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
But it needs, if it's going to work for the United States, to be the kind of trade in which other countries are buying things for us and we are in turn buying things from other countries.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
Well, one element is I think we could have structured the agreement differently. We could have structured it certainly to provide much stronger, for instance, labor protections so that the strategy did not just become investors are moving to Mexico because it's easier to exploit workers in Mexico.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
Well, and this again, this is why I always harp on this question of like, what is the actual theory of trade here? Why are we expecting it to be beneficial? In theory, we expect it to be beneficial because we think there's value in specialization. If there are things they can do more efficiently in Mexico and things we can do more efficiently here, That's great.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
We think there are benefits of scale. If we have a bigger North American market for everybody to sell into, we can make gains from that. The problem is that when you look at where the actual, what is actually driving investment and economic moves in trade, too often it's none of that at all.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
It's just investors and corporations saying, hey, we can exploit labor and pay people a lot less to do the same thing somewhere else.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
There's no reason that that should be the case. And again, that's not the theory as it's sold, right? Go back to what economists say when they're saying we should do NAFTA, we should do WTO.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
The arguments are there are some things that are gonna be relatively more efficiently produced in those other places, but there are other things that are going to be relatively more efficiently produced in the United States. And so the gain comes from the fact that, yes, maybe they're making the toy cars for us, and we are making the industrial equipment that makes the toy cars, right?
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
And again, there was a time when that was the case. I mean, you go back to the 1970s, 60s and 70s, the US essentially did have balanced trade. It is a much more recent phenomenon that in many ways was driven by the development strategy in these East Asian countries that said the way that we are going to grow is by investing massively in very competitive export sectors.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
So we are going to essentially arrange our economy to hold down the cost of our labor and drive as much savings as possible into manufacturing growth that we can sell into the American market. because those Americans are sitting there saying, yes, please send us more cheap stuff. And so certainly it's important to say, right, like this is our own fault too.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
Well, I think, to be clear, I think the sort of would you pay more for something made in America is not quite the right question to ask. It reminds me of, you know, I live in Massachusetts, and when you file your taxes, there's a little checkbox you can check if you just wanna pay a higher tax rate. And, you know, unsurprisingly, not a lot of people check that.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
Yeah, not even people who believe that.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
The right way, I think, to think about it is that there's a much more fundamental tradeoff going on between whether we want to have a robust industrial economy or whether we want to just encourage our corporations to go elsewhere and send back the cheapest possible stuff. And so, yes, one implication of making a different choice in that regard would be that some things might cost more.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
But the choice you're making is not, well, I feel good about it saying made in America, so I will pay more. The trade-off you're making is about the basic kind of country that you want to have. And I think the best way to think about that trade-off is to recognize that we took one side of it back in the 1990s and then 2000. We said, making things doesn't matter.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
We want the cheapest possible stuff, go. And we have now seen the results of that over the past few decades. And I think the vast majority of Americans are looking at that as an unwise choice. And so my claim is not that people want to pay more to feel good about a Made in America label.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
They're not going to behave that way. The question is that- Consumers don't behave that way. What trade-off do they want to make about the kind of nation we are? And there, I think it's absolutely correct that most people regret the trade-off that was made and would like to see us making a different one.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
Well, that's terrific. That's what we want more of. And again, that's where I think you put China to the side, where we need to more be decoupling from China. We don't need China setting up its factories in the US. But the auto industry, I think, is actually probably the best illustration of what we're talking about here, because you have a very concrete case study
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
going back to the early 1980s when Ronald Reagan comes into office. And that's exactly when you had these cheaper, smaller, more fuel-efficient Japanese vehicles flooding the market, posing sort of a mortal challenge to the big three in Detroit. Now, what did Reagan do? Did he say, well, free trade is wonderful, so that's it. We're just not going to have an auto industry anymore. No.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
Backed up by a threat, a very credible threat of tariffs coming from Congress, Reagan negotiated with the Japanese, and the Japanese actually adopted what is called a voluntary export restraint. The Japanese said, this is not sustainable. We don't want to go down the path of trade war and tariffs that we're headed toward.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
We are going to tell our own producers, stop importing into the US market and go set up shop in the US instead. And that is why Honda and Toyota and then Nissan moved into the American South. ultimately leading to tens of billions of dollars in investment, hundreds of thousands of jobs.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
And now you have, yes, Japanese nameplates on a lot of cars driving around in the US, but the Toyota Camry has more American-made content in it than a car from anybody coming, any of the Detroit manufacturers. Right. And so that I think is, that is exactly what you see the Trump administration now trying to do with these negotiations.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
Because say to these countries, look, this old system of you just produce and we just buy and you get back kind of ownership of the United States is over. let's talk about what you guys can do to actually move us toward a balanced trading system.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
And Stephen Mirian, who's the chair of the Council of Economic Advisors, gave a very good speech a couple of weeks ago at the Hudson Institute, where he talked about exactly this set of things. This is a perfect example of what
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
what these countries can do is tell their corporations and use policy changes in their own countries to say, we understand we have reached the end of the road on this model because the US is not going to accept it anymore. Go invest in the United States. And just like the Japanese could build cars
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
Every bit as effectively with the same quality at the same price in the United States as they've been doing in Japan. There's all manner of things that we are currently buying from abroad that could instead be built in the United States. We're seeing it right now with chips, TSMC, Taiwan Semiconductor. It's already coming at about $65 billion in investment.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
They've just announced another $100 billion investment. The most fascinating thing is they've actually they've said so far the yield, the sort of quality and efficiency of their production in Arizona is higher than it is in Taiwan. So we can do these things. It's a question of whether it's the tradeoff we want to make and the policy we want to pursue.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
Well, I guess I would separate a couple of different issues there. One is I totally agree that you need that phasing period. You need to give companies a time to adjust. And that's why I say, you know, high tariffs on day one. Yes, that causes some of those.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
You know, that is a sort of endemic risk in policy, in the policy wonkery I have chosen to engage in for my career. I'm always on one hand hesitant. I think you always have to accept imperfect implementation.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
That's right. The guy who kind of publishes his white papers and then says like, oh, well, that's not exactly what was in the white paper. Therefore, I disown it. I don't have a lot of time for.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
On the flip side, I do think when you're at the level of sort of the core concepts of what are we trying to do here, especially in this sort of situation, you have to get the balance of costs and benefits right. Right. Because I think the right way to think about this ultimately is we're talking about an investment.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
We're talking about what kinds of costs should we incur in the short run because we think it is going to pay dividends in terms of something better in the long run.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
And when you're doing that, and whether, you know, in the private sector as well, if you're thinking about an investment, whether you keep the costs low upfront and whether you deliver those high benefits in the long run is what determines whether you're happy with the investment or not.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
And so here, I think the right way to understand the risk or the concern is that if you pursue the policy in a way that adds a lot of unnecessary costs upfront, And if you do it in a way that does not deliver as many benefits in the long run, because you don't create the certainty and so you don't get the investment, then it's just, you're not going to be happy with the trade-off.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
And so I think even the way the Trump administration has implemented things so far, you can get some of that reshoring. You can get things brought back to the United States.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
But the way that I hope people will think about it, and I'm encouraged to see the administration increasingly thinking about it, is to recognize that whether or not you're happy with the deal at the end of the day, whether or not it was a good policy to pursue, depends on whether you do it in a way that keeps those costs down and that maximizes those benefits.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
And so that's where that example of the small business is a really good one. Can you do this in a way that doesn't cause those sorts of disruptions or at least minimizes those disruptions? And you can, and I think we're moving toward it, but I think certainly right now we are seeing too much disruption.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
It's a great question, but it's funny because I thought you were going to go in the exactly opposite direction, which is that a lot of the value of security for the United States is something that we don't take into account when we're doing our economic analyses, right? In trying to value all the benefits of the cheap stuff, the costs of no longer being able to make
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
essential goods, no longer being able to- Well, the pandemic was an eye-opener.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
Well, so there's the sort of resilience point for all sorts of goods. And then there's specifically what you do to the defense industrial base. You know, we're seeing in the Ukraine context, our ability to even manufacture the kinds of weapons, you know, you need to help support another country in a, you know...
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
limited land or elsewhere, you look at the sort of modeling of how long could the US actually sustain a conflict in the Taiwan Straits, for instance, what you see is, you know, and you look at our ability to build ships or maintain submarines, or we've hollowed all that out. And none of that gets measured in the economic analyses of free trade either.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
So that being said, the point you make is also a good one, which is that there's real upside benefit to these kinds of trade agreements. And I think the two things I would say about it, one is, I think that's a perfectly reasonable case, but it's one that we should acknowledge and break out in the analysis.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
that too much of the discussion in recent decades has just been, look, this is a win-win-win. Like it advances this foreign policy objective that we have, but also it's really great for American workers. And if that's not actually true, then don't sell it that way. If you have a, you know, we don't say we're going to go to war in this place, but that's okay.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
It's really great for the soldiers too. There's a baseline level of honesty that is necessary, among other things, if you want to sustain political support for making those kinds of trade-offs. So if we want to say, look, we're actually going to use our economic policy, our trade policy to support developing countries that, you know, we think that that really makes a difference for Colombia.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
That makes a difference from, you know, some other country in our hemisphere that has real benefits for us. Great. but make the case on those terms. And then notice that that case doesn't hold up when you're looking at those situations where trade is actually causing us problems, which is with those other major countries, right?
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
It's not our trading relationship with Columbia, again, putting aside if they become a way for other countries to cheat, that is causing the distress. And on the flip side, you can't say, I don't think, well, look, obviously we have to treat Japan this way because, you know, otherwise, I'm not sure what the otherwise is.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
You know who else wants Japan in our sphere of influence and not China's?
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
Well, I certainly agree that the relationships aren't permanent, but I think that you can step back and assess the actual calculations that other countries are facing. And I think the United States should treat allies barely and transparently and so forth.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
Oh, absolutely. That's a core premise of, I think, the direction we're headed. Right.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
So I think that's a fair point about the freakout. I think it's important to say that in terms of where I think the administration is trying to go. And again, I think another fair criticism is they haven't been clear enough in conveying where they're trying to go. But piecing together those comments they do make and the actions that they've taken, I
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
It seems to me that the direction that they want to head is one in which there's a much better deal for countries that are sort of in the U.S. sphere as opposed to those that are not. The difference from the past where I think we're really departing is that in the past, especially post-Cold War, We didn't really ask much of anything because we were presiding over this liberal world order.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
Everybody got the full deal, right? China got open access to our market just as much as Japan did. And what we are starting to shift towards a world where we say, actually, the US has some things that it wants to. And those have to be fair and reasonable things. But I think the things that the Trump administration is gesturing toward are fair and reasonable. So take the balanced trade point. Yeah.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
That seems pretty fair. The US isn't saying we demand that we now reverse things and we get to build up our industry at your expense. They're saying, let's have a trading relationship that isn't beggar thy neighbor. Let's have one where everybody can have a healthy manufacturing sector and trade stuff for stuff. And we will hold ourselves to that too.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
Not necessarily. I think there are certainly situations where that can be a healthy thing.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
I don't think so. I mean, most of that period you're referring to was the Cold War where we didn't have open and free trade, obviously. We had two competing blocks and there was a totally different set of security factors in particular that sort of maintained that balance.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
Then we moved on to the post-Cold War period where, you know, I appreciate your sort of casual description of a war here and a war there,
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
That's important. It's hard to think of what a world war even would look like in a context where the US was so much more dominant than any other country. We had this period of hegemony and kind of the unipolar era was a very strange moment. And it's one that we are moving on from as China rises into being a peer competitor.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
Now, I don't think that guarantees we have to have a war with China, right? We never really had a war with the Soviet Union. But I think, you know, again, as with the claim that like, well, the economy is bigger, so it must be because globalization is good. I think the idea that like, well, we haven't had a world war since the 1940s, it must be because globalization is good, is the sort of like,
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
comically over simple analysis that the exact same people making it.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
Right. But this is my point is that, that it is the sort of capital V, very serious people who are making this argument because it happens to prop up this ideological preference they had. If they had a different ideological preference, they would be laughing this argument out of the room too.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
It's a good question. And it's a place where I think ideally we actually do look more to the market. You know, this is one of the places where I think you still see a really interesting divergence between the kind of right of center focus on reindustrialization and the left of center focus. Because there's obviously a lot of commonalities in some of the pushes on these fronts.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
But I think what you see from the left of center is much more a sense of, OK, here's our list of the 10 things we're going to reindustrialize. And here's kind of the program to do each of them.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
Like that. Well, so right. This is right. This is the interesting point. Chips is sort of the one exception you've seen thus far, where Republicans also, you know, is obviously not unanimous, but bipartisan.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
That's right. There's both national security and there's an economic analysis where I don't think anybody doubts that chips are going to be very important to the next 50 years. And so I think that's what we want to see.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
Certainly what I want to see is that kind of what gets called industrial policy used in a targeted way for some things that we really know are important in a way that the market won't take into account. So chips is a good example. You now see the same thing with shipbuilding. conveniently enough ships to rhyme with chips.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
There's bipartisan legislation on that, too, because, again, purely from a national security perspective, you do need to be able to build ships.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
Yes, and an interesting corollary of that, we just did a big project on this at American Compass, is that the idea that you can kind of just protect the defense industrial base, but not the broader industrial base, has proven to be false.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
Yeah, that's right. And ultimately what we've seen is that when you try to, you end up with this set of companies that isn't being asked to actually compete in the market at all. They are only, right?
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
Yes, totally agree. And so I think if you buy into the Trump administration vision of where we're trying to go, which is we wanna have an economic and security alliance, China is out. Countries that want to align with China are out.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
But market democracies, countries that would prefer to be with us, to accept a commitment to balanced trade, probably more security spending, accept that they too are going to keep China out. That's a very big, healthy, robust market. And if we get everybody to agree in that context, that we're going to have balanced trade.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
That's right. And both India and Japan are countries that especially strongly would like to not be in the Chinese sphere. And so I think that's exactly right. You have the North American core. You have Japan, Korea, India. I think you certainly have the Anglo sphere, United Kingdom, Australia, New Zealand, Japan. Europe you'd mentioned earlier, I think is a much more interesting case.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
We could do a whole separate discussion just about that. But if that is sort of your market and you have a commitment within that market to balance trade, at that point, I think you can mostly say, then go ahead, invest where you want to invest.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
Right. Well, you know, getting to balance trade would mean massive reindustrialization. You know, if we have a trillion dollar a year trade deficit now, you're talking about a trillion dollars a year more production to level that out.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
It is a lot to ask. On the other hand, I would say 10 years is not very long at all.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
I mean, even keep in mind, 10 years ago wasn't 1995. 10 years ago was 2015, right? If when Donald Trump had first come down the golden escalator, we were actually starting in on this project, we would already be at the end of the 10 years.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
We'll do a whole other one on Europe.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
I completely agree with that piece of the argument. I think the counter argument is that TPP would have sort of solidified the imbalance within the remaining bloc. That is, it would have entirely validated the approach of a Japan, of a Korea, to use trading agreements in a way that benefited their manufacturers at the expense of American producers.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
So again, as you said, much more difficult conversation, I think.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
That's right. So just to wrap up maybe on this point, is 10 years a long time? Yes, it's a long time. You know, the chips is a great example where we started back in 2020 with the idea of the legislation for what became chips. And we are on track to actually, you know, we're just starting.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
Things are coming online now over a 10 year window to really have rebuilt a chips industry in this country in a way that thus far consumers haven't been bothered by at all. And so if you if you do things in a way that it didn't end up punishing China the way we thought it would.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
Well, I think that's an important point, actually. And it goes to the current conflict we have with China, even just on these current tariffs, which isn't especially constructive, I would say, on any side, which is that I don't think it's practical for the long-term view to be that the U.S. is going to pursue a policy that somehow holds China down.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
China is going to develop and be successful in all sorts of respects. The U.S. needs to focus on addressing its own problems in a lot of ways, I would say.
The Chuck ToddCast
Tariffs Gone Wrong? - Trump's Trade War Backfire
And so whether it is in chips, whether it's in some of these other areas, whether it's just an investment generally, if we can get back on a pathway to re-industrializing and we can do it a way where the disruptions are manageable and we can do it a way where we get to start seeing the benefits, I think that's a very popular project.
The Daily Show: Ears Edition
Jon Stewart on Trump’s 3rd Term Plans & Signalgate Lack of Accountability | Oren Cass
Thank you for having me.
The Daily Show: Ears Edition
Jon Stewart on Trump’s 3rd Term Plans & Signalgate Lack of Accountability | Oren Cass
Sure. I think the best way to understand it is that, you know, we went through a period of 30 or 40 years where conservatives just had way too much faith in markets. Just trust that you get out of the way and you're going to get great outcomes. And markets can give you great outcomes, but they don't guarantee great outcomes.
The Daily Show: Ears Edition
Jon Stewart on Trump’s 3rd Term Plans & Signalgate Lack of Accountability | Oren Cass
And so conservatives have been seeing, especially over the last decade, a lot of the things we care about, things everybody cares about. Do jobs pay enough to support a family? Right. Are we too dependent on China for everything? Can we make computer chips in this country?
The Daily Show: Ears Edition
Jon Stewart on Trump’s 3rd Term Plans & Signalgate Lack of Accountability | Oren Cass
Markets were perfectly happy to give us really bad answers on those questions, and so conservatives are starting to say, well, wait a minute, we actually have to care about this, and we have to be prepared to do something about it.
The Daily Show: Ears Edition
Jon Stewart on Trump’s 3rd Term Plans & Signalgate Lack of Accountability | Oren Cass
Yeah, I think that's right. The new writers are saying, actually, there are some things we really want to see win. And that's what politics is. What would politics be if you just pretended you sort of didn't care about anything? You'd sort of have a lot of the very uninspiring Republican politics of the last few decades, I would say.
The Daily Show: Ears Edition
Jon Stewart on Trump’s 3rd Term Plans & Signalgate Lack of Accountability | Oren Cass
I mean, for me to actually started working with then Governor Romney, like you said, he was conventional in a lot of ways. One of the issues I was responsible for with him was trade policy. And we brought him the very typical, here's what Republicans say about trade briefing. And he said, well, that's fine, but what are we going to do about China?
The Daily Show: Ears Edition
Jon Stewart on Trump’s 3rd Term Plans & Signalgate Lack of Accountability | Oren Cass
And to your point about all the other conservative economists in the room, they were... what are you talking about? We don't do anything about China. If China wants to send us cheap stuff, we say, thank you very much.
The Daily Show: Ears Edition
Jon Stewart on Trump’s 3rd Term Plans & Signalgate Lack of Accountability | Oren Cass
Great Poupon! The gasps can be disturbing. Yes. To your point, there's a lot of religious fervor, frankly, on what I would call the old right about some of these ideas. And when someone says something very common sense, like, well, wait a minute, maybe an authoritarian communist government that's trying to hollow out American manufacturing, maybe that's not really free market. Right.
The Daily Show: Ears Edition
Jon Stewart on Trump’s 3rd Term Plans & Signalgate Lack of Accountability | Oren Cass
I was like, wow, that's a really important point. And I was the one assigned to go off and try to figure it out. And what I discovered was that on the right of center, really going back to the mid-1980s, there had just been no thinking about this.
The Daily Show: Ears Edition
Jon Stewart on Trump’s 3rd Term Plans & Signalgate Lack of Accountability | Oren Cass
I think, you know, I think on the on the right of center was the China problem was active even before COVID. Right. Because I think, you know, one thing and it's important to say this is a fairly recent conservative phenomenon. If you go back in the history of conservatism, even if you look at Ronald Reagan himself, Reagan was was a trade protectionist.
The Daily Show: Ears Edition
Jon Stewart on Trump’s 3rd Term Plans & Signalgate Lack of Accountability | Oren Cass
He basically started a trade war with Japan because he did care about these things.
The Daily Show: Ears Edition
Jon Stewart on Trump’s 3rd Term Plans & Signalgate Lack of Accountability | Oren Cass
And Reagan negotiated an outright quota that Japan, not even a tariff, Japan will not increase the number of cars it sends into America. And that's why we now have the American auto industry in the South. Honda and Toyota make American cars, essentially, because somebody like Reagan was willing to recognize... Trade is good if it's fair and balanced, but we're not going to be dogmatic.
The Daily Show: Ears Edition
Jon Stewart on Trump’s 3rd Term Plans & Signalgate Lack of Accountability | Oren Cass
They did choose to go to states with nonunion labor. Right. The way that the unions were behaving at the time was one of the reasons that U.S. automakers were falling behind. That level of inflexibility was a real challenge, and that's also something that you saw Reagan really take on and confront.
The Daily Show: Ears Edition
Jon Stewart on Trump’s 3rd Term Plans & Signalgate Lack of Accountability | Oren Cass
So I don't think there are a lot of people in the American South today who would say, boo, we wish these artifacts would come. It was an enormous gain. And the investments have led to much higher productivity over time. So I think that's the story of what we want to see more of.
The Daily Show: Ears Edition
Jon Stewart on Trump’s 3rd Term Plans & Signalgate Lack of Accountability | Oren Cass
I don't know what's going to happen. And I think that there has, you know, rightly been at this point a lot of criticism that the way that the Trump administration has been rolling a lot of this out is just leaving too many questions. That if you want to do this right, you need certainty and predictability, clear communication. All core values of the Trump administration. Fair, fair point.
The Daily Show: Ears Edition
Jon Stewart on Trump’s 3rd Term Plans & Signalgate Lack of Accountability | Oren Cass
One of the interesting things about the Trump administration is that the team he has around him this time on the economic side, so Secretary of State Rubio, Secretary of the Treasury Scott Besson, his chief economic advisor, the U.S. trade representative, he's really surrounded himself, I think, with a quite strong team that thinks consistently about this.
The Daily Show: Ears Edition
Jon Stewart on Trump’s 3rd Term Plans & Signalgate Lack of Accountability | Oren Cass
And so, you know, that's something that... So... Does he ever, like, ask them? That is a fair question, and that's what I think everybody's waiting to see, is can we sort of get this moving in the right direction? Because it is important to say that the direction is important here. Right.
The Daily Show: Ears Edition
Jon Stewart on Trump’s 3rd Term Plans & Signalgate Lack of Accountability | Oren Cass
You know, really, for 25 years, going back to when we let China into the WTO, we have pursued this model that says more free trade always, regardless of what happens to American workers, regardless of what happens to American industry. We just want the cheap stuff. And that has been really damaging.
The Daily Show: Ears Edition
Jon Stewart on Trump’s 3rd Term Plans & Signalgate Lack of Accountability | Oren Cass
Yes, the idea is that corporations are going to respond to incentives. And you go all the way back to Adam Smith and the wealth of nations and the idea of capitalism. You want people pursuing profit to do that in a way that is also good for the society. Where I think a lot of economists, and this is left and right of center, got it wrong was to think that's just... always the case.
The Daily Show: Ears Edition
Jon Stewart on Trump’s 3rd Term Plans & Signalgate Lack of Accountability | Oren Cass
As long as they're pursuing profit, it's going to be good. And it's only going to be good if it's within certain constraints, if the things that are most profitable actually are things that are good for the country.
The Daily Show: Ears Edition
Jon Stewart on Trump’s 3rd Term Plans & Signalgate Lack of Accountability | Oren Cass
I think that's a very fair concern, and ideally it would be done through legislation. I think one of the things that's very encouraging is to see that we are increasingly now seeing a new bipartisan consensus that we do want to change this. I'm sorry, I don't know that phrase. It started when President Joe Biden essentially kept all of Trump's trade actions.
The Daily Show: Ears Edition
Jon Stewart on Trump’s 3rd Term Plans & Signalgate Lack of Accountability | Oren Cass
Everything that Trump did on China, Biden kept and then even extended some.
The Daily Show: Ears Edition
Jon Stewart on Trump’s 3rd Term Plans & Signalgate Lack of Accountability | Oren Cass
Well, it's only unpopular with some on the right. And I think it goes to where we started, which is this historical concern with the idea of sort of picking winners and losers at all.
The Daily Show: Ears Edition
Jon Stewart on Trump’s 3rd Term Plans & Signalgate Lack of Accountability | Oren Cass
And a lot of concern that, you know, what's going to happen if government actually gets involved in giving particular benefits to particular companies? That being said, the CHIPS Act was bipartisan. I think there were maybe 17 senators. You know, J.D. Vance has been a supporter of the CHIPS Act. Right. And so, you know, I think, again, that's a step in the right direction.
The Daily Show: Ears Edition
Jon Stewart on Trump’s 3rd Term Plans & Signalgate Lack of Accountability | Oren Cass
I think you have to do both because if you only do the CHIPS Act kind of thing, CHIPS Act is great if you've got one thing that's really important. almost everyone agrees, you know... Well, there's steel and, you know... So this becomes a question now, right? Do we really want Congress now going through and saying, oh, well, now we need one for steel. Well, do we need one for aluminum? Maybe.
The Daily Show: Ears Edition
Jon Stewart on Trump’s 3rd Term Plans & Signalgate Lack of Accountability | Oren Cass
Well, do we need one for cars? Do we need one for airplanes? You know... That's both cumbersome and something that's very difficult to do well politically. Whereas one of what I think actually the benefits of tariffs is that they are quite blunt. The tariff is sort of, if done well, a much broader policy that sort of shifts the baseline.
The Daily Show: Ears Edition
Jon Stewart on Trump’s 3rd Term Plans & Signalgate Lack of Accountability | Oren Cass
And so I think you need that if you want to shift the basic decision making that businesses are going to make generally. And if there's particular things you really care about, that's when you also want to come in and give them support.
The Daily Show: Ears Edition
Jon Stewart on Trump’s 3rd Term Plans & Signalgate Lack of Accountability | Oren Cass
It's a fair concern. I think there's some truth to it that's not all bad when you talk about this new world order idea, which is that the United States has been sort of championing this liberal world order. where we have essentially taken it upon ourselves to, frankly, absorb a lot of costs from other people, right? So, in the trade world, it's not just China.
The Daily Show: Ears Edition
Jon Stewart on Trump’s 3rd Term Plans & Signalgate Lack of Accountability | Oren Cass
It's also Germany and Japan and Korea. We are absorbing their production. They get the jobs.
The Daily Show: Ears Edition
Jon Stewart on Trump’s 3rd Term Plans & Signalgate Lack of Accountability | Oren Cass
Uh, I mean, in general? Yeah. In the last 30 years.
The Daily Show: Ears Edition
Jon Stewart on Trump’s 3rd Term Plans & Signalgate Lack of Accountability | Oren Cass
No, no, no, no. This is a serious point. I appreciate the joke, but... But there's a reason you couldn't answer the question. Well, I don't know what we'd want them to do, because I feel like... Well, if we don't want them to do anything, then what are we maintaining the leverage for?
The Daily Show: Ears Edition
Jon Stewart on Trump’s 3rd Term Plans & Signalgate Lack of Accountability | Oren Cass
Thank you.
The Daily Show: Ears Edition
Jon Stewart on Trump’s 3rd Term Plans & Signalgate Lack of Accountability | Oren Cass
Thank you.
The Daily Show: Ears Edition
Jon Stewart on Trump’s 3rd Term Plans & Signalgate Lack of Accountability | Oren Cass
Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you.
The Daily Show: Ears Edition
Jon Stewart on Trump’s 3rd Term Plans & Signalgate Lack of Accountability | Oren Cass
in all sorts of ways.
The Daily Show: Ears Edition
Jon Stewart on Trump’s 3rd Term Plans & Signalgate Lack of Accountability | Oren Cass
This is your old book. What's the new one called? It's called The New Conservatives. It's a summary of what we've been doing for the last five years at American Compass, developing the conservative economics of the new right, and it will be out at the beginning of June.
The Daily Show: Ears Edition
Jon Stewart on Trump’s 3rd Term Plans & Signalgate Lack of Accountability | Oren Cass
I'm going to tell them, because I called Jon Stewart a racist. I'm not sure that was smart.
The Dan Bongino Show
America's Liberation Has Begun | Episode 14
This is definitely not one of those moves, is it? I think that's been one of the most important pieces of all of this. And you've seen this even over the last couple of months. Treasury Secretary Besant going out and saying, look, the American dream isn't just cheap stuff. Look, we're willing to actually pay a short term price to turn this around. Yeah.
The Dan Bongino Show
America's Liberation Has Begun | Episode 14
Look, just because it's not good for Wall Street doesn't mean it's not good for America. And what's so funny is that all the capital V, very serious people who spend their time on shows complaining about American politics, complaining about people like the Trump administration, this is all they've ever said they want.
The Dan Bongino Show
America's Liberation Has Begun | Episode 14
They want people making long-term decisions, making short-term sacrifices, thinking about what's actually good for the country. And now we actually have it. And what are they doing?
The Dan Bongino Show
America's Liberation Has Begun | Episode 14
I just saw, you know, last night, Larry Summers, the Bill Clinton Treasury Secretary, Obama Treasury Secretary, leading left-of-center economist, literally goes out there and says, you can just take the damage in the stock market multiply it by five or 10. And that's the damage to America because whatever is bad for the stock market is bad for America.
The Dan Bongino Show
America's Liberation Has Begun | Episode 14
This is now the position the Democrats are taking while the Republicans are saying, wait, wait, wait, the national interest is not the same as the stock market.
The Dan Bongino Show
America's Liberation Has Begun | Episode 14
And by the way, let's notice how bipartisan a lot of this actually is. When you actually look at – so Joe Biden keeps virtually all of Donald Trump's trade actions, everything he did on China. Democrats are complaining about Trump. Biden keeps basically all of it. If you actually look, the recommendations on China specifically now to go even higher pretty much exclude them altogether.
The Dan Bongino Show
America's Liberation Has Begun | Episode 14
That's bipartisan. House China Committee, bipartisan, also in the Trump platform. And then even if you look at this idea of the 10% global tariff, this is something that we've done a lot of work on and we're really pleased to get a first round of legislation introduced on it. The guy who introduced legislation is Congressman Jared Golden from Maine, who's a conservative Democrat.
The Dan Bongino Show
America's Liberation Has Begun | Episode 14
There is broad-based support among people who are actually focused on what's good for the country that we need to move in this direction. And ideally, I actually think getting Congress involved is really important. At the end of the day, if we want this to be credible, if we want it to be permanent, because we do want companies to succeed, we want them to succeed here.
The Dan Bongino Show
America's Liberation Has Begun | Episode 14
And they need to know what the policies are going to be. They need to know they should place their bets on investing here. So I would love to see the administration push on this and Congress step up on saying this is the direction we're going. Let's actually codify this in law. And everyone knows that that's the plan.
The Dan Bongino Show
America's Liberation Has Begun | Episode 14
Well, I think there are certainly some immediate costs, and I think it's encouraging that everyone has acknowledged that and sort of not tried to deny that they exist or claim that we can avoid them. I think going forward, the big question is how well can the administration get its ducks in a row essentially on settling everybody down, saying this is permanent,
The Dan Bongino Show
America's Liberation Has Begun | Episode 14
Communicating clearly, here are the conditions under which it will change. So if this is a negotiation, here are the things we're looking for. Here's what we will bargain with versus here's what's permanent.
The Dan Bongino Show
America's Liberation Has Begun | Episode 14
uh and then as i mentioned getting getting congress involved in as well the last piece i'd love to see the administration focus more on is is what we might call the supply side which is if if we want to rebuild in america we need to help make sure that that that can happen right we need to support the companies that are coming to invest here we need to do a lot of work retraining workers to be able to do these kinds of jobs and so i think
The Dan Bongino Show
America's Liberation Has Begun | Episode 14
Like the risk is we just say, OK, we had Liberation Day. Now we sit back and it's solved. And I think there's a lot can still go wrong. The second risk is that we say, OK, we had Liberation Day and now every day is a new chance to futz around with all of that. Right. I think that is a real downside risk. And then the upside is, no, there is actually a plan here.
The Dan Bongino Show
America's Liberation Has Begun | Episode 14
I think Trump's team on this is fantastic. Rubio at State, Besson at Treasury, Mirren, Council of Economic Advisors, Jameson Greer, USTR, obviously JD Vance. I think these guys get it. I think they're very serious and thoughtful about it. And I think if Trump sort of deputizes them to now translate this vision into into an actual operational plan, I think we could see a lot of success.
The Dan Bongino Show
America's Liberation Has Begun | Episode 14
Tell us about it. Well, to your point, President Trump ran on imposing a 10 percent global tariff on putting 60 percent tariffs on China, on renegotiating our agreements with other allies. And this is now what they're going forward and doing. And, you know, I think we've seen over the last couple of months a bunch of sort of stops and starts as they've gotten going.
The Dan Bongino Show
America's Liberation Has Begun | Episode 14
I think there's still a lot of fair questions about where exactly they go now. Are we are these supposed to be permanent? Are we what are we actually asking other countries to do? Right. And so there's a long way to go on it. But the idea that this came out of nowhere or your point that you should be hysterical about it. I don't understand.
The Dan Bongino Show
America's Liberation Has Begun | Episode 14
And I think the best way to realize this is, look, we've been doing that, you know, we jumped into this free trade thing a generation ago. We decided to embrace China. We've seen all the costs that that brought. If we're not happy with those things, if we wished we'd done it the other way. It's never too late to do it the other way.
The Dan Bongino Show
America's Liberation Has Begun | Episode 14
Well, and this is the problem with how we did free trade. If you listen to the politicians and the economists selling free trade, they try to sell it as you Americans get to make things and sell it to the rest of the world, but that's not what happened. What happened with free trade was we opened up our market
The Dan Bongino Show
America's Liberation Has Begun | Episode 14
We took the things we used to make here, moved them away, and now we get to buy a lot of things from the rest of the world. And that's what you see in our trade deficit. If trade was working well, I'd love to have free trade. I'd love to be buying all sorts of stuff from around the world, people around the world buying all sorts of stuff from us.
The Dan Bongino Show
America's Liberation Has Begun | Episode 14
Well, what we got is we only got half of that deal. And it's the half that does not work for American workers. And I think that's where you see a huge part of what the Donald Trump movement has been all about and what he's acting on.
The Dan Bongino Show
America's Liberation Has Begun | Episode 14
I think the important thing to say is that this did not come out of nowhere. That if you were paying attention, I mean, I'm a relatively smart guy, I guess, but I was just listening to what they were saying, what it was clear they wanted to do. I wrote a piece back in February explaining that this was exactly what they meant by reciprocal.
The Dan Bongino Show
America's Liberation Has Begun | Episode 14
Because the problem with reciprocal tariffs, you just hold up a mirror and do the same thing everybody else is doing, is tariffs aren't necessarily what they're using. So Japan's a great example. Japan actually has some of the lowest official tariffs in the world in terms of the tax you pay.
The Dan Bongino Show
America's Liberation Has Begun | Episode 14
but they have all sorts of policies that make it very hard to sell into the country, that make it much easier for their sellers to export to us. And so I think the president and his team are exactly right. What we're focused on is the deficit. That's what we want to fix. And so what we're going to do is we're going to create tariffs that look at how big the deficit is.
The Dan Bongino Show
America's Liberation Has Begun | Episode 14
The reciprocity, what's reciprocal is not you do a tariff, we do a tariff. If there's imbalanced trade, we are going to put tariffs in place Probably not. We don't want them to be permanent. We want them to lead you to change your behavior.
The Dan Bongino Show
America's Liberation Has Begun | Episode 14
Well, I think there are two things here. One is that the good side of the equation is just much, much larger. So it's true that America is very strong in services. We should be clear, you know, you're talking about a lot of services provided by the, you know, knowledge workers, you know, financial services, technology services, right? that's a much, much, much smaller piece of the pie.
The Dan Bongino Show
America's Liberation Has Begun | Episode 14
So when economists say, sure, we have big goods deficits, but look at our great services surpluses, those do not cancel each other out at all, overall. The second thing, and this goes to why we care about the deficits, is that what economists got wrong for so long and we're finally catching up on is that making things matters. If you want to have a healthy economy, you need that industrial base.
The Dan Bongino Show
America's Liberation Has Begun | Episode 14
You need to actually have the manufacturing. If you want to have national security, you need to have the manufacturing. You want to have strong communities and good jobs for people all across the country, you need manufacturing, agriculture, mining, all of those kinds of industries. There's a social benefit to manufacturing. There's a huge social benefit.
The Dan Bongino Show
America's Liberation Has Begun | Episode 14
And so look, if we were a country that was like crushing on manufacturing and didn't have any services, then you'd probably say like, well, actually we need to be focused more on the services.
The Dan Bongino Show
America's Liberation Has Begun | Episode 14
But if you look at how our economy has evolved over the last few decades, if you look at who's been left behind, if you look at what our challenges are, the challenges on the way that we hollowed out our industry. And so that's what this is all about is how do you reverse that?
The Dan Bongino Show
America's Liberation Has Begun | Episode 14
I think that's definitely part of the calculation. And I would separate out that the 10% global tariff across the board, they're doing that sooner. I think the intention is that that's likely to be quite permanent, that that's not going to be negotiated country by country.
The Dan Bongino Show
America's Liberation Has Begun | Episode 14
Those big tariffs targeted at where we have big deficits, I think it's absolutely right to interpret those as aim to start a negotiation. And what you just described that what countries came out and immediately do is say, oh, we'll drop our tariffs to zero. That's that that captures exactly why we didn't just want to do reciprocal tariffs.
The Dan Bongino Show
America's Liberation Has Begun | Episode 14
It would not have been good for us if the other countries just said, OK, we'll go to zero tariffs. And we said, oh, OK, great problem solved. And so what you're seeing instead is. Your point, okay, maybe that's their opening offer.
The Dan Bongino Show
America's Liberation Has Begun | Episode 14
What I think you're going to hear for the Trump administration and what I also think they need to do a better job communicating is, no, no, here's what we're looking for. Trade deficits don't just emerge out of nothing. They emerge out of a lot of the policy choices that countries make. And up until now, everybody said, well, this is just an American problem.
The Dan Bongino Show
America's Liberation Has Begun | Episode 14
And what we're instead saying is, no, no, this is everybody's problem. If we're going to have free trade, everybody needs to do their part to solve it. And if we do do our part, if we do get the deficits down, then that's great. Then the tariffs can come down.
The Dan Bongino Show
America's Liberation Has Begun | Episode 14
I think that's going to be a big part of the solution. And I wouldn't even call it gifts. There's actually a very clear precedent for this. And it's actually something Ronald Reagan did. In 1981, when Ronald Reagan came into office, the Japanese auto market was crushing the American one. We were being flooded with lower cost Japanese imports. Big three was sort of on the verge of bankruptcy.
The Dan Bongino Show
America's Liberation Has Begun | Episode 14
And Reagan basically, under a threat of big tariffs from Congress, Reagan got the Japanese to agree to voluntarily just cap They're imports. They said the number of cars that went in last year were just, that's it. No more, no increase in cars. Instead, what Honda and Toyota are going to do to keep serving the American market is go build factories in America.
The Dan Bongino Show
America's Liberation Has Begun | Episode 14
And so the entire Japanese auto industry that we now have in the United States making investments here, employing hundreds of thousands of workers here, making the Toyota Camry actually the most American car on the road in terms of who's actually made the stuff in it, That was all a function of this kind of negotiation, right?
The Dan Bongino Show
America's Liberation Has Begun | Episode 14
And so I think that's exactly what we want to see is, look, we know that when other countries think it's in their interest to win industries from us, to export to us, they choose policies that do that. And we're shifting that equation. We're saying, no, no, what is now in your interest is to fix this and to get back to balance. And by the way, let's just be clear on how reasonable that is, right?
The Dan Bongino Show
America's Liberation Has Begun | Episode 14
There's just like, oh, like the United States is now being the bully, right? we're not asking them to do anything that we wouldn't do too. We're not saying, no, no, no, now we want to be the exporter and you have to take all of our stuff instead. All we're saying is let's get rid of the distortions that have been put into the system. Let's get back to the system the way it was supposed to work.
The Dan Bongino Show
America's Liberation Has Begun | Episode 14
Also, we have a lot of weight, don't we?
The Dan Bongino Show
America's Liberation Has Begun | Episode 14
The United States has a tremendous amount of leverage. Even the 25% is an overstatement because it counts both the imports and the exports. Yes, it does. If you think about as a share of GDP, as sort of a share of our economy, it's closer to 15. And to your point, for a lot of other countries, it can be upwards of 50. If you think about how dependent certainly Canada and Mexico are,
The Dan Bongino Show
America's Liberation Has Begun | Episode 14
on their relationship with us. And then if you even think more broadly about just the role, I think something else that's very important to the Trump administration is the security side of things and the role that we play in essentially paying for everybody else's defense.
The Dan Bongino Show
America's Liberation Has Begun | Episode 14
And so my assessment of what's going on here is that the Trump administration has said, look, this old world order where the US just sort of takes everyone else's stuff and pays for everything, that's over. We would like to have a great, strong alliance, economic and security, with as many market democracies as possible. But here are the requirements.
The Dan Bongino Show
America's Liberation Has Begun | Episode 14
Balanced trade, you pay your own way on defense, and we all agree to keep China out. And the United States, we absolutely commit to all of that too, but that's what we're looking for everybody to agree to. And if you're in, we're in, great. If you're not in, we actually do have things like tariffs that we're willing to put on the table.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
That's the hardest question in conservatism, I think. And, you know, for me, it comes down to a focus on what actually matters and sort of, you know, all of our policy debates are about the means. What should we do? I think at the end of the day, what defines conservatism and what separates it from progressivism is the definition of the ends. What do we actually think is the good life?
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
Unfortunately, there are many people who still are. Really? Yes, among those for whom this has all worked, right? Because there is still a class of people, certainly in the United States, if you are highly educated, you know, living in certain regions. Older.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
Older, certainly if you are the beneficiary and have all the savings from the golden era, but there are plenty of people in their 20s and 30s, if they were in the right place, have the right education, get the right kind of job, they're doing very well. And they have immersed themselves in a culture that says, well, we are here because we deserve to be here, right?
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
In our wonderful meritocracy, it is we who are supposed to be the winners and the ones who sort of make the decisions for everybody else. And let's look at just some economic statistics, like our TVs are bigger than ever. We have more stuff than ever. And so... Let's keep let's keep the good times rolling. That's, you know, I think it's there's a lot of small percentage of the country, though.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
I guess, you know, one reason I have maybe sympathy is strong, but a sense of it is I even look at, you know, my own trajectory going through a lot of these same institutions and kinds of jobs. You know, I ended up working for Mitt Romney's presidential campaign. After graduating Harvard. Yes.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
Well, actually, I was still in law school at Harvard, was in charge of domestic policy for the Romney campaign. And questions would come in, what are we going to do about the opioid epidemic? And I'm embarrassed to say this. I'm hopping on Google Maps. Like, what is an opioid? Like opium? I mean, I literally had no idea.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
And at that point, it had already been the deadliest drug epidemic in American, you know, probably for going on a decade at that point. And it was extremely easy to... Not even know it existed to have to have absolutely no contact with or familiarity with those kinds of challenges happening in other parts of the country.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
It was extremely easy if you had taken your economics class where they tell you that free trade benefits everybody and, you know, maybe you lose a job, but it's OK, you get a better job. Right. To then be working in a big city surrounded by other people of good jobs and just kind of assume that that happened.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
And I think, you know, one of the really important things about Donald Trump's success is that. I do think that represents a point at which you can no longer say, well, you could reasonably be sitting around just not understanding. At that point, I think you face a choice.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
What are we trying to achieve? And I think for conservatives, there's a very deep recognition and belief that the good life is about more than just the individual liberty and autonomy and consumption of stuff.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
You either have to recognize, wow, there are some things I did not understand that are serious problems that we need to focus more on, or... and plain people did this, you conclude, wow, I just don't like my country. The people must be too racist or xenophobic or just not understand how good they have it and good riddance.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
And let's be honest, again, you're right, it's a small share of the population, but among those with power and money and influence, it's a large share of the population that even with Donald Trump's success, even now,
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
went in that direction and they call it you know a term they call it grievance anomics if you if you think there are problems out there that things are not going well you're just feeding the grievances of those who yeah i just i think that's a moral crime that attitude and i hope the people um who have it are held responsible at some point sorry i can't i have to i've asked you this before you've never given me a real answer so i'm just going to ask you one last time
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
a good question. I don't try to avoid answering. I don't necessarily have a great answer. I think the, if I were to pick two things, one is I ended up sort of hitting all those important but I kind of had a much quirkier upbringing. I mean, I give my parents a lot of credit. They were Americans, but they grew up overseas, met overseas in Israel. And so, you know, met at the American school.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
My dad lived on a kibbutz. They got married there. And so they moved back to the US. I was raised in the US, but with a just sort of different outlook. They hadn't come through that model that we were just talking about in the, you know, in the 60s and 70s. They weren't here. And so... They were growing things? Literally, that's right. My dad was head of irrigation on a desert kibbutz.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
And so, like, pipe, you know, like literally nozzles on pipes. And so, you know, I look back and I realize that I've been incredibly fortunate to have... been given at once both a lot of the sort of superficial um accompaniments of the standard meritocracy but also an outlook instead of values that from them really did focus much more on you know
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
Obviously, we care about those things too, but that it is much more balanced against a recognition that, you know, the well-being of families and the conditions in which we're raising the next generation and the strength of our communities, ultimately the strength of our nation, the ability to carry forward traditions, that all of those things are equally probably more important
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
Question one is family and what you're doing there and how you structure a job and a career comes around that. Amen. So on and so forth.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
No, not especially. You know, I think the... This is something you see a lot, and the Israeli connection is interesting there. On one hand, it's very religious. There's also just a very strong sort of secular culture that I think exists there. And so I had that, and then the other thing I had, and my grandfather was an extraordinary trial lawyer, and from the age of about four—
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
my age of four, he just, whatever I wanted to say, he would just immediately take the other side of it and start arguing with me about it. My first book is... He was willing to argue with a four-year-old? Yes. If that was who was available to argue with, that was who he was going to argue with. My first book is in memory of Irv, who always liked a good argument. That was...
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
And I just grew up loving that. And the idea that everything was always up for argument and testing both sides of, I think, just left me at every stage reflexively unwilling to accept the... Sometimes in a very unhealthy contrarian way, but also in a healthy contrarian way, insisting on arguing about it and pushing on it from all directions. And so...
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
I think those two things then left me kind of moving up through standard Republican conservative politics, but a little bit as an outsider and looking at it and saying, well, why is that? I'm not sure that makes sense. That's not what I thought we were here to do. I thought conservatism meant the things we've been talking about here, not tax cuts. And that...
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
led me down a lot of interesting paths.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
Yeah, I don't, I guess that's true.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
That's definitely true. Now that you mention it, I do think though, and this has been my experience with all the work that we've been doing at American Compass over the last five years, which is my organization that sort of works on, okay, what is conservatism? What should it mean going forward?
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
I find that as long as you're willing to sort of engage people in good faith and try to understand what they think and tell them what you think and argue about it. Again, this is back to our mantra is intellectual combat with personal civility. Yeah, there are the people who will be like, oh, well, I don't like that. I don't like that person anymore.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
to people's actual well-being. And that as we think about what government is for, what public policy is for, those are the things we actually have to have in focus.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
The vast majority of people are actually really interested in it. And so, you know, I guess it would be interesting to be sitting here like telling you about the huge personal cost I've paid for doing these things. Frankly, there hasn't been the personal cost at all.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
Oh, well, certainly to do public policy instead of going and, you know, being business, whatever. But that's always been, ever since I was a high school debate nerd, I was always, always wanted, like I said, always wanted to be arguing about stuff.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
Yeah, it has been a fascinating time since the administration started, especially after Liberation Day. You know, my view is that the direction that Trump and the administration are going is exactly the right one.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
That the willingness to focus on how globalization failed, that free trade isn't real, it has not worked out the way it was promised, we need to move on to something else, is exactly right. The fact that they're willing to acknowledge it has costs and that we should bear those costs is extraordinary.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
I mean, how long has it been since we had politicians who were actually willing to stand up and say, yes, this isn't just a free lunch. There are actual costs here and we think they're worth it. And I think that's right, too. It's such a good point.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
And it's the irony, of course, is it's exactly the, you know, the very important people, very serious people in the newspaper columns, so forth, who've been complaining like, oh, we politicians won't do this. They won't be serious. You finally get, you know, President Trump and Secretary Besant, people who are willing to say these things. And immediately everybody attacks them.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
How dare you suggest we should accept any costs? Look at these fools saying – and it's like, no, this is exactly what actual leadership looks like. This is what we need if we are going to get back out of the hole that we've dug. I think that being said, especially when you are doing this kind of thing that does have upfront costs, you're kind of making an investment for a payout down the road –
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
You have to be really careful to keep those costs as low as you can and make sure you're setting yourself for as much of the return as you can. And, you know, I think in some of the sort of, frankly, chaos that we've seen in changes in the policy, in a lot of people not necessarily being clear on, okay – Where are we going and why?
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
Well, I think first and foremost, it is the family that at the end of the day, everything is oriented toward this question of how do we raise a next generation that is able to do what we have done, hopefully more than we have done, to enjoy what we have enjoyed, hopefully more than we have enjoyed. And that is a sort of fundamental obligation that we all have.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
I think in some cases the costs have been higher than they have to be. And I think it's been really encouraging to see, you know, really after Liberation Day, a bunch of shifts that have improved things. So I'm somebody who thinks tariffs are good. We should have them, but you should phase them in. You should give people time to adjust. And so now we've started doing that, right?
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
Tariffs were paused, so we can have negotiations. With China, they've now come back down a bunch, so we can have negotiations. I think what we should have is a very clear commitment that
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
down the road, two or three years out, for the long run, countries that are not playing by the rules, obviously China, countries that are not willing to take a balanced approach to trade, yes, there are going to be tariffs. There are going to be obstructions. And if you are somebody who wants to do business in America, you need to start planning for that. And you need to invest more in America.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
And going back to Adam Smith and what the paragraph about the invisible hand actually says, if we want our economy to work well, it has to be one where the way to make a lot of money in America is by making things in America.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
It's not a choice, a consumption choice, right? Some people go to Greece, some people raise the next generation. I mean, as a descriptive matter, it is true. But as a normative matter, as a question of should… That is what should happen and that is what needs to happen. And so the question is, well, okay, what are the conditions in which that can and will happen?
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
Yeah. These things take time. I think it's funny, you said earlier, well, the good news is people are starting to realize how big a mess we've made. The other thing I always say is the good news is that we've done it to ourselves, which is, I guess, mixed news.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
But it's good news in that it is policy choices that we made that have led to this situation, which means we can make other policy choices. You know, there are some things, if you think back in the 1970s with the oil crisis, oil embargo and so forth, there was a situation where in the foreseeable period, we just didn't have oil. Now, it turns out we actually did have massive reserves of oil.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
It took technological innovation to access it. But at least in the short to medium term, you can say like, look, we just don't have the oil and our economy runs on oil. Like that's just a sort of geographic reality. The problems that we have created with trade are not about actual geography, right? It's not like, oh, shoot, we can't grow avocados. Where will we get the avocados from?
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
The problems are all a result of our country's decision that we didn't care what we made or whether we made anything at all. And other countries, China being obvious, but it's also Korea and Japan and Taiwan and Germany saying, no, it's actually really important to what we make. And so we are going to be the ones that invest in making it.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
And as a result, all of that investment, all of that technology went to those places. But if we make the other decision, if we say, no, actually, we care at least as much as those places. We are going to make things here too. We certainly – we have the natural resources. We have the innate skill in the workforce. We have the capital. We can do it too.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
And just sort of two really good examples of this. One is – Reagan actually did this, right? People are like, oh, Ronald Reagan, free trader. Like, not true. The Libertarian Cato Institute, when Reagan left office, Cato called him the worst protectionist since Herbert Hoover. You know, especially vis-a-vis Japan. Reagan had no patience for the trading relationship as it was working.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
And under threat of tariffs, just as Trump is doing now, Reagan went to the Japanese and said, the way that you are flooding our market with Japanese-made automobiles cannot continue. And the Japanese, not wanting the tariffs, said, okay, we will voluntarily cap how much we import into the United States, and we will instead send Honda and Toyota to go invest in the United States.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
We need to have the conditions where young people can see a future for themselves, forming families, being self-sufficient, supporting kids, being able to provide them a good environment. They need to be in communities that have not just strong institutions and good schools but also just a basic sense of a common culture and a culture that is going to be a healthy one for kids to grow up.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
And the entire American auto industry in the American South is a function of that, of Reagan saying – Free trade does not work here. You need to come invest here. And lo and behold, American workers can build great cars, including Hondas and Toyotas. Toyota Camry has more American-made content in it than anything coming out of Detroit. And that was an extraordinary success. Really? Yes.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
Because it wasn't just... So the first thing that happens is the assembly plant comes over, right? Once this is a place where you're assembling, well, now it makes sense to move the supply chains over. Now it makes sense. Now they have research and development facilities here. This is how these countries got everything from us. They took the American manufacturers and said, come over here instead.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
And it all moved. In a case where we've actually said, no, you have to bring it here. That works too. And the other great example we're seeing now is with semiconductors, right? We have what's called the Chips Act, where we basically said, wow, it's a huge mistake that America, inventor of the semiconductor, pioneer of pretty much everything chips-related, we just said we didn't care.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
We let all go overseas, right? The reason Taiwan – it's not because Taiwan's beaches are made out of silicon. There's nothing special about Taiwan. Right. Taiwanese government said, we're going to lead in chips. And now that the U.S.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
has said, no, we're going to lead in chips, and Taiwan Semiconductor is making $60 billion, now another $100 billion of investment in Arizona, their first plant is coming online. And they actually said the yield's coming out of it. So basically the quality of the chip manufacturing in Arizona is already better than in Taiwan.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
So we can do it, but it's a policy choice of whether we care and whether we're going to do it.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
So I think there are a few that you really give priority to because they have some kind of unique strategic value, either for defense purposes or because of the way supply chains grow up around them. And so chips is a great example of this. Critical minerals, you mentioned the magnet. It's a great example of this.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
I think batteries, whether it's for electric vehicles, for electric grid generally, for all sorts of uses, is probably one of these things. And so there are there are a few particular things you want to identify and say, we have to have this. And that's where I would use what's called industrial policy. Right.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
You just you literally say we've decided this industry is important and government people call this picking winners and losers. It's not picking this company wins, this company loses, but it's picking we actually have a point of view as a country that we want this thing.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
Beyond that, one of the things that's so great about tariffs, it's funny, I'm having a lot of fights about people with this right now, because in my view, tariffs are actually the free market approach. A tariff, it can be a very broad-based policy. You're not picking a particular industry. You're just saying, look, we are going to give an advantage to things made domestically.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
So whichever things make, relatively speaking, the most sense to make domestically will come back. The things that, relatively speaking, make the least sense to make domestically will stay elsewhere. We don't have to tell people what to invest in. We can just tell people, all things equal, we're giving a 10% advantage to making things here. Now go.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
And I think that creates a much healthier economic system. It's much closer to Adam Smith's invisible hand And means we have to have less regulation, right? We don't have to go around figuring out, oh, what's every other country doing? What do we have to correct this way or that way? We don't then have to say, oh, and let's not forget all the losers.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
We have to now have a whole other set of programs to help everybody who... isn't succeeding because we don't have this stuff. We just say we actually want to have a free market in the United States, but it has to be one that makes things. And so we hereby give an advantage to whoever wants to make something here. And then as the Chinese would say, let the flowers bloom.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
Well, the reason it hasn't been is because our point of view was that nothing that I just said was true, right? Our point of view, in terms of the underlying assumptions, our point of view is that making things doesn't matter. There's a very famous quote attributed to Michael Boskin, who was the George H.W. Bush's chief economic advisor.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
We obviously, therefore, need an economy that provides those kinds of jobs. There need to be good jobs available to anybody who wants to work and is willing to work hard, regardless of what their particular aptitudes and interests are, regardless of where they live, right? The idea that, well, we'll get more growth if everybody moves to a big city is
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
He literally said, potato chips, computer chips, what's the difference? So if that is your economic theory, then yeah, who cares? If the idea is, well, anything that China can make more cheaply, we want China to make it, then why on earth would you put a thumb on the scale to make something here? And so that model persisted for a very long time.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
And it persisted partly on the very foolish assumption that we just don't care if we can make anything. It also persisted on the foolish assumption that don't worry, these things will sort of self-correct and work themselves out. So, you know, the best way I think to see how... badly things have gone is our trade imbalance, right?
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
We get, you know, we bring in more than a trillion dollars more stuff from overseas every year than we sell to the rest of the world. That suggests that trade isn't working very well. Paul Krugman famously said trade deficits are self-correcting. There was an economic theory that said such imbalances won't persist. They will take care of themselves.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
You know, Krugman, I was actually, this was a discussion I was part of with him, and I said, like, Why do you say that? And he said, like, yeah, that was naive. Like, just, sorry, we built an awful lot on that idea, and that was just wrong.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
You see the same thing, you know, Janet Yellen, who was Biden's treasury secretary, has recently said, look, the standard economic model was if someone will send you something for cheaper, you just send a thank you note. And she said, I would never say that again. That just wasn't true.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
It's a great point. And using Krugman again as an example, he actually has a fascinating essay where he says, look, some people won't understand this stuff that we now know is not true. And you're not going to convince them. So the best tool you have is ridicule. You wrote that? Yeah, yeah. It's still up there on the web.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
That it's not going to work to persuade them, but with sufficient ridicule, you can either essentially force them to stop saying it or make sure that nobody else listens to them. And it worked in both cases. It worked. There's another, I guess this is Krugman, this is the Krugman segment of the show. There's a very famous anecdote.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
Danny Roderick, who's an economist at Harvard and one of the very few people who has always been skeptical of globalization, tells the story of sending out his manuscript for a book about this to Krugman to ask his feedback. And Krugman writes back, you know, the substance of this is all fine, but you shouldn't do it. You will give ammunition to the barbarians. Right.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
is highly corrosive to the idea that we will actually have a world of people raising strong families. And then as you sort of keep zooming out, ultimately you get out to the level of the nation and you recognize that, you know, at the end of the day, you do have to have a country. A country is not just a market, right? or an Olympics team.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
Yeah. Well, I'll give you my theory for it because I've tried to go back and find, like, where did these economic arguments come from when they're clearly just not true? And as best I can tell, what happened, particularly after World War II, and this was in this era where people kind of were rightfully saying, you know, never again –
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
obviously about the Holocaust, more broadly about World War II, we can never go back to that kind of conflict. And you have the United Nations, you have all of these sorts of, right? Like that is everybody's focus. And that is when the arguments about free trade actually start to emerge. And they emerge not actually primarily as economic arguments.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
They emerge as a sort of new model of a global world order, right? And, you know, one thing people looked at... Now you're getting to the heart of it. Well, you know, one thing people look at, you know, what happened after World War I, the way Germany had been treated, the idea that, you know, sort of holding them down rather than supporting them helps lead to World War II.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
So how are we going to rebuild the world after World War II? How are we going to build a sort of inclusive market that builds these companies up? How are we going to rebuild Japan as a democracy? How are we going to rebuild Germany as a democracy? How are we going to combat the Soviet Union, which, remember, is out there
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
now putting out this ideology that says markets just can't work at all, we are going to put forward this vision. And the best illustration of this is guy Paul Samuelson, Nobel Prize winner, sort of writes the standard economics textbook that comes out in 1948, right after World War II. Remember, I mentioned the invisible hand gets ellipsed. That's in this textbook.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
It is actually something with an identity within which people owe obligations to each other. And not everybody is raising kids, but if you're not, you have some obligation to the folks who are. You have some obligation to those kids. And as those kids grow up, they will in turn have obligations back to you.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
It was the textbook, exactly. And I have a copy now. I went and got like, you go through it and you say, okay, well, how does he make the argument about free trade? And what you find is that he really doesn't. He actually acknowledges all the ways that free trade might not work, that it might be bad for the United States, especially if other countries behave a certain way.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
And he says, quite bluntly, Basically, so what? That if we actually want to build this kind of global economy that we all agree we need, the United States basically just needs to take the lead and push this forward. Wow. And look, again, and maybe I'm being too charitable again, but like I can see why someone would say that in 1940.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
And by the way, you could even say it was right in 1948. And this goes to the point about the boomers, that the policy as we pursued it into the 50s and 60s did accomplish a lot of what we wanted it to. There's a very famous article in Foreign Affairs in 1971 where one of the kind of leaders of international economic thinking says quite clearly,
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
Quite explicitly, he says, you know, the case for free trade has always been primarily a foreign policy case, not an economic policy case. And then, of course, you get to that when we get to China. Right. The entire argument, the entire argument for welcoming China to WTO. I mean, economists said like, oh, this will create good jobs for Americans and whatever.
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
But the actual argument was this is going to fix China. This is the way we democratize China, we liberalize China. And if that happens, if China does become a liberal democracy and we do bring them forward in this way, then won't it be wonderful that we have trade with them and won't it be great that everybody prospers?
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
And again, that wasn't like, if that had happened, that might have been a good idea too. The problem is that in the post-Cold War era... this model fell apart very quickly.
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
I don't... are other people who say that. I've written an essay about it. It's called the free trade origin myth that kind of goes through the chapter and verse on all these various things.
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
And if you can't maintain that structure, and I think a lot of what you see in the modern West is struggles to maintain that structure, things start to fall apart.
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
Yeah, and another good example is – so if you go back – so Samuelson is the key post-World War textbook. There's a prior textbook by a guy named Alfred Marshall who's kind of seen as the father of like modern economics, right? Like Adam Smith is like the original guy.
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
Alfred Marshall is a British economist. Probably the first one to actually be called an economist. No one would have called Adam Smith an economist back in the day. So Marshall writes probably the first economics textbook. It comes out in like 1890. Yeah. And he says essentially nothing positive about free trade. He actually has a whole section.
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
The comparative advantage is this idea that, oh, free trade works out great for both sides. And it's attributed to a guy named David Ricardo, who was a great early 1800s economist. Marshall has a whole section called The Narrowness of the Ricardians.
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
where he specifically says, look, Ricardo has this nice theory, has some good math associated with it, but it only works in very limited circumstances. It makes a lot of sense that Britain as a global empire is promoting it, but there are lots of people it doesn't work for. The Americans don't believe it. The Germans don't believe it.
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
And he even has this hilarious footnote where he says a lot of these ideas basically seem to be used as a way for people to put one over on the working class. Um, and so like, again, all of this, and then if you even go back to Ricardo, like, and Adam Smith, these guys, as I was saying, Adam Smith knew the invisible hand didn't work automatically.
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
Ricardo, when he's talking about free trade, he gives the example of how it could work. The famous example is England specializes in cloth, Portugal specializes in wine, and here's all the great ways it works them to trade. Right there on the same page, he says, by the way, this only works if capital is immobile. Right.
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
meaning if the British clothmakers can't pick up and go make the cloth in Portugal. It's right there. And then even more, he notes, and he hopes that never changes, that the idea that basically people were going to be stuck investing and doing business in their own countries was one of the core premises of any of this working.
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
So it's all there, and it's only post-World War II that you get, partly for the foreign policy reason – And then building on that, people looking around like Milton Friedman and like Friedrich Hayek and just saying like, wow, like this is all just working, right? Friedrich Hayek used this term, the self-regulating market.
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
And he actually – it's funny that Hayek, who's one of these libertarians who's now associated with the right of center, people say like, oh, like conservative economics. Hayek has a very famous essay called Why I Am Not a Conservative.
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
in which he specifically mocks conservatives for not being comfortable enough with the idea that markets are just self-regulating and will automatically deliver good answers. And so there's sort of this weird way where the ideas morph into, well, it's working, well, it must work automatically, all the way to this fundamentalism where, like you said, it's just like a law of physics.
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
And if you don't understand that, you must be an idiot. And more importantly, you must be a heretic. And heretics are the one thing we cannot have.
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
boy i mean well that that's just we watched that happen we watched that happen and i participated in the slander by the way i did i i have my um my you know my original college economics paper i've got like here's my two pages and why why free trade is good and i have this great sentence that's like you know while some workers will lose their jobs they will find better ones like A. Correct.
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
Correct answer. That's what you were supposed to say.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
Well, it's interesting. Washington is changing. I mean, you now write the Trump administration. I think one of the very cool things about and most encouraging things about the second Trump administration compared to the first one is is that there is now an entire team of people who understand this stuff, are aligned on it, are carrying it out, right?
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
In Trump's first term, Bob Lighthizer, who was, I think you had him on recently. Oh, yeah. He was a wonderful guy. He's been an incredible mentor to me.
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
He wrote a wonderful book called No Trade is Free that talks about his whole history working on this, but especially then in the Trump administration, how even just within the senior Trump team, these ideas that we're talking about were incredibly controversial. There were a lot of people who were still like, nope, free trade. Let's just make sure Trump doesn't disrupt things too much.
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
And now you have a team from Scott Besant, the Treasury Secretary, Stephen Mirren, the head of the Council of Economic Advisors, Jameson Greer, the U.S. Trade Representative, obviously J.D. Vance, Howard Lutnick at Commerce. All of these people are on the same page that this needs to change and they're going to push forward this new approach.
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
And so, you know, and they have teams that understand that and are working on that. And so you actually have a whole administration and then an ecosystem of organizations around them working on this stuff that are supportive. In Congress now, you know, they've been trying to bring these resolutions of disapproval.
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
I try to. And I think it's important at that level because I think that what I'm describing isn't sort of the ideal that I hope somebody goes and does. I think it is, as I said, sort of that obligation that everybody should feel that they have. And also that I would underscore that people can fulfill in lots of ways. You don't have to live in the middle of nowhere.
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
And Democrats vote to disapprove just because they disapprove of Trump, even though, like,
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
Isn't that funny that all of a sudden Democrats are now the, you know, free traders, like literally Democrats are now fighting with labor unions over this because the labor unions to appear like, oh, yeah, like, hey, this is actually the kind of stuff that we wanted that we were talking about back in the 90s when we were shamed for it. And now the Democrats are shaming them for it.
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
But the Republican Party, generally speaking, is quite supportive of it. Some are mostly supportive because it's the party line, but you have a really great set of, especially, you know, younger Republican leaders, folks like Josh Hawley, like Bernie Moreno, like Jim Banks, who are being very outspoken and effective advocates for it. And so...
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
There, unlike in the past, there is a Washington that is actually supportive of it. And then there's what you would call the blob. Yes. Right. And the blob obviously hates all of it.
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
Oh, I think the blob is getting much less powerful.
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
That's my sense, too. Yeah, I think it's partly there is more division within it. You know, I was describing some of the things that someone like a Janet Yellen or a Paul Krugman has said recently. it is starting to dawn on folks that the status quo just is not defensible. And it's funny to see the kind of ridicule argument flipped the other way.
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
At some point, standing up and just being like, free trade with China is great, is now the position that's subject to ridicule. And if there's anyone who cares about ridicule, it's the blob. It's the blob. And so that's actually very powerful. Yeah.
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
And then I also think there's just a way in which, you know, one thing that Trump is demonstrating, that folks like Vance and Rubio have demonstrated, is that the blob just doesn't have power over you. That the blob has been so discredited by... everything that has gotten wrong, that when the blob tries to apply its ridicule to a J.D. Vance, right?
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
Forget about them talking to each other to the extent that it's just performative for the rest of America. America's not going like, oh, well, this former State Department official, you know, says J.D. Vance is wrong. I guess J.D. Vance is wrong. They're going like... Like, is this the former State Department official who got us into Iraq?
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
The one who screwed up the Afghanistan withdrawal or the one that like embraced China? Right. Like and so look, there are some ways in which it's a huge problem for the country that our that our experts have been so discredited. It would be nice to have credible experts. But to the extent that it's happened, I think it just does not have the same political power that it used to.
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
You can do these things in a city too. You can do these things with all sorts of jobs. You can do these things in a family where both parents are working, in a family where only one parent is working. But I think a lot of what... We need to aspire to – and the fancy term for it is pluralism – is the idea that having all of those different options is a good unto itself.
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
Really good question. So one way in which it obviously did work for the world is that it obviously worked for hundreds of millions of Chinese subsistence farmers who have now benefited from China's growth. And China is the top example, but lots of countries have benefited from this system and to the extent that the U.S. was happy to kind of be the consumer for other countries as they developed.
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
In some ways, we obviously benefited from getting to consume a lot of stuff too. So I think it's important certainly to acknowledge that. And I think it's even important to say, you know, good U.S. policy, right? America first policy isn't America only policy. I think we should want a policy that lifts other people up when we can.
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
But I think it's important to be honest about the tradeoffs and say, you know, look, if we do X, this could have this great effect. It's also going to have this cost and who's bearing the cost. So there have been those benefits. I think during the Cold War era, there was obviously enormous benefit in defeating the Soviet Union.
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
I mean, in that sort of an existential conflict, holding together the American alliance, making sure that it was seeing broadly shared prosperity within it, proving that markets could work better than communism... Those were all extremely important things. And by the way, it did work. We did win the Cold War.
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
I mean, that's always the one piece of credit I will give the market fundamentalists as I'm decrying them. The reason this became the standard economic thinking on the right of center is because Reagan brought it in. Reagan said, my coalition is this kind of free market economic thinking, even as he himself was not a fundamentalist on it.
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
If there's any group to whom we should be focusing resources on, it is families raising kids who are the ones who have been, I think, most squeezed by these economic changes. We will have to pay for that. And the people who will pay for it are the people who are earning a lot of money and don't have kids.
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
the more traditional social conservatism and the Cold War hawks. And what actually did all those folks have in common? They hated communism. And gosh darn it, they succeeded. And so it's very important to give that its due. I think where things go off the rails is once you don't have that existential threat anymore. And you see it in the foreign policy context too, right?
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
Where all those hawks are now like, well, let's go find other wars to start. In ways that are neither conservative nor good for the nation. No. And the economic folks say like, well, like, great. How can we like continue to carry this further? Well, like now we need the WTO. Now we need free trade with China and on and on.
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
And so I think it's it's sort of it's it's the classic pendulum swing from something that, you know. A world of no trade isn't a good world either. Some good ideas were introduced. They did accomplish some things. And then it just sort of kept on swinging all the way to the other side.
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
And, you know, that's where I think we got stuck and where it's now very helpful to see we've kind of dislodged it and we're swinging it back.
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
The fact that people can see that option set and find one that works for them is part of what leads to human flourishing, part of what makes it all work, and one of the things that our markets – have pushed against. The market just looks for the most efficient solution. And that might be fine if you're just trying to sort of maximize your GDP growth.
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
I don't think so. I think other things have increased the chances of conflict, right? The fact that since the year 2000, China, rather than liberalizing, has become more authoritarian with more expansionist ambitions with a massive military buildup. That makes it more likely that we're going to have a conflict.
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
But I think one of the key failures of the blob is that it always tends to live in the world as they wish it were. Rather than the world as it is. Like, I wish we were in a world where China had liberalized. That sounds great. But we don't. I wish we lived in a world where, you know, the U.S. was still the superpower that could essentially dictate terms.
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
I mean, when we did a bad job, that was bad. But all things considered, it would be great for the United States to be— You want your country to be on top, sure. Absolutely. But— That's just not the world anymore. It's not a question of should. It's a question of is. And so in the world that we have, the idea that like, well, higher levels of trade with China is what's going to diffuse conflict.
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
That's just like a cliche that people say. You know who had really close relationships in trade? France and Germany and the UK before World War I and World War II. This idea that countries that trade don't go to war with each other isn't actually a thing. And so conversely, when we entirely decoupled from the Soviet Union, we had a war that stayed cold.
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
And so I think the United States needs to make its decisions about the economic relationship with China Right. Right. But then also to make very clear that we are not going to buy into this gobbledygook, that we are going to be realists and we are going to look at the world as it is. And one element of that is not to pretend that you can have free trade with an authoritarian communist regime.
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
So how does the tariff story end?
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
I think we do. I think the best way to understand what's going on is to think about this kind of world order that we've been talking about a bunch and recognize that what we are going through is a transition out of U.S. as sole superpower to I guess you would call it a multipolar world where China is a kind of peer competitor and adversary.
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
Secretary of State Rubio has actually been talking about this a lot. And all of the assumptions we made – we've been talking about the foreign policy case for free trade. In a world where the U.S. was the power, you could make a case that it was worth accepting these various costs for sort of maintaining that status.
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
In the world where it is no longer, we're seeing in real time how it breaks down, how you can't just be the benevolent open market when China is now bigger than you and more technologically advanced in some ways. And it can't go on that way. And so, you know, I think the tariffs are the sort of tip of the spear of saying that system is over. What do we want to have replace it?
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
But if the most efficient solution is to push everybody into any particular lane, especially the kinds of lanes we've been pushing people into, you don't actually get the outcomes you care about, which is the ability for people to live good lives.
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
And I think what the United States should want and what I see the administration pointing toward and pushing toward is basically, look, we still want to have strong allies. We still want to have free trade among our allies, right? When I was talking about that idea, if you have a tariff on the outside, you can have a freer market on the inside, right? Ideally, that's not just the U.S. alone.
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
Ideally, that goes for a set of countries that actually are market democracies and do want to play by the rules. And so what the U.S. is doing with the tariffs is saying, look, the open season, everyone does whatever they want and unconditionally gets benefits of American defense, American market. That's over. New system.
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
We would like to have strong alliances and relationships and low tariffs, but there are now conditions. Condition one is balanced trade. And again, that's this idea that free trade is great if you're actually trading stuff for stuff and you're doing it in a way that fits with the economic model where it's supposed to work.
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
And so, you know, countries that have been basically taking the most valuable industries for themselves and just selling to us – That's over. Piece number two, on the defense side, everybody needs to pull their own weight and actually lead in their own areas. You want to deter Russia, Germany, go figure out what you need to do to deter Russia.
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
You want to deter China, Japan, go figure out what you need to do. Don't be looking over your shoulder, sort of, have I done enough homework to go outside and play? Like, actually get it done. And it's actually interesting.
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
You see the Trump administration, Stephen Mirren, who's the chair of the Council on Economic Advisors, gave a very good speech talking about what are we actually looking for in these negotiations. And he said, this is economic and security. These are not separate conversations. This is a question of whether you are in for both.
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
And by the way, one way you could balance your trade with us would be to buy a whole bunch of American weapons and pay us for the security services we provide because it ain't going to be free anymore. And then piece three is China is out. That more like in the Cold War system, you can't have these sort of entangled systems where, okay, the U.S.
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
doesn't want Chinese supply chains, so they just go set up in Mexico and it comes in through Mexico. Exactly. Mexico, you know, and this is actually I think why Trump started the way he did with Mexico and Canada. Mexico and Canada with the U.S., you should be the core of this alliance we're talking about. But you need to understand that. That it can't work the way it's been working.
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
It's going to have to work on these terms. And so you see, you know, someone like Treasury Secretary Scott Besant specifically saying, you know, Mexico, we need to see the same tariffs toward China that we're putting toward China. Canada, we need to see that same policy because it can't be a sort of screen door.
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
And, you know, the funny thing about this sort of set of demands, right, is that like the blob gets very uncomfortable with this, like, oh, like you can't, you know, you'll drive these people into China's arms. Right. And you actually step back and you look at it objectively and you say, this isn't some exploitative client tribute regime.
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
This is a set of demands which, by the way, we hold ourselves to. We are not asking them to switch to a trade relationship where we get all the advantages. We're just asking for a balanced one. We're not asking them to pay for our defense. We're just asking them to do their fair share. We're not asking them to keep China out so we get all the fun with China.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
We're saying we all need to keep China out. And while there are obviously a lot of people who are very sore at the moment with how they're being treated by the Trump administration, anybody who actually steps back and looks at this, if you are a market democracy that wants to remain a market democracy – this is your chance, right?
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
By the way, not only are these not unreasonable demands, these things are good for you. You should want to be moving to balanced trade. You should want to have the will to get China out. And the U.S. is, frankly, helping you by giving you a way to go in, you know, in your own domestic politics to say, look, we can't keep pursuing this compromise relationship partly with China if we don't
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
get real about this, we are going to end up outside of the US perimeter and then stuck with China. And I think whether it's Canada and Mexico, you know, Japan, India, Australia, Korea, we've already seen with the UK now the start of a deal. I think that's sort of a no brainer. I think the one where it's hard is Europe. I think Europe is probably more compromised.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
They've shown more willingness already to just take the short-term gain. The crazy thing is the group most opposed to keeping cheap Chinese cars out is the German automakers.
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
Because they want to make five more years of money in China before they get thrown out of there. And so I don't know if Europe has the civilizational will. I don't know if they have the understanding of their interests. And because of the way the EU is structured, I don't even know if they have the – this is something that could also pretty much break apart the EU.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
You could have some countries that say, well, wait a minute. We do want that deal with the US. And if we can't get that through the EU, then the EU doesn't work anymore. That's where I think you're going to see the most tension. And then you'll see countries that are going to be in China's sphere, right? Pakistan.
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
I think a country like Vietnam is a very interesting question, which direction they might go. Yes. But at the end of the day, the idea isn't that we sort of are going to be able to get the whole world to gang up on and oppress China. The idea is that we're going to be in a world with two powers that have two very different economic and political systems and different spheres of influence.
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
And that goes back to the question about like, well, but isn't this going to start a war or whatever? It's like, no, this is the best case. This is the formula for actually having, I think, a much more sustainable equilibrium. Yeah.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
Well, and this is, that's such an important point that people keep raising this as like, what is this strange, unprecedented thing? Like, the crazy Donald Trump is doing. It's like, no, no, no. Like, first of all, like, this literally was U.S. policy for the Cold War, right? And like, not to mention, this was the way foreign affairs always worked for however many hundred years before the Cold War.
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Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
Well, I think it's common to a lot of religions, right? You're right, there's the Protestant, you know, you certainly find it in Catholic social teachings. I think you certainly find it in Judaism, which, you know, my reading of it is it is especially oriented around raising that next generation.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
It is only people who think the world started in 1991 that don't understand what is happening.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
Yes. Well, and that goes to your question about sort of the costs, because there obviously are costs here. You know, some of them are the sort of direct just consumer costs. If you were relying on cheap stuff from China, you don't want to do that anymore. At least in the short run, there is going to be higher cost.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
I think in the medium, not even just like the wealth someday, but within the five to 10 year window, you actually see the benefits overwhelm that. You see that if you actually return to an economic model that does encourage domestic investment, that does focus on prosperity in places that aren't just a few big cities, that is oriented toward creating good jobs for everybody.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
You actually get more growth that way. I mean, the dirty secret of this post-Cold War period is we're supposed to do globalization and efficiency and growth. Growth just keeps getting slower. No, I know. Investment keeps going down. In manufacturing, productivity has actually turned negative, which should not be possible in a capitalist economy. We are literally getting worse at making things.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
You need more labor. in an American factory today than a decade ago for the same amount of output. And so this just isn't working. And going back to the kind of economic model that did drive our prosperity for so long, I think will be much better. The point about what happens after empire That's bigger than the economic question.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
If this were just about the numbers and the production, I think you can see a very clear way out. The social and political and cultural question of what does the United States become, can it return to the idea of a republic as, in fact, far superior to and more desirable than an empire? On paper, that sounds great. It shouldn't be a problem at all. In practice, for anyone who studied history knows
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
No one has ever really stuck that landing, and that is the challenge we have. Why do you think? I think probably for a lot of the reasons we're seeing now in our politics, which is that for the political class, for people who run things, going from empire back to republic is not...
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
desirable, that the entire push toward empire, then the push toward sort of globalism is a better end state if you are the emperor, if you are that set of people. And for me, ultimately, this is kind of the best way of understanding Because I think everyone agrees something like populism is happening, right?
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
And so, you know, not by coincidence do the world's great moral traditions have this embedded, you know,
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
And it is used often in a very sort of derogatory way, like, oh, populism means, you know, just telling the masses what they want to hear or ignoring experts or something like this.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
Certainly, there are plenty of bad forms of populism, but I think at its core, particularly in a democracy, what populism means is that you have a situation where the elected representatives and the other elites, people with power in the society… Yes. The response to that is a populism that's entirely healthy.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
It's to say, well, if the people who are in charge are not going to act on behalf of everybody, we are no longer interested in having those people in charge. And frankly, we will take anybody at all if they at least will start with that commitment that we are here to act on behalf of the broader interest. And so I think what's so encouraging about the U.S.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
Well, yes, that's right. There's a common thread there. I think you don't see it as much today for two reasons. One is that it is constraining.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
I think it is. And it really dawned on me speaking to the faculty of a university recently who were like extremely... They don't understand what's going on at all. And... not talking about elected officials, just talking about the university as a university saying, look, you guys are a quasi-public institution. You operate in the public trust.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
And at some point in the last 20 years, you just decided you don't actually have to run this place in the interest of the nation anymore. You're going to run it in the interest of yourself and your friends. And your policies are going to be the ones that you like best, not the ones that are best for everybody. And so, yeah, either
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
you self-correct somehow, and I don't see that happening, or this gets done to you. And that is a natural and necessary step. And if there's a reason to be optimistic for the US, I think it's to contrast what is going on in the US with what is going on, let's say, in Europe, where for all of our Yes. Right.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
You contrast that to what's going on in Europe, where you have, frankly, among the population, a very similar set of frustrations and desires. And you have that political class at the top banning political parties. And this is why I think J.D.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
Vance's speech at the Munich Security Conference was so important and gets exactly to the heart of what is going on, of what the Trump administration represents in this respect, where he was saying, look, the biggest problem that we all have here isn't some external adversary. It is our own capacity to actually navigate these challenges. And probably better than any country in history ever
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
The entire premise of obligations and duties as opposed to merely rights and privileges is that there are things that you should be doing even if they are not the thing that is the most fun at that moment in time, even if they are not the thing that you personally want to be doing at that moment in time.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
For reasons that is driving the blob, the elite, absolutely nuts, the US is actually showing some ability to respond. And if we can pull that off, that would be pretty exciting.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
It's a great question, and I think it's important to think about it expansively. Because it's great that we now have a, quote, family policy discussion in the U.S., but a lot of the times it is basically a, well, how big should the child tax credit be discussion. And to be clear, that is an important piece of it. And this goes back to the boomer discussion as well.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
We have a system of taxation and distribution in this country that overwhelmingly – brings resources to retired people.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
And I don't think we should stop giving resources to retired people. I think the fact that we have Medicare, that we have Social Security are great things. But if there's any group to whom we should be focusing resources on, it is families raising kids who are the ones who have been, I think, most squeezed by these economic changes.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
And I don't think we should believe, you know, oh, well, if we manage to get them more resources through some sort of child benefit or child tax credit, like, that's going to, like, make people have more kids in the short run, right? I don't think that works very well. I don't think we want to be in the business of saying, like, well, if we pay you a little more, will you have another kid?
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
But what it will do is make the experience of being a family raising kids better, right? And in the culture, it will begin to shift what it feels like to be doing that and what people see about people who are doing that. Not this constant struggle and getting squeezed, but a little more something that is actually viable and desirable and that we all have committed to supporting.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
And so both for the sake of the families and for the sake of the culture, I think that does make a big difference. I also think it's important to note that we will have to pay for that. And the people who will pay for it are the people who are earning a lot of money and don't have kids, which is the direction of distribution we should be leaning toward.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
Sometimes just because it is the right thing to do and it is something that is important to the well-being of those around you. A lot of times, I think what you find in these moral traditions is that also in the long run, it is good for you, too, that there is a recognition that humans are frail, flawed people.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
More broadly, I think then, and this is great that we're sort of landing back here.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
Because that is your obligation as a citizen of the nation. And it is all our obligation to raise the next generation of kids. And whether someone is not called to do that, whether someone is not able to do that, not everybody is going to be doing that. But the idea that you can disavow it and say, not my problem is just not true.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
I mean, there are very specific like math and demographic related reasons it is your problem.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
Yes. And I would say, you know, it's very interesting. Whenever you talk about an obligation, the question is like, well, where does that come from? Like, well, just because like...
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
somebody said it and so I do think you have to attach it to something and I think it attaches to two things one is this obligation of citizenship and the idea that if you know in so far as you think you are better off living in America than like having been dropped naked in a jungle somewhere like you didn't cause America to come into being yourself.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
You are part of this larger system that if you want to benefit from, you probably need to contribute to. But then also broadly, crazy ideas. The more specifically, you know, you as an individual came from somewhere like you're only here because some other people actually chose to take the time and dedicate their life to having and raising you.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
And so, you know, either you could say like, well, I'm just going to like stick that in my pocket and go on vacation to Greece. Right. Or you can't pay it back. You can never repay your parents for what they gave you. The only thing you can do is pay it forward and do the same thing for the next generation.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
Whether they're yours, that's absolutely right. And if they can be yours, ideally they will be. And if everybody says, well, I'll just support somebody else's, obviously it doesn't work. but I think that's the sort of dual individual and communal commitment that supports all of this. And so that then just, you know, we talked about the kind of narrow family policy of tax policy and so forth.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
Whoever wants to pick them up.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
It's an interesting question. I actually just did a talk at Yale Law School about this. And one of the really things that's interesting that's going on with younger conservatives is that they are very attuned to this. Yes, that is true.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
There's an extraordinary divide, sort of really once you're under 40, certainly once you're under 30, you've just grown up in such a different context that the Cold War Reagan-style conservatism makes no sense. And the things we've been talking about here are just much more responsive to the problems you see out in the world. Yes.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
The funny flip side of it then is that you always get the few progressives who want to sort of come show up. And to your point about like, well, like nobody could disagree with this. In fact, you will have the few progressives who either somehow like think this must be a conversation about gay marriage somehow, even if like they're not sure how, but they would like it to be.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
And simply pursuing what the economist would say is optimizing your well-being at every moment in time leads people to choose all sorts of things that are not actually good for them at all. And, you know, that's what I find fascinating about speaking about these kinds of concepts of obligation and duty in the good life is some people get very skeptical of this.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
Or they will just more broadly sort of try to interpret the principles as by implication oppressing some out group, which is right. I mean, look, that's sort of the core of progressivism.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
Well, even just, you know, this goes to the question of rights and privileges versus duties and obligations. Like, part of the reason progressives get very uncomfortable with that side of the discussion is because, well, like, wait a minute, that you just, like, infringed on something. Right.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
And so there is a lot of, especially a place like Yale Law School, there's a lot of sensitivity to like, well, who are you infringing on with this view? And the answer is like, everybody.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
Like, to be clear, I am an equal opportunity infringer on – I value liberty and would like to protect it, but I am an equal opportunity infringer on all liberty to the extent that it is being claimed to the exclusion of all of these other things that matter too if we are going to have a society and a civilization at all. And that is, in my mind, what conservatism is.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
meant for most of modern Western history. And it's very exciting that a lot of people are now focused on it again.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
This was so much fun.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
They're like, oh, yeah, but, you know, no one's going to choose that when they could just have all this other stuff instead. But you step back and you look at all of the available data and you say, no, no, they will actually be happier if they choose all this stuff. Yeah. People who are married are happier. People who have kids are happier.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
People later in life who have done these things live fuller lives overall. They also tend to earn more money. They have whatever it is you actually want to achieve in your life. It is almost certainly the case that making these kinds of decisions will be good for you, too. The problem is just that in the moment when you're 23, it's not necessarily a thing that you're going to choose. That's right.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
And in a sense, and this goes back to where you started with what is conservatism, it's a recognition that for people to lead good lives and make good decisions, they need to be operating within this structure. They rely on institutions, their own families, ideally an education system, ideally the broader culture,
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
to shape and form them and help them make these kinds of decisions that will benefit them, they themselves in the long run. We're not just asking for fixed bayonet charges, you know, into machine guns. We're talking about things that will be good for them, will be good for those around them, will be good for their own kids. Yeah.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
But that we know are not things that they're just automatically going to choose by themselves. And so just, you know, this is the other thing that you would just like, well, why aren't we doing this? Part of it is people just don't like being constrained. Part of it is we have adopted this sort of what I call market fundamentalism where economists and their way of thinking have –
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
somehow persuaded a lot of people that no, no, no, just everybody choosing what they think is good for them at every moment with no constraints is actually the way to optimize welfare for themselves, for the nation, for the economy. And that's just not true.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
I think that's right. And I think part of the answer is the sort of more skeptical or cynical one that, you know, this generation has not been especially thoughtful and obligation-oriented. Man, you ought to join the State Department. That level of diplomacy is awe-inspiring. Many of my friends are boomers, let me say.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
But I also think part of what we saw happen is that we went through, the boomers lived a life where everything did just seem to work.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
That, you know, if you look, and sorry, I always come back to the economic side of these arguments because I see them sort of infecting our culture. You know, you had these folks like Milton Friedman as a classic example of someone who was sort of making this very public case that literally his best work is called free to choose, right? That was the mantra.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
We should have them, but you should phase them in. There are going to be obstructions. If you are somebody who wants to do business in America, you need to start planning for that. If we want our economy to work well, the way to make a lot of money in America is by making things in America.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
And what Americans were experiencing in American society was that this just worked. That because we weren't paying attention to and were instead taking for granted all of that institutional capital we had built up in the American culture, because we were taking for granted that we were the dominant industrial power far and away ahead of anybody else,
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
it felt like, oh, you don't have to worry about these things. You can just leave people free to choose. They will just make these kinds of decisions. You know, investors will just invest in the best things. We will get the best innovation. We will create the good jobs. This is just how things work. The magic hand. Well, this is – right. And this is something I write about a lot, right?
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
Adam Smith, the father of capitalism, had this idea of the invisible hand, which if you go back and look at what he was actually talking about, what he was describing, like literally in the paragraph where he writes about the invisible hand, he has all these requirements.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
Like if people prefer investing domestically to investing in foreign countries, if people focus on doing the things that will lead to the greatest outcome, the greatest output and most jobs, then the economy will work. And in this generation, just all that got erased. It's actually interesting. In the leading economics textbook, it literally got erased. They just elipsed it out.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
And just left with the part that the invisible hand leads to this stuff. And so it sounds like a magical force. Well, yeah, I call it magical. It's like the Holy Spirit. Exactly. And this is why I call it market fundamentalism, because it sounds like a derogatory term. Obviously, I'm using it somewhat derisively, but it's a descriptive term.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
It is a fundamentalism, just like a religious fundamentalism, that misinterprets the original texts and ideas and
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
to create this very absolutist easy to live by framework even though it's probably not actually true and probably isn't actually very good for people and that is the course that that that the us set itself on in american culture set itself on in a period where things were working well right you can get away with it for a while
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
And then, especially as the Cold War ended, as we sort of moved into this new world, I would say just it went off the rails. And we started making choices in our foreign policy and our economic policy that assumed a whole bunch of things that certainly weren't true anymore, even if they ever had been true.
The Tucker Carlson Show
Oren Cass: How Trump’s Tariffs Are Reversing the Foreign Policy That Doomed America’s Economy
And I think in both our culture and our economy, we're now sort of grappling with the consequences of it.
WSJ What’s News
The Case for Trump’s Tariffs
Sure. Well, I think the most important thing to recognize is that tariffs can both be an economic policy. Let's say, you know, we want to encourage domestic manufacturing. We want to try to reduce our trade deficit. Then we might want to have tariffs in place. But they can also be a negotiating tool, a tool of statecraft that just as we use sanctions, just as we even threaten military force,
WSJ What’s News
The Case for Trump’s Tariffs
We can threaten a country with a tariff. So it's important to ask the question, what is the tariff supposed to be doing? And then evaluate it on those terms.
WSJ What’s News
The Case for Trump’s Tariffs
That's definitely a risk, and I think it's a challenge the administration is facing right now because for political purposes, you need to be signaling clearly to your domestic audience what you're doing and why. Obviously, there are costs also to tariffs. If you're asking people to accept costs, you need to explain why and what they're going to get out of them.
WSJ What’s News
The Case for Trump’s Tariffs
Well, in some respects, you need a permanent policy. You need a change in just the baseline American economic strategy, which for decades now has been free trade. And so step one is that baseline shift that says, no, the default is now actually free We are going to use tariffs if trade is imbalanced.
WSJ What’s News
The Case for Trump’s Tariffs
It's really important to signal to investors if the goal here is to change where capital gets deployed. And then third, it's really important to be clear to allies, to other countries that we do want to work with. If we are using tariffs to try to, in some cases, force them to change their behaviors, to say, we want to see changes in your policies that either keep China out or
WSJ What’s News
The Case for Trump’s Tariffs
that reduce your trade surplus with us, they need to know that so that what you're doing doesn't just look like kind of arbitrary ax wielding, but actually comes with a clear if this, then that.
WSJ What’s News
The Case for Trump’s Tariffs
Well, look, I think the frustration is entirely natural and to be expected. I think the reality in the long run is that if you step back and look at this situation objectively, the countries that we want to be allied with and working with closely, countries in the Anglosphere, the EU, Japan, India, Korea, these countries, for very good reasons, have a very, very strong preference for
WSJ What’s News
The Case for Trump’s Tariffs
being allied to the United States and part of a US-led bloc over falling into China's orbit. And the US has a lot of room to run on being more demanding of what it looks like to be in our alliance. That being said, we should want to treat allies well and reasonably and fairly and to have good relationships, not extortionary relationships with them. And so I think the
WSJ What’s News
The Case for Trump’s Tariffs
there are ways that we can improve on what we're doing and that that communication really does matter. Because are there going to be costs and frustrations? Absolutely. But you don't want to make those any bigger than they have to be.
WSJ What’s News
The Case for Trump’s Tariffs
I think the way to describe it is that we're making a different trade-off and we are reversing the decision that we made in the last generation, right? And so, yes, absolutely, there are going to be effect on equity prices. There could be an effect for a year or two on some of those top line economic measures.
WSJ What’s News
The Case for Trump’s Tariffs
There are gonna be some effects on prices, but you're also going to get the side of the scale that goes up. You're going to get a lot more domestic investment. You're going to get a lot more economic opportunity in parts of the country that have fallen behind. You're gonna get a lot more resilience and security. And so nothing is free. The question is, what trade-off do you want to make?
WSJ What’s News
The Case for Trump’s Tariffs
And I think, again, this is where that communication, this time directed domestically, is so important.
WSJ What’s News
The Case for Trump’s Tariffs
Well, one question is, how much change are we actually talking about in prices? Because the first thing to recognize, of course, is that the share of consumption that is these cheap imports is not that high, right? Only about 15% of our GDP is imports to begin with.
WSJ What’s News
The Case for Trump’s Tariffs
And so when you think about even very substantial tariffs on imported consumption, it's nothing like what we went through over the past few years with across the board, 10% inflation in a single year hitting everything you're trying to buy. You're talking about a particular subset of products.
WSJ What’s News
The Case for Trump’s Tariffs
And what you're really looking at is asking, well, how long would it take to make those things in the United States? And how much more expensive would it actually be to make them in the United States? Because one thing that we see is that when you actually do create the incentives to produce again in the United States, we do that quite well.
WSJ What’s News
The Case for Trump’s Tariffs
I mean, one classic example is when, thanks again to the Reagan administration's policies, Japanese auto industry moved its production to the American South. I don't hear a lot of people running around complaining about how much, you know, more expensive Toyotas and Hondas are because they're made in America. In fact, there is no cost related problem with them being made in America.
WSJ What’s News
The Case for Trump’s Tariffs
So you can absolutely do it. I think what you want to have is a clear plan that that. corporations and investors can also respond to. And ideally, you want to phase these in so that you don't have tariffs charging people extra money faster than it is plausible to bring alternatives online.