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BookNotes Plus is available wherever you get your podcasts and on the C-SPAN Now app. | |
| Economists and scholars discuss the impact of President Trump's tariffs at the 2025 New Liberal Action Summit. | ||
| Panelists argue that tariffs were unprecedented from constitutional and historical perspectives. | ||
| The U.S. Supreme Court is scheduled to hear oral argument in November regarding the legality of the tariffs. | ||
| All right. | ||
| Thank you everyone for coming to our panel on trade after Trump. | ||
| For those of you that don't know me, I'm Tobin Stone. | ||
| I'm the deputy director of the Center for New Liberalism. | ||
| This year, we've been focused a lot on trade. | ||
| It's been one of our top issues since our founding in 2017. | ||
| But as you can imagine, it's become a really important issue in 2025 with global tariffs being done by the Trump administration. | ||
| So we're convening this panel to kind of talk about what trade policy is both going to look like, what it looks like right now, but what it could look like after Trump and if there is a path forward for a more prosperous world with more free trade. | ||
| So I want to real quick introduce our panelists. | ||
| We have Ed Gresser, who is the Vice President of Global Markets at the Progressive Policy Institute. | ||
| We have Tara Hoops, who is the Director of Economic Analysis at the Chamber of Congress. | ||
| And Joseph Follitano, who writes for Apricetas Economics. | ||
| So just to get things started, Ed and Joey, you've both written a lot about tariffs. | ||
| You've been tracking the numbers closer than just about anyone else I know. | ||
| And you've also written a lot about Trump's tariff decrees and how inconsistent they've been. | ||
| For the folks who aren't as in the weeds as the two of you, it's pretty hard to make sense of what the actual policies are. | ||
| Could you try to distill down what's been happening and why it's so bad for the public? | ||
| Sure. | ||
| I think to tell the long story of U.S. trade policy, we've had low tariffs for now almost half a century. | ||
| When Trump came to office his first term, average tariff rate is about 1%. | ||
| When he comes in for the second term, it's about 2%. | ||
| So he had doubled them. | ||
| Today, it's something close to like 18%. | ||
| So in his first term, he's doubled them. | ||
| This time, we're talking about something close to 10 times what it was before. | ||
| And the tariff rates are set still by something close to that crazy bilateral formula that came out on April 2nd related to trade deficits. | ||
| So countries like Vietnam that have a higher nominal trade deficit with the United States have higher tariffs, but there's no like structural rhyme or reason. | ||
| And then there's a ton of like these sectoral tariffs on things that are very important to the U.S. economy, like cars, like steel and aluminum, that are at a base rate but much higher and totally universalizing. | ||
| And then the last thing, this is something that I think is sort of underreported because of how frequently the tariffs change and how difficult it is to track them. | ||
| But there are these like big, big, big, important exemptions. | ||
| So right now, about half of U.S. imports still come in without a tariff. | ||
| Those half, it's basically first computers, almost all computers are exempted. | ||
| Then it's secondarily stuff from Mexico and Canada. | ||
| And then it's like pharmaceuticals, some critical minerals, oil, things like that. | ||
| But those exemptions are in some ways just as important as the tariffs themselves because they induce what you still can buy as the tariffs are that high. | ||
| And then, of course, they change like every five seconds. | ||
| If anyone is watching this more than a week from now, they've probably changed again. | ||
| They will probably change another dozen times before the end of the year. | ||
| I can't stress enough how abnormal that is. | ||
| Like, just for a point of comparison, something I'm sure we'll get into later in the discussion when the Biden administration did tariffs on China during the last year of their term. | ||
| The tariffs were announced in 2024, and the bulk of them were scheduled to take effect in 2026, meaning they have not yet taken effect. | ||
| And then Trump will say, you know, we're going to maybe do tariffs 100 times larger than that this Friday. | ||
| Who knows if that's actually going to happen? | ||
| But you have this perpetual undercurrent of uncertainty. | ||
| Yeah, to follow up on that, a couple of additional points. | ||
| One is for the historical record, the last time we did a big tariff increase, it was in 1930, Tariff Act of 1930, Senators Moot and Rip Holly. | ||
| That took the average tariff from 14% to about 20%, so about a 6% jump. | ||
| I think it is probably true that this 2% to 18% is the largest tariff increase that the U.S. has ever done. | ||
| So it's a very big step. | ||
| Second, it has been done outside the constitutional context. | ||
| The Constitution says very clearly Congress has power to lay and collect taxes, duties, imposts, and excises. | ||
| No previous president had ever claimed a power to set tariff rates personally, whatever country he wants, whatever product he wants. | ||
| It is an entire innovation in American political life. | ||
| And three, the various decrees that have done this, there's, depending on your count, 11 or 12 of them, are often accompanied by almost lunatic statements that really make your eyes go wide open, | ||
| such as on September 29th, three or four weeks ago, the Commerce Department put out a decree 10% tariffs on lumber and 25% tariffs on bathroom cabinets, kitchen cabinets, | ||
| bathroom vanities, and upholstered furniture, so this kind of chair but not a wooden chair, on the basis of a national security claim involving the assertion that wood products are critical components of munitions, such as artillery rounds and tank shells, and critical components of missile defense systems and thermal protection systems for nuclear re-entry vehicles. | ||
| You can go and look on the Federal Registers. | ||
| This is exactly what they say. | ||
| This is why your house payments are going to be higher next year. | ||
| Yeah, Ed told me about that the other week, and I was shocked. | ||
| Their whole justification is that wood is supposedly used in the nose cones of nuclear missiles, or Poseidon missiles, actually, but we haven't made any Poseidon missiles since 1992, I believe. | ||
| Tara, turning it to you, you've written a little bit about the specific impacts of Trump's tariffs on families. | ||
| We've seen a lot of tariffs on specific products that are really useful for new families. | ||
| This trend kind of contrasts with the agenda of affordability that Trump was trying to run on in 2024, where he said he was going to bring costs down. | ||
| Could you talk to us a little bit more about what you've written about and just the politics of Trump now trying to raise costs after running on lowering costs? | ||
| Well, keep in mind, he said he was going to lower costs on day one. | ||
| So he's already lost on that goal, which is obviously not surprising. | ||
| But something that is happening right now, where we saw our report come out just a couple months after Liberation Day, April 2nd, and it was baby essentials were all going up in price. | ||
| 24% was the average. | ||
| When people are starting a family, that is when they are at their most vulnerable at times economically. | ||
| If you just ran a campaign where arguably cost of living was one of the most important topics, and now you also have a campaign that's focused on family formation, IBF, increasing the birth rate, why are we at complete odds with the goals that we originally stated only a couple of months ago? | ||
| So right now, families are going to either cut back, they're trying to look for second-hand goods, people are able to mark up prices when they know that the supply is low and that the demand is high. | ||
| So it's something that families are continuing to struggle with, as are these construction materials also making the housing crisis a bit more unaffordable. | ||
| So it's something that we're getting hit at from all sides. | ||
| It's really hard to ask families to front up and pay more for this if their wages haven't grown and matched that. | ||
| Awesome. | ||
| Thank you. | ||
| Ed, you kind of alluded to this earlier, but when we set aside just the economic impact of Trump's tariffs, there's something unique about them, which is that they are different from those of past presidents, not just in scale, but in their approach and intent. | ||
| Could you go a little bit further into this and what makes the trade strategy so unprecedented in modern history? | ||
| Yeah, for sure. | ||
| Again, the Constitution views tariffs as a form of taxation, and it assigns the power over taxation to Congress. | ||
| And it also assigns to Congress the power over regulation of commerce with foreign nations. | ||
| So in the past, the way trade policy has been made, either in the first half of American history by congressional laws and bills, and then by international agreements that administrations carried out based on instructions from Congress that always included negotiating objectives. | ||
| We want you to cut tariffs by 25%, but not in this type of product or whatever the instructions were at any point. | ||
| The really unusual thing about the Trump administration's approach is that it has ignored this pretty strong and unambiguous constitutional rule that Congress ought to be the one to set policy. | ||
| They have done this by taking laws that Congress had passed, one in 1962 and then another in 1974, which are really designed for extraordinary situations. | ||
| The one on lumber uses a law saying in cases where there's a real national security problem, presidents have a right to adjust imports in certain ways. | ||
| Most of the ones that, like the ones on Vietnam or that Joey was mentioning, come under another law, International Economic Emergency Powers Act, which dates to 1974 and is meant for things like the outbreaks of wars or pandemics when you may really need to seal the border or cut off trade with a hostile country very quickly, and then Congress can kind of normalize it and regularize it later. | ||
| So this is an attempt to use pretty extraordinary circumstances laws to scrap the congressionally authorized tariff schedule, which has a lot of problems, but it is constitutionally legitimate, and substitute for it a new schedule which is extremely mutable, changes constantly, grows constantly. | ||
| One of the other examples I noticed was in August, the administration declared that condensed milk and cream and also balance beams and propane and mosquito repellent are steel and aluminum derivative products, and those therefore should be covered by the steel and aluminum tariff decree of March and June. | ||
| So it is a, you know, I think we maybe use the word haphazard approach, very much guided by sentiments and emotions. | ||
| I'm really mad at Brazil this morning. | ||
| I'm going to try to hit them very hard. | ||
| Or appeals from interest groups like the National Aerosol Association, who's responsible for this milk decree, and in some sympathetic way, because they had really been hammered by the steel decree earlier. | ||
| So you get all of these kind of escalating waves of things having caused a problem for the National Aerosol Association members. | ||
| You then try to push the cost off onto bakeries and gym clubs and restaurants. | ||
| They will have a problem, and you'll have to be trying to solve that one in a few months. | ||
| That is the big difference. | ||
| In the past, Congress would take a year and design a law. | ||
| They may do it well or they may not. | ||
| But it was kind of regular and predictable and once in place, be stable until Congress again decides it's time to make a change. | ||
| And that's not what we're seeing now. | ||
| I just add to Ed's point here. | ||
| It's worth remembering Congress can stop this at any point. | ||
| Congress could stop this at any point tomorrow if they chose to, and they will not even hold many votes to say how many members of Congress would agree with stopping this at any point. | ||
| I don't think there's anything close to a majority now, but I do think that there is like dissension within Republicans on how poorly this is going and how poorly it reflects on that all as a party. | ||
| And they choose not to. | ||
| So they've surrendered this authority to the White House and they're refusing to take it back to sort of defeat. | ||
| Believe our recorded program here. | ||
| You can watch it in full on our website, c-span.org. | ||
| We take you now to Tokyo, where President Donald Trump is meeting with the Japanese Emperor. | ||
| But surely if we gave more authority to the president, the president would take the interests of the whole of the country into account and would sensibly craft stable tariff policy that would not change. | ||
| And so like that, that theory worked to a point for several decades. | ||
| Clearly it's not working today. | ||
| And Congress is derelicting its duty by not actually either legalizing the tariffs, pass an actual law that says this is what we want the tariff rights to be, or saying no, the White House should not have this authority. | ||
| You know, the authority for taxation is vested in the legislature, and we have to take that back. | ||
| Just to add on to what Joey was saying, it is very important to understand that Congress could do something about it at any point, and the fact that they haven't is kind of insane. | ||
| And when the tariff conversation first started, free trade was not something that every single person, the average American, was going to get on board with. | ||
| But we now have polling for the past couple of months showing everyone is not a fan, besides MAGA's base, of these tariffs. | ||
| We have independents growing weekly in these polls showing that they are not a fan of this. | ||
| They understand their impact on the economy. | ||
| Democrats are basically completely for free trade at this point. | ||
| And yet, our elected members of Congress are staying relatively silent on it. | ||
| And when we first saw signs of this show up in the economy, many of them were even making videos trying to somewhat say, well, maybe in a targeted tool way, this could work. | ||
| Like, that's not what Trump is doing right now. | ||
| We have fully lost the wagon here. | ||
| Like, we are just going down a birding hill with this. | ||
| And yet, like, it's been very slow and not much mention of it. | ||
| Well, that's a perfect opportunity to just plug, first of all, a project the CNL started in May, which was our Congressional Tariff Messaging Index, which takes a look at all of the Congressional Democrats in the U.S. House and evaluates how they responded to Trump's tariffs. | ||
| Whether or not they said anything about the tariffs on Canada, the tariffs on Mexico, the global reciprocal or reciprocal tariffs, whether or not in their statement they added something about, well, I support some tariffs, but not these tariffs, all of that. | ||
| And we released it, we found that there were quite a few Democrats who did have some really strong messaging. | ||
| Quite a few of them have been at today's conference already. | ||
| But there are a lot of other Democrats who aren't as great. | ||
| But where I want to take that, though, is like there is a trend of Democrats who used to be pretty anti-trade, who may have voted against the Trans-Pacific Partnership back in 2015, now have started to become pro-trade. | ||
| We've seen House Ways and Means, which has members of Congress who were leading the charge against TPP, are now leading the charge against Trump's tariffs. | ||
| So just kind of for all three of you, could you kind of talk about this development that you've seen and whether or not you think that it might be long-lasting? | ||
| Do we think Rep Linda Sanchez, who used to voted against TPP but is now leading the charge against Trump's tariffs, is going to stay anti-tariff after this? | ||
| Starting with you, Adam. | ||
| It's a great question, very interesting one. | ||
| Polling has always showed that people who think of themselves as Democrats are kind of internationally minded, kind of like trade. | ||
| They're kind of positive about trade agreements. | ||
| But I think it has not been until now that the government has really pushed on them. | ||
| You have to have an opinion. | ||
| It has to be a pretty strong one because this is going to affect you and your life right now. | ||
| Rather, it was more like, do you think the Trans-Pacific Partnership is a good idea? | ||
| And people kind of like, I have a kind of good feeling about it, but it might be kind of complicated. | ||
| I don't really feel totally confident. | ||
| They now do feel pretty confident. | ||
| They've seen this in action for nine months. | ||
| They don't like it. | ||
| The public in general is pretty disgusted. | ||
| Very typical polling is like 64% negative, 35% positive. | ||
| And I think, as Tara mentioned, Democratic self-identified is more like 95 to 5. | ||
| Or I saw one from Ohio yesterday. | ||
| It was 97 to 3. | ||
| So I think Democratic politicians are hearing strongly from their constituents that they're afraid, they're upset. | ||
| They feel this is putting pressure on them in their personal lives. | ||
| They don't like the idea of the U.S. being in a kind of really unfriendly relationship with Canada. | ||
| And so I think it's a much more salient issue now than it has been in quite a long time. | ||
| And I think that does have the potential to make kind of the change in mood a kind of lasting one. | ||
| I am interested to see how Republicans will assimilate this. | ||
| Are they viewing this as an embarrassment and a failure that they are kind of trapped in out of fear of the administration? | ||
| Have people on the right bought into this now? | ||
| I think that's really the bigger, like for me, a more kind of open question than what lasting effect will have on Democrats. | ||
| I do think it's going to be a pretty powerful one on the Democratic side. | ||
| So the thing I would add, G. Elliott Morris, who's a data scientist, does these big trackers of issue polling and issue approval for the Trump administration. | ||
| And the Trump administration's worst issue right now is cost of living. | ||
| They're like negative 20 on cost of living. | ||
| And then right above cost of living is trade. | ||
| They're like negative 18 on trade. | ||
| And obviously those two things are very related. | ||
| People elected him in part because they wanted the cost of living situation addressed. | ||
| And the first big economic proposal he has is what if I made the cost of living situation worse? | ||
| So unsurprisingly, that didn't resonate well with voters. | ||
| I think there were a lot of people who voted for Donald Trump, one, thinking that the tariffs were going to be like closer to what they were in the first term, which were they were big, do not get me wrong, they were like macroeconomically significant, but they were not the overwhelming economic story. | ||
| And like I said, a difference of 10, a difference of a full order of magnitude. | ||
| And the second important thing to keep in mind there is like during Trump's first term, the economy was consistently one of his best issues. | ||
| And a lot of these sort of rule of law, immigration, like what do you think of his attitude or how he presents himself in the public, those are some of his worst issues. | ||
| And that's flipped. | ||
| People are like more approval of his immigration policy than it was in the first term, less approval of his economic policy in the first term. | ||
| And so I think that that's really telling about the big difference is tariffs. | ||
| Obviously, the immigration policy has, in my opinion, gotten a lot worse and clearly gotten a lot more restrictive. | ||
| So people don't like them. | ||
| And the second thing that I would say here is to me, for Democrats, this is lining up an economic ideological axis. | ||
| Trump has this core belief that the problem with the U.S. economy is foreigners. | ||
| It's foreigners within the country, foreigners outside of the country who are taking advantage of the United States, who ally with some fifth column of Americans to undermine the country via corporations, NGOs, Soros, blah, blah, blah. | ||
| And I don't think that that's actually what people want to see. | ||
| They want to see complex economic issues solved. | ||
| Restricting immigration or increasing tariffs is not solving inequality or wage growth or cost of living or housing crisis. | ||
| They don't care about it as this sort of anti-foreigner, xenophobic, nationalistic project. | ||
| They care about it if it delivers results. | ||
| And if it doesn't deliver results, you have an opportunity to attack the xenophobic ideological project on the grounds that it's not working. | ||
| Yeah, just to add on to what you were saying before on how it has never really been as salient as it is now, because back then, as Joey said, this was not something that was ever precedented before. | ||
| This is completely unprecedented to have a president tweet out a new tariff change on his social media website. | ||
| We have not done that before. | ||
| And while he is doing his best to slow down some economic data coming out, people are still going to see it in the price of goods as they go up. | ||
| And one of Biden's fatal flaws is that people don't like high prices, and they don't like when you deny high prices in front of their face. | ||
| Voters are consumers. | ||
| When people are unable to use their pocket change as much to buy the things that they would like to do, they understandably get upset from that. | ||
| And I think Democrats are finally starting to learn, like, affordability and cost of living is the number one thing to run on. | ||
| For example, the government shutdown. | ||
| I would say a lot of people are happy with how Democrats are responding to the government shutdown. | ||
| They're focusing on health care, focusing on costs, and how it's impacting you and your family. | ||
| And people are responding to that. | ||
| They could see themselves there. | ||
| A government shutdown outside of that is pretty abstract. | ||
| So if you don't add any specificity to it, people kind of get like, okay, well, why do I care? | ||
| How does this impact me? | ||
| If I could just add one thing to that, and you mentioned the Biden administration, in retrospect, one of the things that was a pretty ominous sign was early on in the first couple of years, and then very explicitly in a speech that the former National Security Advisor Jake Sullivan gave, he made a point of saying past policies have focused too much on efficiency and not enough on resilience. | ||
| And that was a way of saying to the public, you're going to expect higher prices, and the bargain for that will be we'll be less vulnerable to some sort of shock in the future. | ||
| And I think the public really did not like that and did not agree with it. | ||
| They thought, yes, being more resilient is a good idea. | ||
| We don't think it's correct to say that that has to mean higher prices. | ||
| And if you keep at it, you're going to lose a lot of your goodwill. | ||
| And that was what happened. | ||
| They made a bet that they really should have thought about a lot more before taking that road. | ||
| Tara, you mentioned talking about just how we need to raise the salience of cost issues and just continue to raise the salience of this issue. | ||
| When it comes to making this issue more salient, you've also written about the weirder price impacts of tariffs on a kind of just a wide variety of ranges of goods that you wouldn't think about, but that create opportunities for Democrats to run. | ||
| Could you talk a little bit more about that and how Democrats can take the lead on that to raise the salience of the issue? | ||
| Yeah, so I had a piece recently that was called like the tariff tax on joy, and I almost thought about titling it like they came for the gamers after seeing the price increases on Xboxes, PlayStations, and so forth. | ||
| And it's like they might not say it out directly, but everyone knows why these price increases are happening. | ||
| And those aren't the only things where we're seeing that. | ||
| You're even seeing it in board games. | ||
| You're seeing it in individual Lego sets. | ||
| Like, those are something small, but when it is that small, it's going to be more costly to recreate it, so they just won't have the supply anymore. | ||
| And it's like now you're just attacking people's hobbies on top of their necessities. | ||
| So you have Americans suffering for some abstract policy goal of revitalizing manufacturing, but we're not seeing any benefits right now. | ||
| We may never see any benefits right now because sometimes he pulls them out, sometimes he pulls them in, but really we have no clue if these factories are ever going to open and if jobs really can come from it. | ||
| One thing I'd really like to add to that, to Tara's point, in Trump's first term, right, so you'd have these giant lists that they'd announce ahead of time for tariffs on China. | ||
| And it'd be like 150 crate items, each of them is a separate code, whatever. | ||
| But they were very particular and careful about what they exempted. | ||
| They never put tariffs on smartphones from China. | ||
| They never put tariffs on toys. | ||
| They never put tariffs on Christmas instruments, excuse me, Christmas ornaments, which almost all come from China, because they had this sort of internal belief that if we ruin Christmas, it's going to be bad. | ||
| That's not a winning electoral strategy. | ||
| And that requires some dexterity and skill to have someone in who knows, hey, we import a lot of Christmas ornaments from China. | ||
| Maybe we should exempt them. | ||
| And they've clearly just not put in the care or effort to do that, either because they're too lazy or because I think they believe that public opinion on this doesn't matter. | ||
| That they can ruin Christmas now and it would be fine. | ||
| And I don't I think they're wrong about that belief. | ||
| I think people are like the backlash you're saying is in part because they went over their skis even more so than they tried to. | ||
| And people are having the backlash over like stuff that's very obviously not related to national security, stuff that's very small but very important to people. | ||
| At that time I was a civil servant in the U.S. Trade Representative Office. | ||
| The adjectives of care and precision, probably a little bit overdone. | ||
| Comparatively, comparatively. | ||
| At that time they were trying they focused everything on China. | ||
| And now they're focusing everything on the world. | ||
| And if you've ever seen Canadian comedian Norm MacDonald, he does a kind of bit about the country I'm really worried about is Germany. | ||
| Think about 100 or so years ago they decided a war. | ||
| Who do they pick? | ||
| The world. | ||
| And that's kind of what Trump has done now. | ||
| So it's harder to find spaces and gaps to use. | ||
| And I think both now and in the previous case, they really did in the first term try to avoid tariffing sensitive consumer goods. | ||
| The price of that was that most of those tariffs fall on industrial inputs instead. | ||
| About 56% of imports, I think, are bought by manufacturers, construction firms, farmers, so forth, to make things. | ||
| And what's happening now is really an amplification of the first decision, that costs are really piling up within U.S. manufacturing. | ||
| And despite the hope of the administration that this would make manufacturing bigger, the opposite has sort of happened up to now, that manufacturing relatively has shrunk fairly quickly over the past six months because there's so much cost imposed on them as well as on the family and the home buyer. | ||
| Awesome. | ||
| I do want to go a little bit off topic for a moment, but earlier one of you mentioned that we're in the middle of a government shutdown. | ||
| I feel like it's important to address the fact that in the middle of this government shutdown where we're doing a panel on trade policy, President Trump and his administration is using some of the tariff revenue to kind of trendy around the fact that the government doesn't have a budget. | ||
| They are probably doing this illegally. | ||
| And Ed, starting with you, and any of you guys have any thoughts to add, can you talk about what the potential long-term impact of this could be if Trump continues to use this tariff revenue in this way? | ||
| Well, tariff revenue, traditionally from the 1930s forward, has been about 1% of government revenue. | ||
| This year, it's a lot bigger, but it's only 3.5% of government revenue. | ||
| And I think what they've been trying to do is advertise, well, we used to have 30 billion in tariffs, now we have 100 and some billion, to show how wealthy the government has become and how much money we now have to bail out farmers or to do this or that. | ||
| We have collected this year $4.6 trillion in income tax and Social Security and Medicare taxes. | ||
| Tariffs are quite small still compared to other forms of money. | ||
| They're not different from other forms of money, except that they cost the public more than those other forms of taxes. | ||
| And if you're using tariff money for something that's not legal, it is generally going to be illegal, you know, income tax or whatever. | ||
| So I think you should think of this as a way that the Treasury Department is trying to build support for a policy that the public is clearly rejecting. | ||
| Not by saying we have more jobs or more manufacturing, but we, the government, have gotten some more tariff money this year. | ||
| I don't think it's going to be a success. | ||
| Yeah, I will add to that. | ||
| Obviously, we've touched on throughout this conversation, like the legal status of the tariffs, the sort of gray area that they're in right now. | ||
| And there's a Supreme Court case going through the rounds on one of the AIPA tariffs, so most of the April 2nd tariffs are actually legal. | ||
| And I personally have very little faith in the Supreme Court. | ||
| And I think that this is sort of a downstream of the decay of Congress being unwilling to assert its authority and the judicial branch being unwilling to check the executive. | ||
| You have this, like, it's been a pattern since the start of the Trump administration where the executive is dismantling agencies like the Department of Education without a law from Congress, spending money that's not appropriated without a law from Congress, and taking in, or excuse me, refusing to spend money that is appropriated by laws of Congress. | ||
| And so I see this move that we're using the tariff money on the WIC program. | ||
| That's not real. | ||
| That's just like the tariff money doesn't go into one jar that's in the White House and then gets distributed to families. | ||
| But I do, I think it's to Ed's point, it's exactly right. | ||
| They want to tie the revenue impacts of the tariffs to other positive programs that people have good feelings about, even if the things are totally unrelated. | ||
| Awesome. | ||
| Well, to kind of start to wrap things up, the last 10 years have tested a lot of the assumptions behind liberal economic policy, but there are also signs that support for more openness, and just more global trade could make a comeback, especially if Democrats retake power after having been re-energized by Trump continuing to push forward on this. | ||
| As we look ahead, both to 2026 and the 2028 elections, what is giving each of you guys confidence that free trade and international cooperation can make a real comeback? | ||
| And what is the most important thing that everyone in this room can be doing to help move that conversation forward? | ||
| Something that I think would be a great path for Democrats to understand is look back at the criticisms that we got from the 2024 election. | ||
| A lot of people thought the Democrats were not for the working people anymore. | ||
| They're not for like the small businesses. | ||
| They're just not there for the average person. | ||
| The people who are getting impacted by tariffs the most are going to be the small businesses. | ||
| They do not have the revenue, the resources to take on the import costs, and sometimes they have to pass it on to the consumer. | ||
| There's obviously a lot of competition out there. | ||
| The consumer is just not going to go for the more expensive product. | ||
| And for that, that means a lot of small businesses are close to failing. | ||
| So it's understanding like one, you have essentials at home, you're starting to rise. | ||
| Now you have the creation of businesses that are now at stake and might be close to failing. | ||
| And then you also have your gaming equipment going up in price for no reason. | ||
| So it just becomes a very simple messaging standpoint for Democrats to just be on the bright side of history. | ||
| And I would like to look past them lagging when this all first started happening because even myself, I find this to be, as we have been saying, completely unprecedented. | ||
| For him to take it to these levels is something that is very hard for us to wrap our minds about. | ||
| But now they need to stop being reactive and start being proactive. | ||
| We have the midterms coming up. | ||
| That is going to be another cost of living election. | ||
| Let's get the messaging right there and not flail again. | ||
| So I was chatting with my friend Scott Linsecumb, who I'm sure people in the audience know. | ||
| He's the trade policy guy at the Cato Institute, obviously also not a big fan of tariffs. | ||
| And we were having this big, long discussion about what is the closest example of a country that lowered tariffs back to sort of free trade levels from very high tariffs successfully. | ||
| And the bad news is that there's not that many good examples. | ||
| We're talking about Mexico in the 90s during the debt crisis, Turkey during the IMF bailout, the fall of the Soviet Union, really, really struggling to get good comparison points. | ||
| But the other thing is that there's no comparison in modern history for a large high-income country raising tariffs this quickly. | ||
| So we are really in uncharted territory. | ||
| The thing I would say to start out is, like I said, this is unpopular. | ||
| People do not like it. | ||
| And even though there are going to be vested interest groups who build cars and therefore they like tariffs on cars, there is now the tariffs are so big that they're affecting every member of the general public in a way that they were not during Trump's first term. | ||
| And so I think there's a real opportunity to communicate to the American public what you're doing. | ||
| And then the sort of trade-off of like Trump has done this all by executive order is that the next president could undo it all by executive order and then hopefully put the genie back in the box and not let this keep this power around. | ||
| But I think it's something that people have to be vigilant for in public. | ||
| If you're advocating for people in the next election cycle, this should be something that is important enough now that it should be on your checklist of what people's policy ideas. | ||
| And the last thing that I will say is like economists talk all the time in the globalization era about we need to do more trade because trade helps growth. | ||
| It helps raise incomes. | ||
| It helps allow people access to more goods and services. | ||
| But obviously there are winners and losers and we needed to redistribute from the winners to the losers. | ||
| The thing is that a lot of American trade deals, especially in the 90s and 2000s, you're talking about very small decreases in the tariffs. | ||
| The actual macroeconomic impacts of these were not as large as what we're seeing today by a wide margin. | ||
| But that means the opportunity right now to drop tariffs from like 18% back to 2% would actually deliver way more macroeconomic gains than like signing NAFTA did in the 90s or China's accession to the WTO or all these other free trade stuff that happened previously. | ||
| So you have a real opportunity to say, we're going to have a package of policies. | ||
| This is our pro-growth segment for we're going to get rid of the tariffs and then we're going to package it with a lot of stuff that will actually use the money from that economic growth in ways that help everyone in the country. | ||
| As a nominee for kind of another recent example, Australia and New Zealand did a lot of tariff cutting in the 1980s and early 1990s all in themselves. | ||
| So you could look at them as one case. | ||
| In terms of Tobin's basic question, what's the case for optimism and so forth? | ||
| I think there's a pretty good one. | ||
| The first time I wrote about tariff policy, I remember, well, it was my first tour at PPI, and I started out my paper with a line which is, I think, a pretty close, close to exact. | ||
| A lot of people avoid tariff policy because they think it's boring and hard to understand. | ||
| And I think that was true at the time. | ||
| I learned that the paper I wrote was the first look at the U.S. tariff schedule and who it was taxing and how it operated, what was tariffed and what was not. | ||
| Really, since the 1950s, economists have thought this is an old and boring topic, and the typical person would kind of, you know, their eyes would glaze over. | ||
| They're not glazing over anymore. | ||
| They think this is an immediate issue for them. | ||
| They're trying to think through what it means. | ||
| And I think that will really change the trade debate post-Trump administration. | ||
| And it may be that we come out with some different approaches than we had in the past. | ||
| To kind of elevate the question of why is it we have a 48% tariff on cheap sneakers, even without the Trump tariffs? | ||
| Why is it that we have 32% tariff on polyester shirts and only 0.9% on silk shirts? | ||
| Is this really a good system at all? | ||
| And what would we like to, if we'd want to have it kind of tariff reserve, what we'd like to have it on and why. | ||
| So I think there's a lot of opportunity both to kind of pull back the kind of pretty egregious stuff that Trump has done, but also to look at the basic constitutionally authorized systems and make them better in a way that nobody had been interested in for quite a while. | ||
| Well, if there isn't anyone else, if anyone else wants to add anything, I'll do that. | ||
| If not, I want to thank Joey, Tara, and Ed for joining this panel today. | ||
| All of them do great work. | ||
| Check out Joey's blog, Tara's blog, and all the work Ed does at PPI, including his Trade Back to the Week, which is the best newsletter that you can get. | ||
| And thank you to the three of you for coming out today. | ||
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