Bulwark Takes: We Haven’t Seen Tariffs This High Since the 1930s (w/ Jason Furman)

Release Date: July 30, 2025
Host: Jonathan Cohn
Guest: Professor Jason Furman, Harvard University

Introduction

In this episode of Bulwark Takes, host Jonathan Cohn delves into the escalating trade tensions and the surge in tariffs that the United States is currently experiencing. Joined by esteemed economist and Harvard professor Jason Furman, who previously served in the Obama administration, the discussion provides a comprehensive analysis of the current trade landscape, historical comparisons, and the potential economic repercussions of sustained high tariffs.

Historical Context of US Tariffs

Jonathan Cohn opens the conversation by highlighting the unprecedented rise in tariffs under recent administrations. He sets the stage by referencing the dramatic shift from historical tariff rates, prompting Jason Furman to provide a detailed comparison.

Notable Quote:
"Prior to Trump taking office, the average tariff we had on other countries was 3%. Now, we're collecting tariffs of about 20% on all imports."
— Jason Furman [00:53]

Furman contextualizes the current tariff levels by comparing them to the 1930s, particularly the era of the Smoot-Hawley Tariff Act, which significantly raised tariffs and is often cited as a contributing factor to the Great Depression.

Notable Quote:
"That is a lot. You have to go back to the 1930s to find tariffs at that rate... It contributed to the Great Depression back then."
— Jason Furman [02:26]

Current Tariff Rates and Recent Agreements

The discussion transitions to the specifics of the current tariff structure and recent trade agreements with major partners like Japan and the European Union. Furman elucidates how tariffs have not only been uniformly increased but also tailored based on individual country negotiations.

Notable Quote:
"We have a 10% tariff on almost every country in the world, and now we're raising that to 15% for Europe, 19% for Vietnam, depending on the country and the item."
— Jason Furman [01:38]

Cohn further explores the nature of recent agreements, questioning their solidity and the practical enforcement when agreements primarily rely on the private sector's actions rather than formalized governmental commitments.

Notable Quote:
"These agreements include Europe buying a lot more energy and Japan investing more in the United States, but it's unclear how the private sector will deliver on these promises."
— Jason Furman [05:52]

Economic Implications of High Tariffs

Jason Furman provides a critical analysis of the economic impact of the current tariff levels, arguing that while the US may appear to be "winning" in negotiations, the broader economic consequences could be detrimental.

Notable Quote:
"The US growth will be hurt more than growth in Europe and Japan as a result of these tariffs."
— Jason Furman [07:48]

Furman references studies from the Yale Budget Lab, which indicate that the elevated tariffs are likely to impede US economic growth more significantly than their effects on trade partners. He emphasizes that tariffs on intermediate inputs can disrupt manufacturing supply chains, potentially leading to job losses in certain sectors even as others may see gains.

Impact on Different Industries and Job Markets

The conversation delves into the sector-specific repercussions of high tariffs. Furman illustrates the complex dynamics within industries such as steel and automotive, where tariffs can lead to both job creation and loss depending on the context.

Notable Quote:
"Some steel plants will gain jobs due to protection from competition, while others that rely on imported materials may lose jobs."
— Jason Furman [10:01]

He highlights the phenomenon of "economic turnover," where industries experience reallocation of resources and labor, which can be costly and disruptive. The automotive industry serves as a prime example, with certain manufacturing activities moving back to the US, while others may relocate elsewhere due to export constraints.

Future Predictions and Areas to Watch

Looking ahead, Furman discusses the lagging effects of tariffs and anticipates further price increases as businesses can no longer absorb the costs indefinitely. He underscores that while the immediate impact may seem manageable, the long-term economic strain could become more pronounced.

Notable Quote:
"We're going to see more price increases as businesses can no longer indefinitely absorb the costs of tariffs."
— Jason Furman [13:50]

Furman also touches on the political ramifications, suggesting that the administration may be remembered negatively for the economic decisions surrounding tariffs, despite their complex nuances within GDP calculations.

US Trade Agreements with Key Countries: Europe, Japan, and Others

The dialogue shifts to recent trade agreements with Japan and the European Union, examining their structure and the challenges in their implementation. Furman expresses skepticism about the enforceability of these agreements, given their reliance on private sector commitments rather than robust governmental actions.

Notable Quote:
"These agreements are not fully formalized, making it unclear how effectively they will be implemented."
— Jason Furman [05:52]

Despite these concerns, Furman is optimistic that the involved parties will find ways to honor the agreements, albeit with some ambiguity in the operational details.

Challenges with Major Trade Partners: China and India

A significant portion of the conversation addresses the ongoing trade standoff with China and the stalled negotiations with India. Furman emphasizes China's unique leverage over the US due to its critical role in global manufacturing and supply chains.

Notable Quote:
"China has more leverage than any other country in the world vis a vis the United States and is willing to use it."
— Jason Furman [15:14]

He laments the lack of a unified approach with allies, such as Japan and Europe, which could potentially strengthen the US's negotiating position. The breakdown of talks with India further complicates the global trade environment, leaving major trading partners outside the framework of these high tariffs.

Concluding Remarks

In wrapping up the episode, Cohn injects a moment of levity by posing a lighthearted question about Major League Baseball, predicting the Boston Red Sox's playoff chances. This moment underscores the diverse range of topics covered and the approachable nature of the discussion.

Notable Quote:
"Wild card? Absolutely. 100% certain. No error bands around that one."
— Jason Furman [17:03]

The episode concludes with mutual acknowledgments, emphasizing the depth and breadth of the trade issues discussed.

Key Takeaways

• Tariff Surge: The US has increased average tariffs from 3% to approximately 20%, marking levels not seen since the 1930s.

• Historical Parallels: High tariffs reminiscent of the Smoot-Hawley era, contributing to significant economic downturns.

• Economic Impact: Elevated tariffs are projected to hinder US economic growth more than that of its trade partners, despite appearing advantageous in negotiations.

• Industry Disruption: Sectors like steel and automotive will experience both job gains and losses, leading to economic turnover.

• Trade Agreements: Recent deals with Japan and the EU lack full formalization and depend heavily on private sector compliance.

• China and India: Ongoing challenges with China’s leverage and stalled negotiations with India remain significant hurdles for US trade policy.

• Future Outlook: Expect continued price increases and economic strain as the impact of tariffs materializes over time.

This episode of Bulwark Takes offers a nuanced exploration of contemporary trade policies, providing listeners with a thorough understanding of the complexities and potential long-term effects of the current tariff landscape. Jason Furman's expert insights underscore the delicate balance between protecting domestic industries and maintaining robust economic growth in an interconnected global market.