Consider This: Trump is Betting the Economy on His Tariff Theory
Episode Release Date: April 1, 2025
Host: Ailsa Chang
Guest: Rana Faroohar, Columnist for the Financial Times
Introduction: A Pivotal Moment for Trump's Tariff Strategy
In the latest episode of NPR’s Consider This, host Ailsa Chang delves into President Donald Trump’s ambitious tariff plan, dubbed "the big One," which he views as a transformative measure for the U.S. economy. The episode was released on April 1, 2025, a strategic date marked by Trump as "Liberation Day" (00:00).
President Trump highlighted the significance of the day in his address:
“I call it a lot of different names, but it’s really, in a sense, it’s a rebirth of a country because...” (00:16)
Current Tariff Landscape: Building on Existing Measures
The administration's upcoming tariff package is set to impose additional tariffs immediately, adding to the existing framework. Previously announced tariffs include:
- 25% tariff on imported cars
- 20% tariff on all products from China
- Up to 25% tariffs on select goods from Canada and Mexico
These measures have been central to Trump’s economic policy, aiming to protect American industries and reduce trade deficits.
Economic Concerns: The Risk of a Trade War and Recession
Contrary to Trump’s bullish stance on tariffs, many economists express significant concerns about their long-term impact. Mark Zandi, a prominent economist, warned of an escalating trade war and flagged the high risk of a recession:
“We’re raising tariffs on our trading partners. They’re responding with tariffs on our products. We’re lobbying nasty rhetoric at them. They’re doing the same to us.” (00:53)
Zandi further elaborates on the mounting economic damage:
“The economic damage so far has been modest. But with each passing day that the war continues, the damage is starting to mount.” (01:06)
Trump’s Vision: A Multi-Faceted Tariff Tool
President Trump envisions tariffs as a versatile tool to achieve several objectives simultaneously. According to Consider This, tariffs serve as:
- Negotiating Tool: Leveraging tariffs to pressure Canada and Mexico into favorable border policies.
- Revenue Source: Potentially offsetting his proposed $4.5 trillion in tax cuts.
- Shield for Manufacturing Jobs: Protecting American industries from overseas competition.
Trump succinctly encapsulated his goals in a congressional address:
“Making America rich again and making America great again. And it’s happening and it will happen rather quickly.” (01:29)
Expert Analysis: Rana Faroohar on Tariff Contradictions
To unpack Trump’s tariff strategy, Ailsa Chang converses with Rana Faroohar, a columnist for the Financial Times and author of Homecoming: The Path to Prosperity in a Post-Global World.
Conflicting Objectives of Tariffs
Chang raises the issue of contradictory purposes behind the tariffs, questioning how they can serve as both a long-term revenue source and a short-term bargaining chip. Faroohar responds:
“They haven’t explained them well. And I think that’s one of the reasons that markets have actually been very jittery in the last days and weeks.” (03:25)
She emphasizes that the current tariff strategy represents an unprecedented experiment, potentially altering the global and American economic landscape significantly.
Psychological Factors and Nationalism
Faroohar underscores the importance of understanding Trump’s psychological motivations, noting his belief that the U.S. has been disadvantaged in international trade. She contextualizes this with data on U.S. tariffs:
“Average U.S. tariffs on the rest of the world are around 2%. Europe, EU would be about 5%. China would be about 10%.” (04:35)
While she acknowledges that tariffs are slightly higher than average, she argues against framing trade deficits merely as subsidies. Instead, Faroohar points to the broader strategy of supporting critical domestic industries for economic security.
Impact on American Consumers and Industries
Economists have found that Trump’s tariffs primarily burden American consumers through higher prices. When asked if it’s possible to balance trade deficits without increasing consumer costs, Faroohar is skeptical:
“Probably not this time around... you might see reciprocal tariffs, potentially the beginning of a trade war. That’s real, that’s a real worry.” (05:50)
She doubts the administration’s assurances that China will absorb some of the costs this time, given the expanded scope of the proposed tariffs.
Market and Public Reaction: Signs of Turbulence
The market has reacted negatively to the latest tariff announcements, reflecting broader economic anxiety. A pivotal concern is whether shifting public opinion against tariffs could pressure Trump to alter his course.
Faroohar speculates on Trump’s sensitivity to public perception:
“I gotta think at some point, even... if you see popular opinion really falling, I gotta think that that’s gonna matter.” (07:49)
She warns that sustained negative public and market reactions could lead to significant economic and political turmoil, contrasting with Trump’s dismissal of consumer price hikes as a metric for success.
Conclusion: The Uncertain Path Ahead
Rana Faroohar concludes that while Trump’s tariff strategy aims to rejuvenate American industry and assert economic sovereignty, the lack of coherent explanation and potential for a full-scale trade war pose substantial risks. The episode underscores the high stakes of Trump’s economic gambit and the fine balance between nationalistic policy and global economic integration.
Rana Faroohar adds a closing thought:
“If it doesn’t, boy, we may be in for not just economic turmoil, but some political turmoil too.” (07:49)
Ailsa Chang wraps up the discussion, highlighting the critical nature of the ongoing tariff debates and their implications for the future of the U.S. economy.
Produced by Matthew Cloutier and Brianna Scott. Edited by Connor Donovan and Courtney Dorning. Executive Producer: Sammy Yenigan.
For more insights and updates, visit plus.npr.org/considerthis.