Future of Freedom: Can the Use of Tariffs Help Improve the U.S. Economy?

Episode: Oren Cass & Iain Murray: Can the Use of Tariffs Help Improve the U.S. Economy?
Host: Scott Bertram
Release Date: May 6, 2025
Guests:

• Oren Cass, Chief Economist at American Compass
• Iain Murray, Vice President for Strategy and Senior Fellow at the Competitive Enterprise Institute

Introduction

In this thought-provoking episode of Future of Freedom, host Scott Bertram delves into the contentious debate over the use of tariffs in the United States economy. Bringing together two experts with opposing viewpoints—Oren Cass from American Compass and Iain Murray from the Competitive Enterprise Institute—the discussion navigates through economic theories, national security concerns, and the practical implications of implementing tariffs in today's globalized world.

Oren Cass's Perspective: Advocating for Strategic Tariffs

Challenging Conventional Economic Assumptions

Oren Cass begins by questioning the traditional economic stance that offshoring production is inherently beneficial due to cost efficiency. He argues that this perspective may be outdated in the context of today's complex global economy. Cass emphasizes the importance of manufacturing for national resilience and economic stability.

“The standard economics for the latter part of the 20th century held that it didn't really matter what you made in a particular economy... What we see in a modern industrial economy... is very costly.”
— Oren Cass [01:15]

Purposeful Tariff Implementation

Cass outlines that tariffs should not be a one-size-fits-all solution but rather tailored to specific economic and strategic goals:

1. Negotiating Leverage: Using tariffs as a bargaining chip to influence trading partners' policies.
2. Long-term Trade Strategy: Implementing tariffs to shift supply chains away from adversarial nations like China.
3. Revenue Generation: While not ideal as a primary purpose, tariff revenues can be repurposed to fund other governmental needs or reduce other taxes.

“If you realize no, actually making things does matter, we can still have a debate about how to do tariffs.”
— Oren Cass [03:06]

Reindustrialization and Middle-Class Stability

Cass underscores the necessity of revitalizing the manufacturing sector to ensure economic opportunities for the middle class, particularly for young men without college degrees. He connects a strong industrial base to national security, innovation, and broad-based prosperity.

“Having a diversified economy, having an economy that is growing... is vital, frankly, for young men in particular... if we want them to feel like they have a strong future.”
— Oren Cass [06:59]

Trade-Offs and Public Perception

Addressing concerns about increased consumer costs due to tariffs, Cass argues that the broader benefits of a resilient and innovative economy outweigh the localized costs. He believes the public recognizes the long-term value over short-term price hikes.

“Understanding the trade-off broadly... that is much more important... that was a mistake.”
— Oren Cass [10:47]

National Security and Decoupling from China

Cass firmly advocates for decoupling the U.S. economy from China, citing incompatible economic and political systems. He views tariffs as a legitimate tool in reducing dependency and promoting American values.

“Tariffs are absolutely an element of, of the decoupling of pushing our supply chains away from China.”
— Oren Cass [12:51]

Evaluating Tariff Success

Rather than relying on stock market performance, Cass suggests measuring tariff success through tangible investments in domestic manufacturing, exemplified by the semiconductor industry's resurgence under the CHIPS Act.

“If we see the investment happening, we'll know that we're on the right track.”
— Oren Cass [16:46]

Iain Murray's Perspective: Critiquing Tariff Utilization

Historical Context and Decline of Tariffs

Iain Murray traces the decline of tariffs from their historical role as a primary revenue source to their current perception as regressive and economically detrimental. He highlights the shift towards income taxes, which are less burdensome on the working class.

“Tariffs are really quite regressive... The income tax... was really only aimed at high earners.”
— Iain Murray [21:14]

The Myth of the Trade Deficit

Murray challenges the notion that a trade deficit is inherently problematic. He contends that as the richest nation, the U.S. benefits from importing goods that complement its consumption patterns, viewing the deficit as a reflection of consumer prosperity.

“We should actually be quite happy about that.”
— Iain Murray [21:32]

Tariffs as Revenue Generators: An Ineffective Strategy

Addressing the argument that tariffs can serve as a supplementary revenue stream, Murray points out their limited financial impact compared to income taxes and the adverse effects of reduced consumer spending and retaliatory actions.

“They're not going to be a significant source of revenue... With retaliatory tariffs, the revenue base goes down again.”
— Iain Murray [23:02]

Retaliatory Tariffs and Global Trade Harmony

Murray warns of the self-sabotaging nature of tariffs, likening them to blockading one's own economy. He explains how retaliation leads to a cycle of economic harm, which was a driving force behind the establishment of the General Agreement on Tariffs and Trade post-World War II.

“Tariffs are basically like you're blockading yourself...”
— Iain Murray [24:48]

Limited Impact on Manufacturing Jobs

While acknowledging that tariffs can create jobs in specific industries, Murray emphasizes the broader negative impact on other sectors. He highlights the negligible effect of tariffs on overall manufacturing employment and the mismatch between the jobs created and the workforce's needs.

“We probably lost over 50,000 jobs in those other industries...”
— Iain Murray [26:16]

Service Economy vs. Manufacturing

Murray argues that the service economy provides better quality and more flexible jobs compared to manufacturing. He suggests that modern service sector roles align better with the current workforce's preferences and societal needs.

“Manufacturing jobs don't really seem to cut it.”
— Iain Murray [28:55]

Resilience Through Global Supply Chains

Contrary to the argument for domestic resilience, Murray demonstrates how global supply chains enhance resilience by diversifying sources. He cites the baby formula shortage as an example of the pitfalls of limited domestic production.

“The more sources you have around the globe, the more resilient the supply is going to be...”
— Iain Murray [30:36]

Negotiating Tariffs: Ineffectiveness and Market Spookiness

Murray critiques the use of tariffs as negotiation tools, noting their tendency to unsettle markets and invite retaliatory measures that damage the economy. He advocates for more rational and targeted trade agreements instead.

“Tariffs invite retaliation, which... causes everybody to be poorer.”
— Iain Murray [32:49]

Fair Trade Without Tariffs

Addressing issues like subsidies and currency manipulation, Murray suggests that tariffs are not the optimal response. Instead, he encourages identifying and targeting specific bad actors in trade practices, as exemplified by the initial strategies of the Trump administration.

“There are ways to negotiate trade agreements... targeting those bad actors.”
— Iain Murray [34:52]

Conclusion: Weighing the Tariff Debate

The episode concludes with a nuanced examination of tariffs' role in the U.S. economy. Oren Cass advocates for their strategic use to bolster manufacturing, enhance national security, and foster economic resilience. In contrast, Iain Murray presents a compelling case against tariffs, highlighting their regressive nature, limited economic benefits, and propensity to disrupt global trade harmony.

Both perspectives underscore the complexity of tariff implementation, balancing immediate economic impacts with long-term strategic goals. Listeners are left to consider whether tariffs, if applied thoughtfully and selectively, can serve as a tool for national economic improvement or whether their inherent drawbacks outweigh potential benefits.

Notable Quotes

• Oren Cass [01:15]:
  “The standard economics for the latter part of the 20th century held that it didn't really matter what you made in a particular economy... What we see in a modern industrial economy... is very costly.”

• Oren Cass [06:59]:
  “Having a diversified economy, having an economy that is growing... is vital, frankly, for young men in particular... if we want them to feel like they have a strong future.”

• Oren Cass [12:51]:
  “Tariffs are absolutely an element of, of the decoupling of pushing our supply chains away from China.”

• Iain Murray [21:14]:
  “Tariffs are really quite regressive... The income tax... was really only aimed at high earners.”

• Iain Murray [24:48]:
  “Tariffs are basically like you're blockading yourself...”

• Iain Murray [28:55]:
  “Manufacturing jobs don't really seem to cut it.”

Final Thoughts

This episode of Future of Freedom offers a comprehensive exploration of the tariff debate, presenting balanced arguments from both advocacy and opposition sides. By featuring experts like Oren Cass and Iain Murray, the podcast provides listeners with a deeper understanding of the economic, social, and political ramifications of tariffs, enabling informed opinions on their potential role in shaping the future of the American economy.

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