Podcast Summary: The Real History of Tariffs

Podcast Information:

• Title: The Charlie Kirk Show
• Host: Charlie Kirk
• Description: Charlie Kirk, founder of Turning Point USA and a prominent grassroots activist, provides insightful analysis on current events from a conservative viewpoint. Engaging with a vast network of students across numerous campuses, Charlie delves into America's cultural and political landscape, offering clarity amidst chaos.
• Episode: The Real History of Tariffs
• Release Date: April 8, 2025

Introduction

In the April 8, 2025 episode of The Charlie Kirk Show, host Charlie Kirk (represented by Andrew Colvitt in his absence) delves deep into the intricate world of tariffs, their historical significance, and their impact on today's economy. The episode features an insightful discussion with John Carney from Breitbart, a renowned tariff expert, who unpacks the current tariff strategies employed by the Trump administration and draws parallels with historical tariff policies.

Market Rebound Amid Tariff News

The episode begins with Andrew Colvitt addressing the recent fluctuations in the stock market. After a tumultuous weekend marked by fears of economic downturn—referred to as "the sky is falling" scenario—the markets show a significant rebound:

• Dow Jones: Up by approximately 1,000 points
• Nasdaq: Up by 400 points
• S&P 500: Up by 123 points

Colvitt attributes this shift to the latest developments in tariff policies and their implications on global trade.

Trump's Tariff Strategy and Negotiating Leverage

A central theme of the episode revolves around President Trump's aggressive tariff strategies aimed at renegotiating trade deals and reducing trade deficits. Secretary of Treasury Scott Besant highlights that President Trump has "afforded himself maximum negotiating leverage," signaling a robust stance against trade partners like China.

Notable Quote:

• Scott Besant [03:27]: "President Trump has maximum negotiating leverage right here, right now. I think it was a big mistake, this Chinese escalation because they're playing with a pair of twos."

Colvitt elaborates on this by explaining that China exports significantly more to the U.S. than it imports, with a ratio of approximately 5:1. Consequently, any increase in tariffs disproportionately affects China more than the U.S. Additionally, China's economy is described as a "house of cards," vulnerable due to oversupply and reliance on exports to sustain its market.

Historical Context: Smoot-Hawley Act and Reagan's Trade Policies

To provide a comprehensive understanding, the episode delves into historical tariff policies, drawing comparisons between the Smoot-Hawley Act of the 1930s and the trade strategies during Ronald Reagan's presidency.

Smoot-Hawley Act:

• John Carney [25:42]: "Smoot-Hawley definitely did not cause the Great Depression. Great Depression was caused by misguided monetary and fiscal policies, but not by a tariff on imports."

Carney argues that the Great Depression was primarily due to poor monetary and fiscal decisions rather than solely the imposition of tariffs. He contends that the global trend towards protectionism was already underway, and Smoot-Hawley was merely a part of that movement rather than its primary cause.

Reagan's Trade Policies:

• Contrary to the common perception of Reagan as a free trader, Carney points out that Reagan implemented protectionist measures, such as imposing quotas on Japanese automobile imports. This strategy was aimed at protecting the U.S. auto industry from what was perceived as predatory practices by Japanese manufacturers.

Current Trade Negotiations and Global Responses

John Carney provides an update on the international response to the U.S. tariff policies. Approximately 50 to 70 countries have approached the U.S. to negotiate trade deals, including key players like Japan, South Korea, and Italy. This surge indicates a willingness among trade partners to negotiate rather than escalate into full-blown trade wars.

Notable Quote:

• John Carney [16:05]: "The rest of the world is not acting as the tariff critics said they would, which was trade war. We are going to, you know, just fight. We refuse to give in."

This optimism is further reinforced by the fact that many countries seek to preserve their access to the vast American consumer market, which remains a crucial economic resource globally.

Art Laffer's Perspective on Trade Policy

The episode references a Wall Street Journal op-ed by economist Art Laffer, who reflects on a 2018 G7 meeting. During this meeting, President Trump proposed eliminating all trade barriers to achieve free trade among the G7 nations. However, the proposal was met with resistance from various countries, highlighting the challenges in achieving truly free trade.

Notable Quote:

• John Carney [18:14]: "I believe that you raised the idea of a tariff free G7... That's the way it should be. No tariffs, no barriers. ... That's the way you learned at the Wharton School of Finance."

Laffer’s critique points out the hypocrisy of trade partners who advocate for free trade while maintaining their own trade barriers and subsidies, thereby undermining the very essence of free trade agreements.

Evaluating Trump's Brinksmanship and Future Trade Directions

The discussion shifts to assessing whether Trump's approach is consistent with his original 2018 strategy or if it has evolved into a more nuanced stance on tariffs and trade barriers.

Notable Insights:

• John Carney [27:15]: "The reciprocal tariffs on most countries will come way down because they want access to the U.S. markets... This is a new chapter of history."

Carney posits that Trump's unwavering stance on tariffs signifies a strategic move to enforce fair trade practices, ensuring that trade agreements are mutually beneficial. He emphasizes that while the U.S. continues to decouple economically from China, it seeks to establish free trade with other nations by removing non-tariff barriers and subsidies that distort free market dynamics.

Conclusion: The Path Forward

As the episode draws to a close, John Carney offers a vision for the future of U.S. trade policy:

• Universal 10% Tariff: Functioning as a revenue-generating measure and a standardized tax to enter the U.S. market.
• Decoupling from China: Encouraging a transition away from reliance on Chinese manufacturing unless significant political changes occur.
• Free Trade with Others: Promoting reciprocal trade agreements that eliminate tariffs and non-tariff barriers, ensuring a level playing field.

Carney asserts that the current tariff strategy is a definitive break from past one-sided trade deals, advocating for a balanced and equitable approach to international trade.

Final Quote:

• John Carney [30:55]: "This is a page that has been turned. We are in a new chapter of history."

Key Takeaways:

• The Trump administration's tariff policies are strategically aimed at renegotiating trade deals to create a more balanced global trade environment.
• Historical tariff policies like Smoot-Hawley and Reagan's quotas offer lessons but are not direct parallels to the current situation.
• The global response indicates a willingness among trade partners to negotiate, avoiding the feared trade wars.
• Future trade policies will likely focus on maintaining the U.S. as a central economic hub while promoting fair and reciprocal trade agreements.

Notable Quotes:

• Scott Besant [03:27]: "President Trump has maximum negotiating leverage right here, right now..."
• John Carney [16:05]: "The rest of the world is not acting as the tariff critics said they would, which was trade war..."
• John Carney [27:15]: "Smoot-Hawley definitely did not cause the Great Depression..."
• John Carney [30:55]: "This is a page that has been turned. We are in a new chapter of history."

For more detailed discussions and updates on economic policies, visit charliekirk.com.