← The Focus Group Podcast
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- [00:00]
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Sarah Longwell
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Scott Lincecum
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- [01:21]
Sarah Longwell
Hello everyone and welcome to the Focus Group podcast. I'm Sarah Longwell, publisher of the Bulwark and this week we're talking tariffs, tariffs and nothing but tariffs. Frequent listeners of this podcast will know that the main reason former bide voters switched Trump in 2024 was so that he'd fix the economy, which to most meant helping make things more affordable for them after the inflation of the Biden years, which are really just the post pandemic years as we are learning, Trump thinks the solution to every economic problem is more tariffs, even though they tend to slow growth while also raising prices. Depending on who you ask. His massive barrage of tariffs followed by a sort of kind of 90 day pause except for China and maybe in some other places and things, you know like computers or iPhones, is either a chaotic mess or a masterclass by a art of the deal master negotiator. Which I guess depends on your point of view. This week we're Going to hear from Biden to Trump voters about the tariffs that Trump promised and is attempting to deliver. My guest today is Scott Lincecum, vice president of General Economics at the Cato Institute and author of the Dispatch's Capitolism newsletter. That's like capitalism, but with an O instead of an A. Get it? Scott, thanks for being here.
- [02:42]
Scott Lincecum
Thanks for having me.
- [02:44]
Sarah Longwell
Scott, here's my first question. What's it like for you when everybody suddenly starts talking about tariffs, the thing that is your raison d'etre and suddenly, like, you're the bell of the ball?
- [02:54]
Scott Lincecum
Yeah, on the one hand, it's great, Right. I'm very popular, and in the policy game, you don't want the phone to never ring, so that is certainly good. The downside is, well, a few things. One is that the phone never stops ringing. So in a way, I feel like, you know, I wished upon a monkey's paw or rubbed the genie's lamp and wished to be popular or wished everybody cared about trade, and this is what I got. Right. The other thing, of course, is, let's face it, online commentary from people who maybe are just reading about tariffs for the first time or just hearing about them from their friends or on Facebook or whatever. The online commentary can be pretty brutal. You get the same five talking points over and over and over, regardless of how many times those things have been debunked. And, of course, you have just random people calling you a moron who, you know, you go to their Twitter bio and they're like a high school soccer coach, which, hey, no offense to a high school soccer coach, but I don't show up to their games and start screaming about whether they should play a 4, 4, 2. And that's basically my entire life.
- [04:07]
Sarah Longwell
Now, that sounds reasonably annoying. So you've said the Occam's Razor explanation for Trump's tariffs is that he likes tariffs and he always. Simple as that. Why do you think Trump likes tariffs? Go back to the original part of that. What is there to like about them? And then give me, like, the most generous possible argument you could make for them, if there is one.
- [04:31]
Scott Lincecum
Right. So if you look back at Trump's writing, since the 1980s, he has generally seen trade as a zero sum thing. There's a winner and a loser, never positive sum, like most economists think of trade, where everybody can win. Also, he sees access to the US Market like a real estate transaction. You know, you have to should pay to access the market, always from the kind of producer's perspective, not from the consumer's perspective. And he sees the trade balance as a scoreboard for who's winning, who's losing, and whether we're charging enough for access. And that's where I think the tariffs come in. Tariffs for Trump have long been a fee, an access fee to the US Market, and one that should be applied to any country that has a trade surplus with the United States. So we have a trade deficit with them in order to balance that relationship that apparently they've been winning too much at our expense. You know, look, I'm not a psychiatrist, but people who have spoken with the president and dealt with him say that a lot of this goes back to kind of 1980s New York real estate, where the Japanese were buying up buildings and outbidding Trump for properties and construction and workers and the rest, and that this kind of set him on his way. Certainly seems that those general themes about the trade deficit and tariffs still apply. But today, I think the additional reason is that US Law is just insanely ambiguous and discretionary when it comes to tariffs. And what I mean by that is that Congress has, over the last 80 years, given the president massive unilateral powers over trillions of dollars in annual commerce, and he can kind of flip them on and off until a court stops him or Congress gets in the way. He can just kind of play kingmaker with these tariffs anytime he wants. And this has all sorts of benefits for the president. He can have corporate titans and government officials just scrambling to the White House looking for special deals. He also, of course, can dole out special favors to those he wants. It also, let's face it, it puts him at the center of the Trump show, and it keeps Donald Trump at the center of everything. And that is a huge benefit. Combine that with it does generate a seen benefit. One of the problems with trade policy is that the benefits of protectionism are very obvious. I have protected a company and these workers. The costs are far more diffuse, less visible. And so he can generate these kind of big scene victories. And as a political matter, that's another big win. And finally, most people don't care about or think about trade deeply because most of us don't work in this field. We're rationally ignorant, we call it. So trade policy views on protectionism and foreigners and all this kind of stuff are just not what economists would say. And again, that's totally fine for regular folks. I do not blame them unless they're yelling at me on Twitter about it. And I think, again, there's some political power in that, because as a Populist Trump can kind of play on people's intuitions. I mean, a trade deficit sounds bad. Protecting American workers sounds good. And by the time I start trying to explain reality, the game's over. Right. And that's a big victory for Trump and his. His side of things.
- [08:16]
Sarah Longwell
Right. And look, as we get into the sound here, you're hitting the nail on the head in terms of people's vague instincts around what Trump is trying to do, what the tariffs are set to accomplish. And I do think so much of it goes really to whether or not people sort of trust Trump with everything and whether they have the luxury of trusting him. Because I think you can actually hear in the focus groups the difference between people who are on quite the low end of the economic scale who just were like, I got this guy, I hired him to lower my grocery bill, like, to make consumer goods cheaper and they're not getting cheaper. And I'm worried about that.
- [08:58]
Scott Lincecum
Yeah.
- [08:58]
Sarah Longwell
Versus people who are like, let me tell you about the 4D chess playing of the grandmaster here and explain all of it to you. And so it is interesting, the lens through which the tariffs come for them.
- [09:11]
Scott Lincecum
Oh, for sure. And, you know, again, getting back to the economics, tariffs have long been known as a highly regressive, meaning they disproportionately harm poor American consumers. And in the United States, our tariffs are actually doubly regressive because we have higher tariff rates on cheap versions of products like shoes than we have on expensive ones. So protectionism is a luxury belief. If you work in services and are untouched by this stuff, or if you don't actually scrutinize your grocery bill every week, then you can say things like, it's patriotic for people to pay higher prices. You can say, oh, well, those automotive manufacturers shouldn't be using imported parts. Right. You can say these things. They don't really affect you too much directly. For the people who are actually working at those auto plants or who really are, you know, clipping coupons and watching their budgets like a hawk because, you know, an extra 20 bucks a week is a problem, then it's a different story.
- [10:19]
Sarah Longwell
Okay, so let's get in and listen to some of these voters, because I'm excited for you to kind of hear how the average American talks about the tariffs and how they're feeling about them. But I'm going to do a quick methodological note starting this week and going forward. When we screen for Biden Trump voters, we are agnostic about who they voted for in 2016, so they might be Trump, Biden, Trump voters. Or they might be Clinton, Biden, Trump voters. And in the past, we've sometimes specified first time Trump voters. So it is possible they voted for Trump two out of three times. Just want to be clear about that. So just FYI. And then another programming note, this tariff situation has evolved so much since we conducted these focus groups, which is only a week ago, and it probably will again before we put this show out, because we're taping this on Monday. But I think the broad strokes of what the voters are saying here are totally applicable. So like I said, we convened two groups of Biden to Trump voters for this show. People were all over the map about the new tariff regime. Some were strong defenders, some were strong detractors, and then most people fell somewhere in between. So let's listen first to what the tariff defenders sounded like.
- [11:35]
Tariff Defender 1
We often forget that Trump's a salesman. You know, he's a negotiator. So he needs to swing the pendulum way out so that he'll have something that comes back that's kind of reasonable. Like when you sell real estate, you don't just sell it for like, oh, this, this house is worth $300,000. No, it's worth 500,000. And it's great. Look at these huge rooms and everything else. Somebody takes another stance and you meet in the middle. So he needs tools to be able to do that. The tariff is a tool. It's not going to be necessarily a long term thing. It's a tool to bring people to the table. And according to what we're seeing even today, I mean, the New York Times said 17 out of 20 countries that they had on their list have already reached out, basically try to renegotiate. And as of Tonight, it was 70 countries that have reached out to renegotiate. So you can bet some of these tariffs are going to go down. Some of them maybe go away if we reach some sort of parity with the other countries. But in the end, the whole stock market panic, it's like, okay, that's short term, too. Since 1929, the stock market has crashed six times. And you know how many times it stayed crashed? Zero. It always comes back. The only people it hurts right now, basically are the 50 wealthiest people in the country. Those are the people that are taking a big hit. But for just about everybody else, as long as you're not stupid enough to sell, like today or yesterday, you're going to be fine. If anything, you should be putting money into it while things are low, you know, and make a whole bunch of money while you can. I mean, it's great for people that are thinking about it as an opportunity. So I don't think the tariffs are going to be long term. I think people are going to come to the table, including China, eventually, because they're going to be one of the few that holds out. And even if it's only a little bit better, we'll take it. You know, it's still going to be better than it was, which was really bad for the American worker, because the American worker has standards. We have environmental standards, we have safety and human rights standards. Guess what don't exist in China? Environmental standards. Human rights standards. So, of course they can make things really cheap because they don't have to abide by any of those same standards. So it's completely not level, completely not fair.
- [13:45]
Tariff Defender 2
I look around my studio here, my office here, and, like, I try to buy American. I see products that aren't made in America. I see us having less of a pull toward exporting our own products to other countries and more of importing. But if the idea is to kind of balance the deficit and refinance the debt, like, we cannot continue to keep going down to borrowing $2 trillion a year, whatever it is. It just cannot continue. I love that we have a president, and that's so weird for me to say I was kind of a never Trumper. Right. But I love that we have a president that's putting together a team to say we have to stop the bleeding. And it's not just like a nick, like it is a gush. I'm sorry, that's pretty graphic. Bad example. We are just bleeding our future dry. So as far as the tariffs go, man, if we can land this, then I think it's a great way to try to. I guess the right word might be recalibrate or even reinvent. Like, we're so deep in the hole that we have to do something like this.
- [14:51]
Tariff Defender 3
What I didn't realize until Trump's first presidency was how badly the US Was getting screwed on them. And people are talking about the cost of things going up and stuff. The issue is we buy those things. We have TEMU that we pay $0.59 for a living room set. And I'm not even sure if it's all sweatshops these days. China has billions of people. It's just the way their country is. They don't sleep, they work. Americans want to get paid for what they do. So the cost of things in America costs more. And we have to be willing to pay more, which is impossible because we don't make more. But what Trump is trying to do is bring commerce back to America, bring jobs back to America, have things American made because we can't afford to buy those things. But we want those things. But that's where tariffs are going to come in. And we're going to have to deal with a small recession or possibly a small depression. If we want America to be actually great again, we have to raise the standards ourselves. And that includes charging other countries for the goods and labors that we do as equally as they're charging us, and then not pay $0.59 for a bag of crap from China and buy something decently made from America.
- [16:02]
Sarah Longwell
Okay, Scott, so I can't wait to get your take on all of that. But I do just want to say it doesn't surprise me, because when I listen to voters all the time, voters do tend to mirror what sort of Trump and then his media ecosystem tells them. What was interesting to me about Trump's pitch on the tariffs is that they gave sort of three broad reasons why they were doing tariffs. Right? They're going to remake the country and bring manufacturing jobs back, or they're going to negotiate better deals, or number three, they're going to raise a bunch of money from these tariffs to pay off the debt. And you heard shades of all of that kind of in there. Are any of those real things?
- [16:43]
Scott Lincecum
Yes, but tariffs throughout history have been used for all of these purposes to raise revenue, to protect domestic manufacturers and to be used in negotiations. Right. Or what we call for reciprocity. The problem is that tariffs really can't be used for all three of those things at once. So one of the brilliant things that Trump has done here is he has thrown out these three things. And of course they're attractive. Right? We sell more abroad. People are inherently mercantilists. They think about exports as winning. In trade, we do have budget problems and debt problems. And again, as we talked about earlier, people think protecting American manufacturing is great, but you can't actually achieve all of those things simultaneously, because if you put your tariffs high enough to protect manufacturers, you're not going to raise that much revenue, because you actually need a lot of imports to collect tariffs, because tariffs are only paid on stuff that actually enters the country. And negotiations will only work if you're offering to lower the tariffs you've increased. So that harms both your protection and your revenues. You can't get steady protection. You can't get steady revenue. And if you're Saying this is all about negotiating. Investors aren't going to invest in new factories and all this stuff if their tariff protection is going to go away in just six months, a year, whatever. So this goes back to again, people not thinking very deeply about these issues, but you can't achieve all three at the same time.
- [18:29]
Sarah Longwell
What was your reaction to just hearing the voters explain why they were pro tariffs in this moment?
- [18:36]
Scott Lincecum
Look, again, it's a messaging victory for the President in the sense that everyone actually thinks that America was getting screwed in the past global trading setup and that American workers have been suffering. The reality is different. Yes, countries do bad things in trade policy and yes, the Chinese government has several policies that I wish were better. But the reality is that the United States has been one of the big winners from globalization over the last 30 years. The United States was the chief architect of the global trading system. And if you were to ask anyone, particularly in a developing country, about who the big winners are from trade, they would probably say the United States and China. And for Americans to say, oh, this is what a disaster this has been, we're getting screwed, it's just not correct. And the other thing is for workers, I mean, most of us don't work in manufacturing where there could be import competition. And in general, median blue collar wages in the United States have been up a lot adjusted for inflation over the last 30 plus years since we've been doing NAFTA and the World Trade Organization, the rest of that household wealth is at an all time high. There's a lot of different variables that show that, you know, you can pick and choose on the margins and certainly certain workers have had difficulties. But as a whole, the American worker is doing pretty darn well over this globalization period. So it's hard to rebut that for a guy like me because once you start trying to contradict what people are feeling, you're losing. And that's the attractiveness of protectionism, is it seems to offer this very easy fix to what are complicated problems or just imagined problems.
- [20:36]
Sarah Longwell
Well, we're going to get to some of the people for whom protectionism is not a luxury item, but quickly before we do. You know, one of the things that I think about a lot is the recalibration of the electorate. And what's so interesting to me, you said, well, what does Donald Trump and RFK Jr. And Tulsi Gabbard and Elon Musk and Joe Rogan, what do they all have in common? It's the 10 years ago they were Democrats and a lot of these Trump voters too are also people who previously were either Democrats or left leaning independents. And those populist trade instincts that were more aligned with sort of the unionized left now are sort of resplendent in the Republican Party. Like, what do you think's going on in terms of just the Republican Party suddenly being a protectionist party, which is obviously, I don't know how old you are, but we look roughly the same age. So I think we both came up as like, you know, free traders, as Republicans or conservatives or libertarians.
- [21:38]
Scott Lincecum
I worked on the McCain campaign, for heaven's sakes. Right? I mean, very free trade oriented. So the shift has been quite dramatic and jarring. And you know, I think there are four big factors that explain the shift in the Republican Party. The first and most obvious is Donald Trump. I mean, this guy has been a protectionist all his life and has a very strong following and is the ostensible leader of the party today. So some of it is just politicians riding in the President's wake or just afraid to contradict him. But there are other things going on. A big one is the Great Recession. You know, I don't think a lot of folks, and I include myself, you know, in like 2012, really thought that the Great Recession was still going on. But the reality is now we, in retrospect, we know that, you know, the economic scars were deeper and far longer lasting. And it was only in 2016 ish that things really were steadily improving. You know, 2014, things were still pretty bad. That had a lot of effect on people's views of the government getting involved in labor markets or that trade screwed us or China screwed us and all this kind of stuff. Because again, it's very easy to point to aha. That happened not to these more complex issues fueling the Great Recession and all of that. Another big one is China. I think China's rise as an economic rival and geopolitical threat, along with very real human rights issues and the rest, I think that has created particularly again, a decade ago, everyone was talking like China was going to own the century, that China was just going to eclipse the United States in terms of gdp. It was this massive country that was just killing us in all these different areas. And I think that really set for a lot of American people and for a lot of politicians this idea that we have to do anything and everything to counter China. Now today, China's economy is battling deflation after a really pretty disastrous crackdown on private business and the COVID zero stuff. Foreign investors are not super psyched about the Chinese economy. China's catching the United States in terms of gdp, just overall maybe never going to happen, at least on kind of a nominal basis. And per capita GDP still pretty darn poor place. But it doesn't matter. Right? That's again, set. We now have this rivalry. We have to abandon trade and other things to counter China. And you hear this all the time with Republicans, that this is nothing to do with free markets. It's about countering China. And trading with China in general is not about free markets. We're going to do it. And then finally is the pandemic. Nerds like me can tell you all day long that global supply chains actually performed better than nationalized ones like baby formula. Right. Our deepest, most prolonged crisis was something that's almost entirely made here. What I say doesn't matter when store shelves are empty, when ports are backed up, it's natural to want to reshore, to bring everything home. The idea is, oh, if we made everything here, we'd be safer. Not so much as the baby formula thing shows. And there are other examples too. So you combine those four things together and I think there's just been this tremendous push both in the Republican Party and nationally for more populist protectionist policy. The interesting thing, though, I should note, is that the American people themselves in the polling aren't like huge protectionists all of a sudden. I just think they're more open to this type of rhetoric. Support for free trade among Democrats is like an all time high, but even among Republicans is not like in the toilet. But nevertheless, again, I think this rhetoric sells pretty well right now.
- [25:40]
Sarah Longwell
Yeah, well, it's not in the toilet yet. Let me tell you. There was a time when every Republican I was talking to supported Ukraine. And you know, Trump's hammering on these things goes a long way to changing people's opinions.
- [25:51]
Scott Lincecum
Yeah, and there's a trust issue. You know, one of my favorite polling results from years ago on trade was Democrats supported trade agreements when Obama was negotiating them and Republicans didn't. They didn't like trade agreements. And then Trump got into office and it just switched, like overnight. Republicans like trade agreements, Democrats didn't. And it's because their guy was negotiating. Right. So buried in all of this, much to my frustration, is partisanship and culture and other things that have nothing to do with the economics or the history of US Trade law or any of that kind of stuff. So I think it's important for trade experts to acknowledge that a lot of what I talk about every day is not driving this stuff at all. And I always warn anybody who's claiming that there is a simple solution to this stuff, whether it's tariffs or whatever, is selling you down the river, because it's just not that simple.
- [26:57]
Sarah Longwell
All right, focus group listeners, have I got a podcast wreck for you. In wild times like these, do you ever want to just break fake rules? It's important to rethink some of the dumb rules we follow for no good reason. Well, that's exactly what friend of the bulwark Glenn Gaelic gets into in his show Break Fake Rules. Here, Glenn and his guests dig into the self imposed rules that hold us back, particularly in the world of America's ultra wealthy philanthropists, to uncover which rules we should commit to breaking together for a better society. Just be sure to break rules in a cool way, not in like an Elon way or in a planning drone strikes over signal way, like a legal way. Check out a recent episode of the podcast where Glenn and I sat down to talk about how philanthropists can use their FU money to defend democracy. Because what is the point of having FU money if you can't say F you when people come and try to take over our democracy? So if you've ever wondered why we live by certain rules or dreamed of what becomes possible when we do things a little bit differently, tune in to break fake rules wherever you get your podcasts. All right, let's get to the people who think the tariffs are no good. We did listen to a lot of the Biden to Trump voters who were mad about the tariffs. Actively mad. Let's listen.
- [28:21]
Tariff Defender 3
I had to get an oil change and it's not even at a regular car dealer. It cost me $10 more, so I'm not seeing it. And why I voted for Trump was for the prices to come down at the grocery store. Nothing's come down. They're talking about your cell phones, your cars, and everything is just going higher. I know it might hurt for us now, but when it hurts now, it's hard to recover for someone like me. So it really hits me in the gut. So I'm really hoping for a short part of this and like what you said and hopefully that people can all get together and agree on a better thing.
- [28:54]
Tariff Defender 1
I don't even know when his official reelection campaign began for Trump, but he.
- [28:59]
Scott Lincecum
Said on day one, prices are going to go down.
- [29:01]
Sarah Longwell
The war in Russia and Ukraine is.
- [29:02]
Tariff Defender 1
Going to end within 24 hours and neither have happened and neither seem like it's going to happen anytime soon. So it's Nice in theory, but we were promised a lot of things that are not happening.
- [29:14]
Tariff Skeptic 1
To make so many things in United States will cost lots of money even for like just the basic stuff. And they're not even talking about like the furniture or anything, especially with medications. I know I had to go through surgery and my insurance wouldn't cover those medications. And I remember looking up and you know, I look a lot of stuff because being from a different country originally and I was checking and those medications I've sold in like dollars or $2, you know, so I think that's why still we're able to buy some medication here, even if it's like out of pocket. And if those medications have to be made here in United States, nobody will be able to afford any medication. So I think this tariffs, I mean, I understand that that will bring some more job opportunities. And that's what I guess his main goal was. But if this war goes on with like, I'm going to do 125, because you didn't listen to what I said, it's not gonna head good way, especially if you are dependent on someone else to, you know, import like 80% of your goods.
- [30:09]
Advertiser
The tariffs I don't get and it kind of concerns me a little bit. And as mentioned earlier, being a dual citizen Canadian, I've kind of got, you know, another perspective on this. But I'm hoping it will make sense shortly. Right now it just, it kind of doesn't. To me, the tariffs have a place and can be quite effective. I just think how it kind of went down is it turned tariffs into an emotional issue and now there's no logic. Like, I wish you people could come with me. I have to go back to Canada for the summer. I can't even talk about this with my Canadian family and friends because it's so emotional. Now you go, no, but wait a second. You know, here's how tariffs work. And tariffs are useful when you've got countries taking advantage of your country and not obeying intellectual property rights and so on. Because it's become just emotional now. I think it's taking away more of the spotlight from some of the other more important issues that are going on. And I hope that it finds its rightful place and settles down really quickly. It's a simple concept, but it's also a very complicated concept at the same time. In this world, pick any product off the shelf and try and disassemble that product in terms of where all the component pieces came from. And it's almost impossible, right? So you can't say this is an American product. Canadians are wrestling with this right now. I find it kind of hilarious. You know, they're by Canadian, by Canadian, we'll stick it to the Americans. And it comes down to, first of all, they're putting this up on like Facebook, which I go, do you guys get the hypocrisy of that? You know, on your Apple device? I go, okay, double hypocrisy. Go on, you know, and oh, buy Tim Hortons coffee. And I go, well, who owns Tim Hortons? It's actually an American outfit.
- [32:01]
Scott Lincecum
Right.
- [32:03]
Sarah Longwell
So people who were skeptical of the tariffs were skeptical sort of for two reasons. One, negative personal consequences. Right. They feel prices going up, certainly not going down since Trump got into office. I talked to a lot of these sort of Biden to Trump voters. And this idea of prices not coming down is the thing that is making people the most frustrated about anything. But you know, you've heard some people sort of say, like, oh, this is short term, you know, we got to hold out for the long term. What are the short term consequences of the current tariff whiplash? And then maybe also do the long term consequences for how does this impact people? I guess let's say, yeah, I mean.
- [32:47]
Scott Lincecum
Prices are the most obvious one. And quite frankly, one of the reasons why I didn't think the Trump administration would do on tariffs what they've done, which is, you know, 10 times the amount of tariffs compared to Trump's first term and ten times faster because the tariffs in the first term took almost two and a half years to implement. These took two and a half months. Right. So 10 times bigger, 10 times faster. And I was skeptical just because of the price issue. That a guy that basically seemed to have won on the back of inflation weary Americans was going to turn around and slap taxes on avocados, just struck me as crazy. And yet here we are. And so tariffs, if they do what they're designed to do, is they will raise prices. They will raise prices of both the imported product and, and the domestic alternative. And that's something most Americans don't get either. You can't just buy American and suddenly pay a lower price because the American goods probably more expensive to begin with and with less competition, the price is going to rise to basically right below whatever the import price is. Right. With the tariff. So that along with the fact that retailers have been quite transparent that the amount of tariffs we're Talking about about 25% in most cases or in China, I mean 100 plus percent, and the products that are covered things that are just simply not made in the United States, like avocados or bananas or a lot of low value clothing and footwear and other things. I mean, there's just no American alternative. So you're just going to pay the tariff, you're going to pay a higher price. So that's inevitably going to be the case. And retailers with relatively low profit margins have said, we can't eat the tariff, we'll eat a little of it, we'll spread it out, we'll do what we can, but we're passing this on. And you know, one of the things we're doing at Cato right now is actually tracking price hike announcements, because there actually have been quite a lot of them. Things like construction materials, a lot of that. Right. So prices are your most obvious one. The other big short term impact is uncertainty in the market because one of the downsides is that business owners have just no way to predict what's going to happen tomorrow. I mean, literally in the middle of this podcast, I just got a ping that Trump is maybe suspending the car tariffs because automakers can't prepare. So this is an impossible environment for business owners. So anybody who is at a company as a worker, as a manager, whatever that was, planning to hire, planning to invest, planning to do something, and they have some sort sort of exposure to the trade world, to imports, and there are a lot of these people, you're just not going to do it. And that, I think is going to also redound to voters perceptions of these things. Long term, the impacts are harder, right? In one sense, it's easy. We know you get less economic growth, right? Tariffs, like any sort of tax, you're going to have less consumption and less economic activity. Tariffs are actually a particularly distortive type of tax. So they slow growth more than other types of taxes. And you have concerns about supply chains and trading partners. Are we simply going to lose export markets because of retaliation or because consumer boycotts are going on in Europe and in Canada and elsewhere? So these things take a little bit of while to materialize, but you could see kind of long term shifts in these trading patterns that are not actually to the benefit of the U.S. economy. And I think the other long term economic issue we need to now be looking out for is the US Status as a safe haven for global investment and the dollar's value and all this, this is typically thought of as being a very good thing. But again, because there's so much uncertainty and because Trump has just thrown grenade after grenade into the trading environment in the US and beyond. Investors are actually pulling out their money from what used to be thought of as safe havens like treasury debt or government debt, which affects mortgage rates and other things. And so this is another area where beyond the short term jitters, which we've seen, that too treasury yields, which affect mortgage rates have gone up a good bit in the last month or so. You could have a situation where you actually have persistently higher debt costs. And that's bad for American consumers, but also bad for the government because it costs more to borrow. And we're borrowing, unfortunately, a ton.
- [37:37]
Sarah Longwell
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- [40:57]
Scott Lincecum
I think he wants leverage and tariffs.
- [41:01]
Sarah Longwell
Is a way to get leverage for him. So I agree. I don't think it's for forever. I'm not worried about the stock market. It will come back. I am worried about groceries. That's like the biggest thing for sure for me because that's a survival thing.
- [41:14]
Tariff Skeptic 2
Part of the reason why the countries got hit with the tariffs is because we have a trade deficit with them. So he's trying to make up that difference because a lot of countries, you know, we can't sell our stuff there. There's so many different restrictions and we kind of let them sell their stuff here with no restrictions. My one concern though is with China, I know, like even like our medical supplies, like band aids, like all kinds of things are made over there. So if it goes back and forth, back and forth, they can really just say, okay, well we're done with you. And then, you know, are we going to be able to make up the difference? So that's my main concern with that.
- [41:51]
Sarah Longwell
From my understanding of tariffs is I think the real, like motivator behind it is so that they can refinance their debt, right? So that they can kind of tank the economy for a little bit, have stocks go down, interest rates drop, so that they can refinance the trillions of dollars in debt that we're actually in to be a lower cost. And that's actually the goal, not necessarily to bring back manufacturing to the US because then getting materials to even build factories from China and all of those things would be more expensive. So maybe manufacturing in the US Is part of it, but it's really more for refinancing the debt is the main goal, but in the short term, I agree, maybe that could be a good strategy as long as it's not going to impact people for too long of a period of time. Luckily, I'm 38. I pray I have more time to like circle this back around and, you know, recoup what was lost. But for me, like, I'm seeing it as a time where I can buy so that for later. So for me, you know, it's okay you, but I know my situation is not like everyone else. You know, my mom is 69. You know, she's terrified. So that's the thing with all this. It benefits some and, and it's so bad for others. But as far as it not happening fast enough, I mean, he just got an office like not even a full four months. Right. So I understand it's going to take time, but I think that this is exactly like that shakeup that we need that's going to then bring changes. I don't know if there's anything in there you want to address. I want to ask you about Trump doing the carve outs after he said he wasn't going to do the carve outs, but just go ahead and react to what was a little bit of a mishmash of reasons why it could all be okay.
- [43:38]
Scott Lincecum
Well, I mean, on the bright side, you know, I'm really enthused to hear from almost all of your respondents that they understand that tariffs mean higher prices. You know, a consistent talking point from the President was that this was not going to increase prices. And so one of the silver linings I can take from our discussion is that guys like me have done a pretty good job and many others have done a pretty good job at educating the voters that this does mean higher prices, regardless of the promises we were given, particularly during the campaign. But I mean, even now you hear Treasury Secretary Bessant and others say, oh no, China's going to eat the cost. No, I think everybody gets it. It's going to mean higher prices. Then the question is, right, is this worth it? And I was amazed to hear this idea that this is just about refinancing our debt. Again, I just said that, in fact, treasury yields have gone up, which is the opposite of what this so called theory would want. And that's bad actually for our debt. But you know, I mean, again, somebody heard it from somebody and it's, oh, then it's fine. And so that's a very difficult thing for a guy like me. Because you just impossible to bat down all these different reasons. The other thing that I think is very important and valuable was the person who said, you know, he just got into office and this is where I think things are going to get really interesting is we're in the, you know, maybe the first inning of a long game since his baseball season. Right. Of this stuff. And voters tend to be pretty forgiving of new presidents in the short term and they tend to be pretty forgiving regarding inflation. It takes a while for them to start getting really angry about inflation or to notice that prices are getting better so each way, right. So as I've been saying for a while, I think the ball game here to continue the metaphor for is going to be this summer when voters say, okay, you've had six months, whatever, eight months, and it's still chaotic and the tariffs are still here and the negotiations didn't produce what you said, or prices are now up, my car is more expensive or I'm getting tariff bills on my receipts, right. And then they're going to say, okay, this has nothing to do with Biden. This is what Trump promised and this is what he's getting us. If the stock market is similarly in a bad place or even if it's just flat, right. If mortgage rates are up, then I think some of these fence sitters right now are going to be less willing to give the President the benefit of the doubt. So I think that's one of the reasons actually you're seeing the Trump administration pivot, it seems pretty quickly to trying to put a lot of this to bed, these 90 day deals, right. Is that, you know, it seems like somebody in the White House has taken the keys away from Peter Navarro and is trying to get this to a place that by the time voters are blaming or crediting Donald Trump, the tariff stuff has been put behind them. Now, it doesn't mean there still won't be problems, you know, if we end up with a 10% global tariff. But those are going to be much less visible than all the rest of this stuff. Right. The biggest tariff hits. So, you know, we'll just have to come back in a few months.
- [47:14]
Sarah Longwell
Yeah. The one other thing I'll say that is unusual for Trump voters is like they know the tariffs are Trump's, like there is no mistaking, right. This is not Biden's economy. I think for Trump, you know, whenever he wants to blame anything, you know, he sort of looks back and says, well, Biden left that open border and Biden, you know, he made the Economy terrible. But the tariffs are his, and everybody knows the tariffs are his.
- [47:38]
Scott Lincecum
Yeah. And he's promising this big jobs boom and all these factories and he's got all these big announcements of promises in the future. So if you're facing higher prices and the rest of the stuff hasn't materialized and Canadians won't buy our liquor anymore, and you know, there is, I think, the potential for the voter sentiment to shift pretty harshly. But, you know, going though back to what people are thinking right now, if you look at consumer sentiment, data and other things, I mean, people are already like, I'm in wait and see mode, which is of course bad for the economy because businesses depend on kind of consistent customers. And so there is a chance that things actually get worse for the economy as a whole because a lot of folks just are so unsure as to what's coming.
- [48:32]
Sarah Longwell
Yeah, I'm not sure that there's a worse business environment than just rampant uncertainty and where things are going next.
- [48:37]
Scott Lincecum
Dorks like me are eagerly awaiting the first quarter GDP data because it'll have investment data in there, and then especially second quarter because every single survey, so what we call soft data out there has had business managers, CFOs, all this basically say, we cannot invest right now, we are holding off. And that along with the consumer sentiment going off a cliff, we could be in for a bit of a shock. Huge economy. I always have to say United States, a huge economy. We're primarily services, but it certainly is looking like a recession is at least 50, 50, if not more of a chance these days.
- [49:21]
Sarah Longwell
Let me just ask you really quickly. Trump's were up and down. There were going to be no exceptions. And then he went ahead and did carve outs for favorite industries like accepted electronics, smartphones, computers. Then he liked truth that he didn't make the exceptions and whatever. And now you said maybe on cars. So, like, what is he doing? It's one thing for people not to be even sure whether we're trying to pay back our debt or remake the American economy or force people in negotiations. It's another thing altogether to like day to day not know what we're doing.
- [49:55]
Scott Lincecum
I don't know how much people pay attention to this stuff, you know, so fortunately, I don't live in D.C. i live in North Carolina. And I like to talk to my neighbors because my neighbors are normal humans. They're not like me. And you know, even they will ask me a little bit about this stuff because they know what I do. But for the most part, they're checked out and I don't know if most people are really paying attention to the drama or they know that Scott Besson has now replaced Peter Navarro and that there are going to be exclusions. And I don't know if they're really attuned to kind of the cronyism and some of the other stuff that's going on here. I wish, of course, they were. And that stuff, you know, offends me. But I also try to remember that most folks are sane and they actually have interests outside of international trade policy and politics.
- [50:51]
Sarah Longwell
Well, then, as our last bit of sound here, I'm just going to play for you, because we asked the groups about the tariff situation after Trump paused the tariffs, and there was a lot of frustration with the sheer chaos that's been unleashed, not the least of which was China's retaliatory tariffs. People were scared about escalating tensions with China. So let's listen to how voters talked about just the chaos of it all.
- [51:13]
Tariff Defender 3
I think the trouble is right now we have two leaders of two very, very huge, powerful countries who both have their dicks out and are measuring them, and they're not doing anything that's good for the people of their country. And because of these two very specific leaders, we are looking at the possibility of a World War III over something that could be sat down and talked diplomatically. And that's where Trump's issue lies. Why none of us voted for him in the first place is because he's the bully in the playground. You know what I mean? And if it's not his way and the way he wants it, he's not going to give. And now you're going against somebody like China, who is probably going to get North Korea on their side, too. And we're all going to be speaking another language.
- [51:54]
Tariff Skeptic 2
I think we'll have to back down first, because China, this would happen in the 90s. We would have had the power position. But if you look at brics, China has a lot of powerful allies also. They make a lot of our stuff. They also own a lot of our stocks, they own a lot of our farmlands. So if it came down to, like, Imano Mano, it's like we're not in a good position because if they stopped everything, how are we going to make these things in our country tomorrow? It would take at least 18 months to probably two years to be able to replace the difference, and that's the best estimate possible. So hopefully they can come to some kind of consensus. I do know that they closed the loop with Temu and Sheen and all those kind of sites that were able to buy stuff really cheap.
- [52:39]
Tariff Skeptic 1
It'll be sad if it doesn't back down because the fight keeps on going. Another thing, I know a few months ago when all the war happening between Russia and Ukraine, when we're going with Ukraine, like there was a big group farming from Russia, India and China. They were forming their own ally and they're backing up everything. So they pretty much like would own 90% of the market throughout the world, you know. So rather than having your ego, if you just like back down a little bit and sit down and talk, that would be the way to go. And because I don't know if they will pay anything because they're a billionaire, only the one would be suffer people like us, you know, who have to make our ends meet in a very difficult way.
- [53:24]
Sarah Longwell
So I guess as a last matter, I guess we're in a trade war with China. But like, what is this going to do to our relationship with China and the future of our global trading and how that relates to our relationships with everybody else on the global stage?
- [53:39]
Scott Lincecum
Yeah, I was actually really surprised to hear those concerns because typically I don't think geopolitics kind of filters into people's views of trade beyond the kind of, you know, foreigners are screwing us type stuff.
- [53:53]
Sarah Longwell
So what can I just say as a quick, quick thing is every now and then one of these people will open their mouth and like you've just been watching them, they look normal and all of a sudden they like just spit fire at you. Like they like know all kinds of things and you're like, wow, like that middle woman who knew all of the stuff was like, go on. But anyway, go ahead.
- [54:09]
Scott Lincecum
Yeah, that gives me hope. One of my big concerns with the current situation with China is not Temu and Shein, quite frankly, it's that when you cut off trade and investment, you make hot wars. More likely. If you look at Taiwan, for example, currently China's integration in the global economy and with the US economy acts as a bit of a check on an invasion of Taiwan or other bad behavior and foreign policy if you completely sever the two economies, if you turn China into this massive, you know, North Korea style economy, it makes bad stuff like that happen, which is a lot worse than paying more for a cheap T shirt. So I think it's interesting that people are recognizing this potential for the conflict to spiral because that's the other thing. One of the reasons why we don't like tariffs and protectionism is because rarely does the tempest stay in the teapot? Inevitably, foreign governments are compelled to retaliate because they have their own political or strategic incentives, even if it's bad for their own economies. And you can get to a tit for tat situation that can be very bad for both the global economy and again, for potential armed conflict. Right. So I think it's good to see that people are aware of these issues. The only thing I was a bit surprised, honestly, is I didn't hear more about going after allies and treating allies like we're treating China, because quite frankly, that offends me. You know, the Canadian guy kind of mentioned this. Right. But you know, treating Europe and Japan and Canada and even Mexico as national security threats, which is what we're doing, is insane and makes it more likely that they're going to move out of our geopolitical orbit and more. More either into China's or into their own. You know, New Zealand just proposed a bunch of like minded countries. Them, the Europeans, the Trans Pacific Partnership countries, all just banding together and kind of leaving the US out. And so that's the type of stuff that I was a bit surprised that people weren't bringing that aspect up.
- [56:17]
Sarah Longwell
Well, I know it reads to you like maybe a good thing that people understand that there's geopolitical implications, but like, if you are in sort of the right wing ecosystem at all now, you very much are primed for World War iii. Like I hear the World War III stuff all the time. And in fact, one of the reasons that people voted for Trump, not the top one, which was to lower prices, or maybe the second one, which was to do something about immigration. But the idea that you needed somebody strong like Trump at this moment when things felt chaotic on the world stage was one of the reasons people voted for him. Another example, I think, of people missing the fact that Trump was absolutely ready to destabilize the world in ways both economic and geopolitical.
- [56:59]
Scott Lincecum
Yeah.
- [57:00]
Sarah Longwell
Is my two cents.
- [57:01]
Scott Lincecum
No, it's depressing to hear. Not entirely surprising. It just is kind of stunning to me that, and you hear a little bit in the sound bites you gave that, you know, they want the world to be rewired. Right. That that's what a lot of people want Trump to do. And the other kind of stuff we haven't discussed, you know, this kind of wartime economy stuff also is really baffling. Like wartime economies are really bad. Yeah. We might have a lot of people working in factories, but it's very bad. You're poorer. And of course people Are dying not a good place to be. I wish fewer people were enthused for that prospect.
- [57:43]
Sarah Longwell
Yeah, I mean, look, this is a longer conversation, and we don't have to end with all of this, but I oftentimes argue with, like, Tom Nichols or JVL about the idea that, you know, this is because people are bored or idiots and we're a decadent society. But there is a little bit of that in here, which is that people simply do not appreciate the wealth and prosperity and peace that the last 50 years have granted us and that we are are throwing all of that overboard because most of us who are alive right now don't remember a time where it wasn't peaceful and prosperous.
- [58:17]
Scott Lincecum
Yeah, yeah. I mean, there's definitely a bit of that crisis of abundance baked into a lot of this. And, you know, I think the other thing is there are things in life today that are chaotic and disruptive, and people crave kind of security and. And change. I mean, it's been change candidates forever, right? So it's very easy to promise the. The alternative when it's just kind of this fuzzy thing out there. But that's why we have guys like me to remind folks that actually the protectionist alternative is really bad. And we've already tried it, and it was bad. And I'm trying to prevent a return, but it's a tough sledding these days.
- [58:58]
Sarah Longwell
Great news, Scott. Everybody loves an expert these days. Yeah, well, we do love an expert here on this show. Scott Linceum, thank you so much for joining us. And thanks to all of you for listening to another episode of the focus group podcast. Don't forget to rate and review us on Apple podcasts. Subscribe to the Bull, work on YouTube and become a Bulwark plus member at the Bulwark.com see you guys later. Thanks, Scott.