Checking The Receipts On Trump's Tariff Proposal

Summary

The NPR Politics Podcast: Summary of "Checking The Receipts On Trump's Tariff Proposal"
Release Date: November 26, 2024

In the episode titled "Checking The Receipts On Trump's Tariff Proposal," NPR's Susan Davis, Frank Ordonez, and chief economics correspondent Scott Horsley delve into President Elect Donald Trump's announcement to impose tariffs on imports from Canada, Mexico, and China. This comprehensive analysis explores the implications of such a policy on the U.S. economy, international relations, and the political landscape.

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1. Introduction to Trump's Tariff Proposal

Susan Davis opens the discussion by highlighting Trump's declaration on social media to impose tariffs on all goods imported from the U.S.'s three largest trading partners: Canada, Mexico, and China. Scheduled as his inaugural policy, this move aligns with Trump's campaign promises and his history of using tariffs as a political tool.

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2. Understanding Tariffs

Scott Horsley provides a foundational understanding of tariffs, stating:

"A tariff is a tax that is imposed on imported goods. The president elect likes to say that it's the foreign country that is exporting the goods that pays the tariff. But economists are pretty much in agreement that the lion's share of this tax is borne by the businesses here in the US and the consumers here in the US that use the tariffs."
[01:53]

He further illustrates with an example:

"You can think of this as a 25% tax on guacamole coming from Mexico three weeks before the Super Bowl."
[02:08]

This explanation underscores the direct impact tariffs have on both businesses importing goods and consumers purchasing them.

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3. Trump's Strategic Linking of Tariffs to Immigration and Drug Policies

Susan Davis clarifies the motivation behind Trump's tariff proposal:

"This is an economic policy that he would be enacting in response to immigration and drug issues. It's not sort of an economic retaliation against these countries. It's because he wants them to solve a different problem."
[02:51]

Scott Horsley elaborates on Trump's stance:

"He says he's going to attach these tariffs on all imports from Mexico, Canada and China until he gets some relief from those countries on illegal immigration and illegal drugs coming into the U.S."
[02:29]

Trump leverages tariffs as leverage to compel trading partners to address concerns related to illegal immigration and drug trafficking.

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4. Historical Context: Trump's Previous Use of Tariffs

Frank Ordonez reflects on Trump's prior administration:

"Trump administration raised tariffs by a considerable degree... a lot of those tariffs that went through due process at the Commerce Department or the US Trade Representative."
[04:31]

He contrasts past targeted tariffs with the current broad-based proposal:

"This is what he's proposing now are across the board tariffs on Mexico, across the board tariffs on Canada as well as China... This would have a much more significant impact."
[05:36]

Susan Davis notes the continuity and evolution of Trump's tariff strategies.

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5. Economic Consequences of the Tariff Proposal

Scott Horsley outlines potential economic repercussions:

"Prices in the produce section of the supermarket would soar if you had to put a 25% tax on all, all the fresh produce coming from Mexico."
[06:17]

He warns of severe impacts on the North American auto industry:

"The North American auto industry, which is very integrated among all three countries, would be seriously handicapped. That would affect, you know, U.S. manufacturing jobs in the Midwest."
[06:29]

Frank Ordonez adds:

"When you levy a big tax on a country other than China, what you're really doing is handing an advantage to China... you're basically just serving up a favor to the Chinese government."
[13:10]

The trio emphasizes that tariffs could lead to higher consumer prices, disrupted supply chains, and unintended advantages for competitors like China.

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6. Political Implications and Party Dynamics

Frank Ordonez discusses the political undertones:

"This is exactly how he impacts change... part of Trump's strategy to create this culture of fear to affect change."
[06:54]

Susan Davis observes the shift within the Republican Party:

"This is one of those ways in which Donald Trump is economically changing the Republican Party because the Republican Party has been opposed to the idea of tariffs."
[09:30]

Trump's advocacy for tariffs marks a significant departure from traditional Republican economic policies, potentially realigning party priorities and strategies.

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7. International Reactions and Diplomatic Tensions

Frank Ordonez highlights Mexico's stance:

"Mexico issued a statement just a little while ago saying that for every tariff that the United States imposes, that there will be a response in kind."
[10:54]

He notes that Mexico, familiar with Trump's tactics, may retaliate, especially targeting American automotive industries:

"General Motors, Stellantis and Ford Motor Company have plants in Mexico and that those would be impacted."
[11:00]

The response from Mexico underscores the potential for escalating trade tensions and mutually detrimental economic actions.

---

8. Broader Strategic Implications

Scott Horsley addresses the global strategic landscape:

"There's a growing bipartisan consensus in this country that if there is one major rival for the United States, both economically and strategically, it is China."
[12:21]

He warns that sanctions on neighboring countries could inadvertently strengthen China's position:

"If you make it harder for Canada, harder for Mexico to compete, then you're basically just serving up a favor to the Chinese government."
[13:10]

This dynamic suggests that misguided tariff policies might undermine broader U.S. strategic interests against global rivals.

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9. Conclusion: Assessing the Potential Impact

The episode concludes with an acknowledgment of the complex interplay between economic policy, political strategy, and international relations. Susan Davis emphasizes the multifaceted consequences of Trump's tariff proposal, from everyday consumer costs to geopolitical shifts.

Frank Ordonez adds a personal touch, comparing the policy's impact to family dynamics, reflecting on the broader confusion and unintended consequences of such sweeping economic measures.

Scott Horsley reiterates the potential for increased uncertainty and economic instability, urging listeners to consider the long-term ramifications of such policies.

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Notable Quotes:

• Scott Horsley [01:53]:
  "A tariff is a tax that is imposed on imported goods... the lion's share of this tax is borne by the businesses here in the US and the consumers here in the US."

• Frank Ordonez [03:18]:
  "He would say over and over and over again, his favorite word is tariff... he uses it as a weapon, weapon against other countries to get things that he wants."

• Susan Davis [06:54]:
  "Political support for this kind of activity is real, I mean, even among Democrats... if you don't do that or you take that away, you could lose support."

• Scott Horsley [12:21]:
  "There's a growing bipartisan consensus in this country that if there is one major rival for the United States... it is China."

---

This episode of The NPR Politics Podcast offers an in-depth examination of Donald Trump's tariff proposal, dissecting its economic logic, political maneuvering, and potential global repercussions. Through expert analysis and insightful discussions, listeners gain a comprehensive understanding of the complexities surrounding this pivotal policy decision.

Transcript

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[Chris Simmons Solomon]

G'day. This is Chris Simmons Solomon, and I'm at 87 degrees, 12 minutes south and 133 degrees 55 minutes west in central Antarctica. I'm a mountain guide for a traverse with 13 mechanics and tractor operators in the US Antarctic Program. We've been traveling now for three weeks from McMurdo Station with essential science equipment and fuel supplies for the Amundsen Scott South Pole Station. Now, this podcast was recorded at 12:37pm.

[Susan Davis]

On Tuesday, November 26.

[Chris Simmons Solomon]

So things may have changed by the time you hear it, but we'll likely still be making our way through whiteout blizzards and temperatures below negative 40 Celsius or Fahrenheit, working hard to keep all the 40, 14 noses, 28 ears and 139 fingers we started out with. All right, let's get to it.

[Susan Davis]

I have a chill just listening to that time, though.

[Frank Ordonez]

I mean, part of me wants to go and do the podcast from there.

[Susan Davis]

That is an extremely cool job that I would never, ever want to do. Hey there. It's the NPR Politics podcast. I'm Susan Davis. I cover politics.

[Frank Ordonez]

I'm Frank Ordonez.

[Susan Davis]

I cover the White House and longtime friend of the pod. NPR's chief economics correspondent Scott Horsley is with us today. Hi, Scott.

[Frank Ordonez]

Hi.

[Scott Horsley]

Good to be with y'all.

[Susan Davis]

Today we're talking tariffs because last night President elect Donald Trump announced on social media that he's planning to impose tariffs on all goods coming from Canada, Mexico, and China, the US's three largest trading partners, on his very first day in office. Scott, let's do a little service to our listeners here. Let's start with the most basic question. What's a tariff and how do they work?

[Scott Horsley]

A tariff is a tax that is imposed on imported goods. The president elect likes to say that it's the foreign country that is exporting the goods that pays the tariff. But economists are pretty much in agreement that the lion's share of this tax is borne by the businesses here in the US and the consumers here in the US that use the tariffs. So in this case, you can think of this as a 25% tax on guacamole coming from Mexico three weeks before the Super Bowl.

[Susan Davis]

Okay, can you now talk through exactly what Donald Trump is saying he's doing and what the economic consequences could be.

[Scott Horsley]

Well, he says he's going to attach these tariffs on all imports from Mexico, Canada and China until he gets some relief from those countries on illegal immigration and illegal drugs coming into the U.S. he says that those countries have the power to stop undocumented immigration and illegal drugs flowing into the US and that until they do so, they'll be paying a heavy price.

[Susan Davis]

And just to be clear, this is an economic policy that he would be enacting in response to immigration and drug issues. It's not sort of an economic retaliation against these countries. It's because he wants them to solve a different problem. That's correct, Franco. A bit of a surprise announcement. I think we're back to the days where the president elect and soon to be president is announcing policies at all hour of the night and day. But this isn't a surprise policy. This is exactly what Donald Trump campaigned on.

[Frank Ordonez]

He would say over and over and over again, his favorite word is tariff. He uses it as a weapon, weapon against other countries to get things that he wants. I mean, just one example is using tariffs against Mexico. He tells this story during the campaign that that's how he got the remain in Mexico policy. That's the policy, of course, that requires asylum seekers to stay in Mexico as their cases go through the courts. He tells this long story about having a conversation with a Mexican diplomat and them saying, no, no, no, no, asylum seekers can stay in Mexico. He says, yes, yes, yes. They say, no, no, no. Well, if you don't do this, I am going to slap these massive tariffs on you. He claims within hours they had a deal done. Now he says that's what he's going to do again. And this is the kind of thing that he does over and over again. I mean, we are eight weeks away from Inauguration Day to be this early. There is some tactics here, Scott, though.

[Susan Davis]

I do think it's important to remind people that this wouldn't be the first time Donald Trump has imposed tariffs. And in fact, the US still has tariffs imposed that were imparted under Donald Trump that Joe Biden continued.

[Scott Horsley]

That's true. The first Trump administration raised tariffs by a considerable degree. There were a lot of those tariffs that went through sort of due process at the Commerce Department or the US Trade Representative. Then there were threats of tariffs which came from the president's social media accounts, often late in the evening. A lot of those tariffs didn't come to pass. So I think people are waiting to see whether this is going to be a genuine threat or just A lot of sound and fury signifying not much, but just the threat of these tariffs has generated lots of headlines for the president elect. And, you know, maybe that's part of his goal here.

[Frank Ordonez]

I mean, on the sound and fury point, I mean, yes, he definitely announced a lot of tariffs in his first administration. He made threats of very widespread tariffs, but in the end, most of them were targeted tariffs that. That hit specific things. What he is proposing now are across the board tariffs on Mexico, across the board tariffs on Canada as well as China. China. This would have a much more significant impact.

[Susan Davis]

And this could just be a threat, right? I mean, in the past, he has threatened big consequences, but they didn't actually happen.

[Frank Ordonez]

This is the kind of thing that the president elect does. I mean, this is part of his M.O. this is how he impacts change. And I will also add, this is something that bothers diplomats. When I talk to diplomats about, well, what would it be like, you know, going back to Trump versus Biden? This is something that is often brought up. You were talking about kind of using trade to talk about border policy. Kind of like the mixing the buckets of issues. This is something that really drives diplomats mad because Trump will use one issue to kind of attack another. You know, he kind of mixes these buckets of issues.

[Scott Horsley]

If these tariffs were actually to go into effect, though, this would have serious economic consequences. I mean, we heard over and over again throughout the campaign how unhappy people were with the high price of groceries. Well, prices in the produce section of the supermarket would soar if you had to put a 25% tax on all, all the fresh produce coming from Mexico. What's more, the North American auto industry, which is very integrated among all three countries, would be seriously handicapped. That would affect, you know, U.S. manufacturing jobs in the Midwest. People who supported Donald Trump. So if this threat were actually to be carried out, it would have serious economic consequences.

[Susan Davis]

But Franco, to that end, the political contradiction here is if this policy was enacted, one of the most clear impacts on everyday people is grocery store bills would go up. And how many times did we hear from voters in this past election that they were voting for Donald Trump because they wanted to see those grocery prices go down?

[Frank Ordonez]

Absolutely. And I think that is the reason why so many Trump supporters, you know, have. Have really kind of questioned how serious this is. I mean, I think the phrasing that many people use is to take Trump seriously, but not take him literally.

[Susan Davis]

All right, let's take a quick break and we'll talk more about this when we get back.

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[Susan Davis]

The NPR app cuts through the noise, bringing you local, national and global coverage. No paywalls, no profits, no nonsense. Download it in your App store today. And we're back. And this is a policy. If Donald Trump chooses to do it, he can pretty much do all on his own.

[Frank Ordonez]

Yeah, I mean, it is complicated, but the US Constitution does give Congress the authority to issue tariffs. That said, they also have the authority to delegate it to presidents. And that's what they have been doing for decades. And that's why Trump was able to basically free, freely issue tariffs quite a bit in his first administration.

[Susan Davis]

It's also one of those ways in which Donald Trump is economically changing the Republican Party because the Republican Party has been opposed to the idea of tariffs. And here we are where the leader of the party is now the arguably the loudest advocate in the world for them.

[Frank Ordonez]

In so many ways, Trump has expanded the presidential powers for those exact reasons.

[Susan Davis]

Scott, is there any, I mean, as you noted in the beginning of the conversation that there's broad consensus among economists that this would impart higher costs on consumers or businesses. Is there an economic argument that the Donald Trump worldview is relying on to say that this could actually be good policy?

[Scott Horsley]

If you put these kinds of economic consequences in play for the sake of a bargaining chip, it creates A lot of uncertainty. It makes it hard for businesses to know what's coming down the pike. And we know that businesses don't like uncertainty. Businesses like to know what are the rules of the road, how can we comply with those rules of the road? And we want to know that they're going to be the same tomorrow and next week and next year that they were yesterday. So just rattling this tariff saber in this way, I think creates uncertainty and discourages people from wanting to do business under these circumstances.

[Susan Davis]

Franco, do you have any sense of how the effective countries are responding or might respond?

[Frank Ordonez]

I mean, they're responding pretty aggressively as well. Mexico issued a statement just a little while ago saying that for every tariff that the United States imposes, that there will be a response in kind. They went so far as essentially pointing out that General Motors, Stellantis and Ford Motor Company have plants in Mexico and that those would be impacted. They have been in this situation before Mexico. That is, I think if any country know kind of the tactics of President Elect Trump better, it is Mexico. So it will be interesting to see how they respond. I will add, though, while the response does kind of seem muted in some ways, because it does seem like this is a negotiating tactic, but it is having some real world impacts in these countries. I mean, the headlines that we're seeing here are headlines that you're seeing in Mexico as well. You have experts and pundits, they're saying this is terrible, this is the worst thing that can happen. And they are putting political pressure on their leaders to respond. So I do think this is part of Trump's strategy to kind of create this culture of fear to affect change. And for him and his team and his allies, they would certainly argue that if they can use that fear to disrupt and to create change, then that could be good.

[Scott Horsley]

I will say, too, there's a growing bipartisan consensus in this country that if there is one major rival for the United States, both economics, economically and strategically, it is China. And you know, in the campaign, Trump Talked about imposing 60% tariffs on China and 10 or 20% tariffs on other countries. Well, here he's doing the opposite. He's imposing two and a half times the tariff rate on Mexico and Canada, our next door neighbors, as he is on China. And every time you levy a big tax on a country other than China, what you're really doing is handing an advantage to China. China's already the number one exp border in the world. And if you make it harder for Canada, harder for Mexico to compete, then you're basically just serving up a favor to the Chinese government.

[Frank Ordonez]

I mean, I think you're absolutely right. I just question whether Trump is looking at it that way. I mean, obviously, Trump looks at these things very much through a political lens, in the lens of his own interests and his supporters. They are going to see this as an example of how Trump kind of uses America's strength to create change that can benefit them. I mean, the political support for this kind of activity is real, I mean, even among Democrats. I mean, there's a reason why Biden kept tariffs in place because the political support is there. And the concern is if you don't do that or you take that away, you could lose support.

[Susan Davis]

My son is currently going through a hitting phase where he will, for no reason at all, hit my daughter really hard and she will just look at me and yell, I was just sitting here. I wasn't even doing anything. And in this metaphor, that's Canada to me. Like, I understand the Mexico part of this policy, especially because of illegal immigration and drugs coming across the border. China, as Scotch as well articulated, is seen as the largest global rival to the U.S. i'm not sure I fully understand the Canada part of this broad sweeping tariff punishment.

[Frank Ordonez]

Well, I mean, there is a connection with immigration here as well. I mean, the Biden administration has increased enforcement on the southern border, and there has been an increase from Canada. People are flying to Canada or getting to Canada and coming through the northern border. So there is is a immigration component here that Trump is seeking to address, but there's also a personal relationship that he has had with Trudeau, and it has been pretty rocky for a long time. You gotta wonder if that is also part of this.

[Susan Davis]

All right, that is it for us today. Scott Horsley, thank you as always.

[Scott Horsley]

Good to be with you all.

[Susan Davis]

I'm Susan Davis. I cover politics.

[Frank Ordonez]

And I'm Franco Ordonez. I cover the White House.

[Susan Davis]

And thanks for listening to the NPR Politics podcast.

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