How Should Trump Approach China? A Debate.

Summary

Podcast Summary: "How Should Trump Approach China? A Debate"

The Opinions – The New York Times Opinion
Date: November 5, 2025
Host: Arielle Kaminer
Guests: Oren Kass (American Compass), Jason Furman (Harvard University)

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Overview

This episode explores the current state and future of U.S.-China trade relations in the wake of President Trump’s recent trade deal with China. Two leading economic thinkers—Oren Kass, a skeptic of free trade with China, and Jason Furman, a champion of its benefits—debate whether the United States should continue to engage economically with China, the consequences of past policy, and what comes next.

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Key Topics & Discussion Points

1. The New Trump-China Trade Deal – Symbolic or Substantial?

[01:41–03:44]

• Jason Furman’s Take: The new agreements amount to a “ceasefire.” The U.S. and China are mainly calling off new escalations: the U.S. won’t double tariffs, and China will continue exports of crucial rare earths and buy farm goods.

  • “Basically nothing new gained, nothing new lost, you know, broadly meh. But better than the alternatives.” [01:58]

• Oren Kass’s Perspective: The deal maintains a high level of conflict and moves both sides toward economic decoupling, rather than meaningful reduction of tensions.

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2. The Evolution of U.S.–China Trade Policy

[03:44–11:43]

• Background:

  • In 2000, Congress granted China permanent normal trade relations, signaling bipartisan enthusiasm for free trade.
  • The expectation was mutual economic benefit and that trade would liberalize China.

• Kass: The optimistic consensus was wrong; American workers lost out, and assumptions about China’s convergence proved false.

  • “Every single assumption that this was built on…was all wrong. And we have seen the fallout over the past couple of decades.” [04:07]

• Furman: The process began in 1979; the 2000 change mostly locked in business confidence and won concessions from China without the U.S. opening up further.

  • Argues consumer benefits (“cheap stuff” meaning real wage increases) were significant and trade is always about winners and losers.
  • “When you have cheaper products, that's like giving a raise to every single worker in America.” [05:18]
  • The negative effects (layoffs) attributed to China were smaller than overall job changes, and employment and inequality levels actually improved over the following decades.

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3. The 2000s: Catastrophe or Inevitable Transition?

[07:33–12:44]

• Kaminer: Was everyone wrong to lower barriers, or was it just mismanaged?

• Kass: The move was a fundamental shift; making trade relations permanent increased offshoring and lost leverage over China.

  • “It did fundamentally change everything when you have an annual renewal process... it lost our leverage over China.” [07:47]
  • Claims the WTO offers no tools to confront China’s tactics.

• Furman: Disputes the scale of the change or business certainty argument. Points to positive U.S. economic metrics after deeper integration with China.

  • “We had an unemployment rate that was lower than in the 25 years that came before it. We had inequality that went up less than it did in the 25 years before it.” [10:18]

• Deindustrialization Debate:

  • Furman: Primarily driven by technology, not trade. Even China is losing manufacturing jobs (by headcount) as output remains steady.
  • Kass: Economic resilience and security, not just employment, should guide trade strategy.

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4. What’s the Right Relationship With China Now?

[12:44–17:37]

• Kass: Advocates "a break"—mostly ending U.S. investment in China and Chinese investment in the U.S. He argues that importing goods from China comes with importing market distortions due to China’s state intervention, which crushes American competitors and undermines resilience.

  • “...if you say, well, therefore we need to have free trade with China, you are importing not just a lot of goods, but you're importing every one of those distortions...” [13:02]

• Furman: Supports confronting China’s abuses but faults Trump's approach for being bilateral and failing to coordinate with U.S. allies. He argues that U.S. leverage is greater with global allies united.

  • “We put a little bit too much weight on tariffs and trade as a solution...” [15:22]
  • “We are nowhere nearly as important and powerful as we think. The majority of countries in the world trade more with China than with the United States.” [17:37]

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5. National Security vs. Economic Gains

[17:37–22:20]

• Furman: National security and resilience justify blocking some imports—rare earths or microchips—but warns against “mercantilist” policy focused solely on raising U.S. exports.

• Kass: Highlights how American tech leadership was lost through trade, citing Tesla’s Shanghai move as an example, and worries that continued openness will mean Chinese firms coming to dominate critical industries in the U.S.

  • “It's very frustrating... when economists simultaneously say, no, no, free trade is good and it doesn't matter which things we make here or don't, except for maybe some small national security exceptions.” [19:32]

• Furman: Notes rising problems within China—youth unemployment, slowing growth—and contends the U.S. model has outperformed in generating wage growth and reducing unemployment.

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6. Trump’s Goals and the Limits of Negotiation

[22:20–27:54]

• Kaminer: Asks: Is Trump’s approach about balanced trade, U.S. dominance, or simply the art of the deal?

• Kass: Trump’s stance has always been about getting a “better deal,” but the fundamentals of the U.S.–China relationship may make such a deal impossible. “Both sides want [the relationship] to come apart at as low a cost as possible.” [22:51]

• Furman: Criticizes the broader Trump tariff policy as “arbitrary and capricious,” applying not just to China but to countries like Canada and Brazil, often for reasons unrelated to trade.

• Kass: Argues broad-based tariffs are preferable to line-by-line political decisions, but acknowledges responding to a television ad with tariffs (as with Canada) “is not a good way to do tariffs.” [26:27]

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7. Reshoring and the Future of U.S. Jobs

[29:11–34:07]

• Kaminer: Can reshoring factories really bring back good jobs for American workers, or will automation negate those gains?

• Kass: Reindustrialization won’t revert the U.S. to the 1950s, but highly automated factories create high-wage, high-productivity jobs and can stimulate struggling regions.

  • Cites a recent example of Sharpie's reshoring: “They massively increased output and they were able to raise wages by 50%. That's what we should be looking for.” [30:03]

• Furman: The manufacturing wage premium is gone; factory jobs now pay less than the national average (excluding managers). The key is not manufacturing per se, but securing “productive” jobs across a diversified economy.

  • “Even if you thought there used to be [a manufacturing wage premium], that premium has just gone away.” [32:23]

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Notable Quotes & Memorable Moments

• Jason Furman: “When you have cheaper products, that's like giving a raise to every single worker in America.” [05:18]
• Oren Kass: “We gave it all away. And that has been a world historical tragedy.” [09:10]
• Jason Furman: “We are nowhere nearly as important and powerful as we think. The majority of countries in the world trade more with China than with the United States.” [17:37]
• Oren Kass: “Both sides want [the relationship] to come apart at as low a cost as possible." [24:51]
• Jason Furman: “Do you want to have a job or not have a job? Generally, the answer...would be yes. The issue is...what types of jobs do you want to have?” [32:23]

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Exchange of Perspectives: Final Thoughts

[34:07–35:18]

• Kaminer: Asks if either participant’s views have shifted.
  • Furman: Appreciated Kass's framing as more about geopolitics than just workers and living standards.
  • Kass: Plans to revisit the historical evidence on trade relations in light of Furman’s arguments about the 2000 policy’s real-world impact.

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Conclusion

This episode presents a nuanced, sometimes contentious discussion about the legacy and future of U.S.–China trade policy, contrasting a call for managed disengagement and increased national resilience (Kass) with a defense of global integration for the sake of American consumers and workers (Furman). Both speakers agree on the need for U.S. policy to adapt in an era of Chinese economic ascendancy, even as they disagree sharply over the methods and priorities that should guide that adaptation.

Transcript

[Oren Kass]

Hi, I'm Juliette from New York Times.

[Podcast Host / Announcer]

Games, and I'm here talking to fans about our games. You play New York Times Games? Yes, every day.

[Arielle Kaminer]

There's this little tab down here called.

[Oren Kass]

Friends, so you can add your friend. That feels new to me. It is. It's nice to have the social aspect.

[Podcast Host / Announcer]

Oh, my God. And you have all the Times.

[Oren Kass]

That's crazy, right?

[Arielle Kaminer]

You can look at Spelling Bee, wordle Connections.

[Oren Kass]

Oh, my God.

[Podcast Host / Announcer]

Amazing. Love that I have to get the app.

[Arielle Kaminer]

New York Times Games subscribers get full access to all our games and features. Subscribe [e-mail] games for a special offer.

[Podcast Host / Announcer]

This is the Opinions, a show that brings you a mix of voices from New York Times Opinion. You've heard the news. Here's what to make of it.

[Arielle Kaminer]

I'm Arielle Kaminer. I'm an editor at New York Times Opinion. Donald Trump's latest round of trade talks with China could mean a temporary calm in our turbulent relationship. In the past week, the countries have agreed to a reduction in tariffs on China and a commitment from that country to continue buying American farm exports and supplying rare earth metals. So this seemed like a good moment to discuss the deal and the bigger picture. I'm joined today by two regular Times Opinion contributors whom I have the frequent pleasure to edit. Oren Kass is the founder and chief economist of the conservative think tank American Compass. Oren has argued against free trade with China in our pages. Hi, Oren.

[Oren Kass]

Good morning.

[Arielle Kaminer]

And Jason Furman, an economist at Harvard and a former chair of the Council of Economic Advisors who has written about the benefits of free trade. Hi, Jason.

[Jason Furman]

Hello.

[Arielle Kaminer]

Thanks for joining me today. We are taping this on a Friday morning, just a day after President Trump and Xi Jinping, China's leader, struck a trade deal. Let's start with the deal. How big of a moment is this, Jason?

[Jason Furman]

Basically nothing new gained, nothing new lost, you know, broadly meh. But better than the alternatives.

[Oren Kass]

Well, I. It's funny. I agree with that, although I suspect we might have a different alternative in mind. I would say the alternative would have been them striking a more significant deal and ratcheting down what has become a quite significant conflict. It seems like they might mostly maintain the status quo, which is quite high levels of conflict on trade and driving toward decoupling, which I think is very.

[Arielle Kaminer]

Important for whatever it does or does not amount to. Jason, maybe do you want to start us off telling listeners how Americans will experience that deal, whether there are any effects that they will register and if so, when?

[Jason Furman]

Yeah. So most of the Deal that the United States reached with China was to call off escalations that they had both either started, started doing or announcing that they were going to do. The United States had threatened to add another hundred percent to tariffs. They're not going to be doing that. China had probably stopped exporting certain rare earths, which are really important for certain American industries. They're not going to do that. So you're not going to, for sort of a normal person, see very much, but mostly you should think of this as like a ceasefire. Neither country is going to escalate. They're going to keep talking. They're gonna try to figure more things out. In terms of what the more is, though, it's a really open question as to whether that more will be less economic engagement with China or actually more, where we're trying to get them to buy more things and actually integrating even more with them than we are now.

[Arielle Kaminer]

Right. And to step back a little bit to how we got here, the story took a big turn in 2000 when Congress granted China permanent normal trade relations status. At that time, free trade was a big bipartisan win, and economists were unanimous on its virtues. Not anymore. Oren, what happened in 2000 and how did that consensus crumble?

[Oren Kass]

Well, in 2000, we were at the very peak of the post Cold War enthusiasm for an end of history. And the idea that we were all going to, across the world, proceed toward a harmonious future of liberal democracy and open markets and embracing China was seen as an important part of that. As you said, economists were probably literally unanimous and certainly trumpeted their unanimity in believing this was a wonderful idea, in emphasizing specifically that this would be good for American workers, that this would create better opportunities for American workers, and that somehow, essentially, it would help China to move toward a market economy as well. The reality is that none of that happened. Every single assumption that this was built on, that countries were moving in this direction, that free trade would automatically deliver for everybody involved, that this would create better opportunities for American workers. That was all wrong. And we have seen the fallout over the past couple of decades. And as people have started to realize it, I think there is a very important rethink going on about the conditions you need to have if trade is going to work.

[Jason Furman]

So first of all, we should really start the story in 1979. That's when the United States first cut tariffs on China. It established what is called normal trade relations. And that was part of our recognizing China and no longer treating China like an enemy on par with the Soviet Union. Then regularly from 1979 through 2000, Congress extended those normal trade relations and everyone fully, fully expected they were going to be extended every year for the rest of time. What happened in2020, I'm possibly an unindicted coconspirator here, having been in the Clinton administration and worked a little bit on PNTR at the time, was that we got China to cut its tariffs on US Exports to China. The United States did not cut any tariffs at all. It did not open up any of our markets to China in 2000. We just said, in exchange for making this permanent, you have to open your markets to us, make it easier for us to sell into China. In terms of how this has worked out economically, I think in many respects it's worked out quite well. People pooh, pooh gains for consumers, you know, oh, it's just underwear and shoes and increasingly it's things like iPhones that are much higher up the technology spectrum. Well, you know, the way we judge wages is how much they can buy. And when you have cheaper products, that's like giving a raise to every single worker in America. It is a 25 year process that has definitely had winners and losers, as is everything in economics, trade, technology, policy. Any change you make is going to help some people and hurt others. The magnitude of the layoffs that have been attributed to China are less than 1% of the total layoffs we've had over this period of time. And there's been a lot of new jobs in industries broadly. This is why we have this interdependence today that the Trump administration itself is loathe to walk away from and loathe to decouple from because they understand just how costly it would be for Americans.

[Arielle Kaminer]

So, Oren, is it your position that everyone was wrong 25 years ago? Like, should those barriers never have been lowered in the first place, or was it just done badly and mismanaged over time?

[Oren Kass]

Well, I think certainly everyone was wrong. And I think it's really important to focus in on something Jason was getting at, which is what exactly changed in 2000? It's very funny to me that of course, at the time this was celebrated as the single most important economic move and policy that the country could be pursuing. Now that it's gone so badly, we have this revisionist history that, well, in fact, it wasn't actually changing things that much. It wasn't such a big deal. China already had this access to our market. The reason that corporations in particular were so obsessed with getting this done is that it did fundamentally change everything when you have an annual renewal process for normal trade relations. First of all, corporations have no confidence, and they have said they did not have confidence. And part of the reason for doing this was to give them confidence that it would be permanent, which led to much, much higher levels of investment in offshoring investment in China. And secondly, it lost our leverage over China. China knew every year it had to behave itself or there was going to be a political issue with renewal the next year. And what we did is we essentially relieved the ability to impose that pressure. We said, we're no longer going to be able to revisit this on an annual basis. You are going to be a WTO member. And as people somewhat knew at the time and have certainly discovered since, the WTO essentially gives you no mechanism to confront what China proceeded to do, which was to pursue this extraordinarily aggressive policy to try to win leadership and jobs and supply chains in virtually every manufacturing sector that mattered. And I think also it's important to note that politicians got up and said, well, this creates jobs. This will be great for Americans, and so forth. A lot of economists had this perspective that frankly, the jobs don't even matter. Paul Krugman had famously said that essentially, you should just have unconditional free trade no matter what. It doesn't matter how other countries even behave a little bit, to Jason's point, because as long as you get more cheap stuff, you should be happy. And so I agree with Jason. We did get a lot of cheap stuff. And I think it's very clear in terms of the trajectory of the economy and now just more broadly, our resilience and national security. We gave it all away. And that has been a world historical tragedy. Right?

[Jason Furman]

I mean, I want to get into the cheap stuff. I mean, it's almost said in a derisive type of way. Let's just use a different word. Instead of cheap stuff, let's call it a pay raise for every single worker in America, because that's what it is in terms of the leverage. And you know, what. What the agreement actually meant in 2000. Certainly the Clinton administration stressed quite strongly that we're not doing anything to lower our tariffs. We're just getting concessions from China. The certainty mattered a little bit, but I wouldn't overstate it. After Tiananmen Square, the United States renewed normal trade relations. Bill Clinton campaigned in 1992 on taking them away if China didn't improve its human rights. And then he never took them away. So by the year 2000, American business was Pretty convinced that those normal trade relations were here to stay. And there's been some mixed research in terms of did the greater certainty play much role in their decisions? I think, on balance, it didn't. But definitely I agree that agreement was part of a greater integration with China and that greater integration in China in the 25 years that followed, we had an unemployment rate that was lower than in the 25 years that came before it. We had inequality that went up less than it did in the 25 years before it. And it helped engineer a broad based, real pay increase for American workers.

[Arielle Kaminer]

So, Jason, you, you also acknowledged a moment ago that all policies have trade offs. So once the trade barriers came down here, were there missed opportunities to benefit American workers? Was there a way to have the benefits of expanded trade without the deindustrializing effect on the United States?

[Jason Furman]

I mean, deindustrialization is mostly about technology in that for a while, even after the China agreement, American manufacturing output was rising. It's now basically leveled off and we're doing it with fewer and fewer people. China is also losing enormous amounts of manufacturing jobs. They are in some sense de. Industrializing, if you look at the number of people that produce stuff, not if you look at the amount of stuff that's produced. So most of what we're talking about with industrialization is primarily about technology, not trade specific.

[Arielle Kaminer]

Trump ran, at least in part on his opposition to China, but he's not turning out to be much of an isolationist. Oren, you have many times called for a complete break, a total end to trade with China. How is this middle path looking to you?

[Oren Kass]

Well, I should say, I think a complete break with China doesn't mean, you know, there's literally nothing being put on a, on a boat in China and sold to the United States or put on a boat in the United States and sold to China. I think the complete break that we need is first and foremost in the degree to which we have investment going back and forth. That is that we have American companies trying to build their operations in China or that we let Chinese companies come and try to build their operations in the United States. I think fundamentally what has gone so wrong in this relationship is that we had an idea that somehow free trade is just a logical, logical extension of free markets. If you like free markets, well, then obviously you want as much free trade as possible. And the reality is that if you say, well, therefore we need to have free trade with China, you are importing not just a lot of goods, but you're importing every One of those distortions, if China decides it's going to be the electric vehicle maker and is willing to plow literally hundreds of billions of dollars into supporting its producers, that in effect crushes American producers who might want to produce or compete with electric vehicles. And so to call that the free market solution or say that that promotes free markets is exactly backward. And part of the case in 2000 was that China was going to change. I think that ultimately is the big question in my mind for folks like Jason, for economists who kind of continue to make the case that, no, no, no, this was a good idea, it has produced benefits, is to actually. Let's kind of go back, knowing what we know now, and say, if you'd known that over the next 25 years, China was going to become more authoritarian and less democratic, was going to turn away from markets and toward state control, was going to pursue this model of industrial policy and attempt to take leadership in virtually every significant supply chain, would we still have been getting up at the White house podium in 2000 and saying, Economics says this is a good idea, this is something the US should embrace? I don't think that's what economics says. I don't think, based on the arguments that they were making at the time, they would have done this if they'd known how it was going to work out. But certainly there are some people who say this is going just fine.

[Jason Furman]

Absolutely. There are a lot of really deep problems with our trade relationship with China. Not all of those can be solved with trade tools. So some of the ways in which we're overly dependent on China, we need to fix. We need to develop more rare earth capabilities in the United States and in our allies. For example, we put a little bit too much weight on tariffs and trade as a solution, even if trade was a cause to the problem. But definitely trade is part of the solution. And that's what's disappointed me with President Trump's approach to this, is he has approached China entirely unilaterally. It is just the United States versus China. And when it's the United States versus China, they have a lot of leverage. They threatened us with rare earths. They stopped buying our soybeans. And that brought Donald Trump to the table, making concessions in a way he didn't to basically any other country in the world. And given China's importance, given how much it has grown its manufacturing and the key role it plays in so many different industries, I'd much rather that we were getting together with our allies, focusing on China, rather than. Rather than engaging in bilateral trade disputes with every country on the planet Earth, when with most of them the issues that we have with China just don't come up.

[Oren Kass]

I agree with Jason that the kind of multilateral let's all team up on China together is absolutely the ideal we should be trying to get to. I think it's important to say that the reality as of the start of 2025 is that other countries were not willing to do that. If I could just kind of throw out one more question I think is really important here, Jason, why do we need to confront anything that China is doing? Like rare earths are cheaper per your formulation, it is a real wage increase for American workers if we rely on Chinese rare earths, it would be a bigger real increase if we allowed subsidized Chinese electric vehicles to take over the US market. So I certainly think that's a bad idea. I'm not clear on why you do.

[Jason Furman]

Yeah, so that's a great question, Oren. And the reason is national security and resilience. And I don't know where that says you draw the line, but if you are incredibly dependent on something where China basically has a choke point over US industries as it does with rare earths, that puts us in a vulnerable position in a country with which we have an unstable and sometimes cooperative and sometimes competitive relationship. I would put limits on microchip exports in that category as well. And that's why the fact that President Trump is considering giving our selling our microchips to China, the Blackwell chips made by Nvidia makes me quite nervous. But stepping back, a big problem the United States has is we are incredibly important, we are incredibly powerful. But we are nowhere nearly as important as powerful as we think. The majority of countries in the world trade more with China than with the United States. So if they had to choose, they would choose China. China has technology that in many dimensions that are actually beyond ours. And we should actually be learning from them in the way that they learned from the United States. That's where cross border investment can help. And finally, in some sense it was really arrogant to the first Trump administration to center its trade agend around getting China to buy more soybeans and American products. Because you're not going to team up with Europe and Japan to force China to buy more American products. Japan and Europe just aren't going to join us on that. We need to have our goals not being mercantilist. Here's how much we can sell to you. But instead something broad based that appeals to global sentiment where the world is nervous on things like Chinese dominance of certain key choke points for global industry.

[Oren Kass]

I completely agree that we have lost leadership to China virtually everywhere. And the way that happened was exactly this model of free trade that said we don't care if we move our manufacturing to China. I mean, even on electric vehicles, it was Tesla moving into Shanghai in the late 2010s induced by China's ridiculously unfair trade policies that led to China taking this leadership on EV technology. So it's very frustrating to me when economists simultaneously say, no, no, free trade is good and it doesn't matter which things we make here or don't, except for maybe some small national security exceptions. But then when the result of that is that yes, things are not static, they are dynamic, we do lose this technological leadership everywhere. We find ourselves in this terrible position. Now the next step is to turn around and say, all right, well, I guess we're going to have to let Chinese Communist Party controlled companies come and essentially take leadership within the United States. I mean, I understand why on like.

[Jason Furman]

A blackboard that doesn't taking leadership in the United States, but go on.

[Oren Kass]

Well, I guess I'm not sure how you envision this happening. So Chinese companies are going to come set up factories in the US Subsidized by the Chinese Communist Party to use their own technology to make and sell vehicles more cheaply than the US Producers can do it. I'm not sure what the end game is there. I mean, I guess in an ideal world you'd say like, oh well, this is great, the US Companies are going to learn from the Chinese ones. But that's obviously not in the Chinese company's interest. It's an extraordinarily asymmetric relationship.

[Jason Furman]

I mean, you're, we're sort of leaving the issue of what this actually means for people in the economy. A lot of what you're talking about that China has done over the last decade, getting dominance in all these technologies has actually worked out quite badly for the Chinese people. Youth unemployment is rising. Economic growth and productivity growth has slowed. And in some ways I prefer what we do here in the United States. We have a lower unemployment rate than they have in China. We've had increase in the pace of wage growth over the last decade. We've had faster wage growth at the bottom than the top over the last decade. And so I guess I'd look at what this means for actual workers and people rather than making huge sacrifices for American workers and American people based on some set of geopolitical theories about zero sumness. And the need to dominate some, you know, specific list of industries.

[Arielle Kaminer]

Let's return to the deal that America and China have just struck. Oren, what do you think President Trump's real goal is here? Is it balanced trade? Is it dominance? Is it working towards a break? Is it just his personal love of a successful negotiation? I mean, he did just raise tariffs on Canada because he took offense at a television commercial. So what's going on here?

[Oren Kass]

Well, I think the best way to understand Trump's position on China is in a funny way, it's been almost too consistent. Trump's view has always been, essentially, we're getting screwed by China and we should get a better deal with China. And in the 2015, 2016 period, when he was rising to prominence, that was seen as an extraordinarily hawkish position in a world where most people would still have said, what are you talking about? Free trade with China is good. They sell us lots of, maybe I'll say things instead of stuff at very good, low prices. And what has happened in roughly the 10 years since is that I think a lot of, certainly the political consensus and part of the economic thinking has shifted to say this relationship with China is broken in a lot of fundamental ways that it's not even clear you could work out with a deal. And Trump, I think, is roughly still where he always was, which is, we're getting screwed by China and I want a better deal. The big question, though, is, is such a deal possible? That is, if you think about the things he said he cares about, that would be part of a deal. Balanced trade is certainly very important to him. Certainly he has concerns about resilience and national security and some of the areas where China has become dominant. So you'd have to have some mechanism for China to be willing to relinquish that dominance. And as far as I can tell, it's just not at all plausible that China would ever actually agree to those things. In fact, to the contrary, President Xi has made very clear that the Chinese economic strategy is to, in a sense, decouple itself. It wants to become more self sufficient. It wants to have soup to nuts control of its own supply chains. It wants to be exporting even more. As long as that's the case, there is sort of no deal to be had. And so I think what we're seeing, and what I hope we continue to see with this sort of series of truces and ceasefires is essentially a recognition on both sides that this relationship is going to come apart, that in fact, both sides want it to come apart at as low a cost as possible. Neither side really gains anything by sort of going to a mutually assured destruction path. The economists love to point out things are not zero sum. I would say the decoupling is not zero sum. It can actually serve what both political classes want and what both countries need for their economic strategies.

[Jason Furman]

Well, first of all, we've been talking almost entirely about China. The trade war is being conducted against every country in the world, and it's being conducted in just a really bizarre and inconsistent manner. Canada is a country that just does not do particularly unfair things to the United States vis a vis trade. Yes, there's small debates we have over lumber and things like that, but they have small debates with us. Roughly. We had free trade before. Now we have higher tariffs because we didn't like a television ad they had. We have a national security invoked an emergency around trade deficits. And then we used that to put tariffs on Brazil, which we run a trade surplus with because we were upset about how they were treating their former president. We have tariffs on coffee, bananas and mangoes right now. The last one is probably the worst for my particular family. I just don't understand most of what we're doing. What type of message are we sending to countries when it's so arbitrary and capricious, who we'll trade with and how we'll trade with them?

[Oren Kass]

Well, I certainly agree with some of those criticisms. I'm actually a lot less concerned about the mangoes and the bananas and the coffee because I think there's a very important point about political economy, which is if you are going to do tariffs, I think you're actually a lot better off doing a broad based one. Recognizing that that's certainly imperfect in various ways than suggesting that we want to have either an administration or Congress go line by line through the tens of thousands of items in the harmonized tariff schedule and decide on each one what can or can't be made in the US and what the tariff should be when it comes to the way we're approaching countries broadly. I completely agree that a 10% tariff in response to being unhappy with an ad is not a good way to do tariffs, Though I think if you broaden that out and say tariffs are a negotiating tool and when you're trying to negotiate and reach an agreement and you feel like the other party is going in the other direction, then that is something that you would consider in how you use tariffs. I think at the broad level, what the US Is trying to do with a lot of its core trading partners is replace a completely broken post Cold War WTO system of which embracing China was the seminal example, with a model that actually does what free trade is supposed to do and have an open market among countries that are committed to doing trade the right way.

[Jason Furman]

I do think or in more countries in the world are like Canada than China in that they largely play by the rules and more products are actually like coffee than EVs and that they're a thing that, that we don't really make in the United States, we don't aspire to make in the United States would be really costly to make in the United States. And so having an entire trade conversation focused on China to me makes a certain amount of sense because it's not Canada and the products we're talking about are not the same as coffee. Almost everything else in the world though, I guess I'd just rather focus on the living standards of the people that work and live in the United States and everything we've done. You know, manufacturing jobs are still falling. The Trump administration bragged back in February, look, you know, manufacturing jobs were up in our first month. Well, they've been going down for the rest of the year. It's still early. Maybe this could all end up working out with a lag. But I'd be quite surprised if we get the things that I actually care about, which are, you know, full employment and good wages out of any of that. To do that, we need to focus on what matters, which is the domestic economy. Much of this is a counterproductive distraction.

[Arielle Kaminer]

Okay, I'm going to jump in. I'm glad you mentioned the domestic economy. One major goal of this administration's trade policy has clearly been to reshore industries that have gone overseas. And there have been some signs that big corporations are willing to move at least some production back to the US but what I always wonder when I read these stories is why should we assume that this re industrialization is going to happen in a way that's good for U.S. workers? I mean, won't at least some of these be dark robo factories? And I guess in a broader sense, can building factories in 2025 return us to the better working conditions of the 1950s?

[Oren Kass]

Well, I don't think that's the goal. I think to your point about the dark robo factories, there's this sort of other extreme of people imagining factories that employ nobody, which certainly isn't the case either. Building factories in the United States in 2025 are highly automated high tech factories for the most part, which means they're also ones where the workers in them tend to be highly productive, which means that the jobs in them are also better jobs in all sorts of ways, including that they tend to be at much higher wages. And so we're certainly not going back to the 1950s model of, you know, 20% plus of the American workforce screwing in bolts on assembly lines. But that's not at all the goal. Every new highly automated, highly productive factory that we open in the United States is an increase over the not having the factory. Right. And the amount of increased investment and production that we would be looking at over, say, a decade if we actually re industrialized, if we actually closed, our trade deficit is on the order of millions of new, more productive, better paying jobs, in many cases with a lot of investment in workforce development, also in many cases in a lot of parts in the country that have not been the beneficiaries of the type of economic growth we've seen in finance, in tech, in certain sort of high end services in major metropolitan areas. So this is exactly what we should be looking for. And to the extent that we have started to see green shoots, as you've said, that is in fact what we're seeing. I don't know if I'm allowed to refer people to a Wall Street Journal article on this podcast, but there was a wonderful one a week or two ago about the reshoring of Sharpie. They did it by investing $2 billion in capital in heavily automating the process and by retraining the workers they had. And the end result was they didn't lay anybody off. They massively increased output and they were able to raise wages by 50%. That's what we should be looking for.

[Jason Furman]

So first of all, Oren, the manufacturing wage premium has actually gone away. If you just do a raw comparison of how much manufacturing workers make compared to all workers and exclude managers. Manufacturing workers used to be paid, you know, 6, 7, 8% more. Now they're paid, you know, 6, seven, 8% less than all workers. So the idea that this is this great pathway for people without a college degree into the middle class, it's just less of one now. And it's less of one now in part because there's not just fewer jobs, but even the jobs that are left, if you exclude the managers, actually pay less than other jobs, not more. But the issue here isn't, you know, do you want to have a job or not have a job? Generally, the answer to that question would be yes. The issue is if you're going to have an unemployment rate of 4%. What types of jobs do you want to have? And I don't have any particular preference. I'd say the ones that are most productive, because those are the ones that are going to be the highest wage, the ones that people most want to be in, because those are the ones that are going to have the most attractive benefits. Manufacturing has a number of things that are good and attractive about it, but it's also a very risky thing. When the plant closes, it can take, you know, the whole town with it. Having more diversified service sector jobs in some ways can be, can be less risky. So I don't have some grand master plan of here's the jobs I'd like to have. When it comes to jobs, don't see anything particularly special about manufacturing. And even if you thought there used to be, that premium has just gone away.

[Arielle Kaminer]

Jason Oren, I really wanna thank you for engaging these questions and each other so deeply. I have really learned a lot. My last question for you, which maybe you can answer briefly, did either of you learn something from the other? Jason, has Oren shifted your thinking in any way? And Oren has Jason, I guess.

[Jason Furman]

Orin I used to think of as focused on sort of workers and living standards. And he seems a little bit more about a grand geopolitical project vis a vis China. And that's not a crazy thing to be for, but it's something different from where I thought he was coming from before and something that you could actually start coherently defending some of these policies vis a vis China.

[Oren Kass]

Well, I would say, you know, I think this question of sort of what actually happened with the WTO and how policy did or didn't change and how businesses did or didn't react is a really important one that I haven't studied as much as I'd like to. And so I have to go back now to what Jason was saying about that and try to understand better exactly how it played out in practice.

[Arielle Kaminer]

Well, thanks for those answers and thanks to you both for joining me.

[Jason Furman]

Thank you.

[Oren Kass]

This was a lot of fun. Thank you.

[Podcast Host / Announcer]

If you like this show, follow it on Spotify, Apple or wherever you get your popcorn. Podcasts the Opinions is produced by Derek Arthur Vishaka Darba, Christina Samulewski and Gillian Weinberger. It's edited by Kari Pitkin and Alison Bruzek. Engineering, mixing and original music by Isaac Jones, sonia Herrero, Pat McCusker, Carol Sabaro and Afim Shapiro. Additional music by Aman Sahota. The Fact Check team is Kate Sinclair, Mary Marge Locker and Michelle Harris. Audience strategy by Shannon Busta and Christina Samulewski. The director of Times Opinion Audio is Annie Rose Strasser.