Podcast Summary: The Trade Guys – "Tariff Dividends, U.S.-UK Pharma Deal, and Bullying vs. Persuasion"

Date: December 8, 2025
Host: Alex Kisling
Experts: Scott Miller, Bill Reinsch
Produced by: Center for Strategic and International Studies (CSIS)

Episode Overview

In this episode, the Trade Guys break down three complex trade stories shaping global policy and the everyday economy:

• The newly announced U.S.-UK pharmaceuticals agreement
• President Trump’s "tariff dividend" proposal (including $2,000 checks and the idea of tariffs replacing income tax)
• A debate on effective trade negotiation tactics: bullying vs. persuasion

Scott and Bill unpack the policy details, economic implications, and big-picture impacts, keeping the tone frank and occasionally wry, while offering accessible insights for listeners at every knowledge level.

Key Discussion Points & Insights

1. The U.S.-UK Pharmaceuticals Agreement

[00:45–08:15]

Background:

• The White House announced a deal (Dec. 1) exempting British new branded drug exports from U.S. tariffs in exchange for the UK cutting a key pharmaceutical revenue “clawback” from U.S. companies.
• Bill describes this as “a fairly free ride for this category of pharmaceuticals” ([01:12]).

Deal Mechanics:

• U.S. concessions:

  • Zero tariffs on new branded UK pharmaceuticals (generics already enjoy favorable terms)
  • Exempted from future Section 232 (national security) and Section 301 (trade remedy) tariffs/investigations

• UK concessions:

  • National Health Service reduces the clawback on drug company revenue from ~23.5% to 15% ([01:45])
  • This means “the British National Health Service will get less money back, which creates an issue for them,” but “our guys are going to be making higher profits” ([02:25])

Context and Implications:

• The UK’s clawback was an outlier; other European countries’ schemes are lower (Ireland: 9%, Germany: 7%)
• Goal: Level the field, potentially reduce U.S. drug prices by forcing other countries to pay more
• Skepticism: “Are American drug companies going to give it back to American consumers in lower prices? There I’m highly skeptical…” (Bill, [03:28])

Industry Structure:

• Pharmaceuticals are developed mostly in the U.S., UK, and Switzerland—countries with “headquarter companies” that drive industry R&D ([04:23], Scott)
• American consumers have “for decades…picked up most of the tab for innovative pharmaceuticals” ([05:23])
• U.S. prices are “triple what they are in a lot of other countries” (Bill, [08:07])
• The challenge is one that’s “40 years old and not easy to solve” (Scott, [07:56])

Outlook:

• This is seen as the first in a series of potential deals, possibly extending to Japan and Switzerland ([07:43], Scott)
• Uncertainty remains: “Will [U.S. drug makers] pass [increased revenue] on to the consumer at lower prices or will they just pocket it?” ([09:30], Bill)

2. President Trump’s Tariff Dividend Proposal

[09:51–19:04]

Proposal:

• Trump floated the idea of using tariff revenue to fund $2,000 checks to middle-income Americans and even hinted at replacing/reducing federal income taxes with tariffs.

Expert Reactions:

• Scott:
  • Calls it “classic President Trump…throwing out ideas” ([10:23])
  • Notes tariffs are a significant government revenue source but “not likely” to replace income taxes ([12:05])
  • Breaks down federal revenue sources ([10:47]):
    • Income taxes: 53%
    • Payroll (Social Security/Medicare): 31%
    • Corporate income tax: 4%
    • Tariffs: 7% (more than many think!)
    • Excise/estate taxes: <2% each

Economic Realities:

• Studies show tariff incidence is shifting:
  • “Early days...only about 20% of tariff charges are passed through to the consumer,” based on a Harvard price tracker ([12:34])
  • By October, Axios data: “the consumer is paying…about 56, 57% of the tariff…over six months, the amount that the U.S. Consumer is paying has approximately tripled” (Bill, [13:11])
• Tariffs do tend to “slow the economy,” but their effect on inflation is debated—some research suggests they may reduce inflation in the long term ([13:49], Scott, referencing a San Francisco Fed study)

Political and Legislative Feasibility:

• Congress would need to act: “You are the wrong branch of government to be doing this” (Scott, [10:35])
• Plenty of legislative (and budgetary) complications: “You need a budget agreement…which is not easy” (Bill, [15:41])
• Uncertainties: Who qualifies? How many checks per family? Estimates vary widely, and the math “doesn’t add up” ([12:05], Alex)
  • Yale Budget Lab: $450B cost
  • Tax Foundation: $158B this year, $208B next year
• Persuasive analogy:
  • “We are taking [money] out of the taxpayer’s hands via what is essentially a tax. And now Trump wants to give it back…in the form of a check…Just let him keep the money in the first place and not have the tariffs. But that doesn’t seem to be in the cards.” (Bill, [18:16])

Deficit Context:

• Bill: “What Trump has done is added $3 trillion…the tariff revenue is never going to pay for all that. But what he’s proposing with this check is even worse…Let’s just give it back to the people that I’ve taken it from in the first place. Makes no sense. I’m frustrated.” ([18:26])

3. Trade Negotiation: Bullying vs. Persuasion

[19:04–28:17]

Debate Launch:

• “One of the biggest questions...is what works better in trade negotiating strategy, bullying or persuasion?” ([19:04], Alex)

Scott’s View:

• Not an either/or: Effective negotiations “often require both in different measures” ([19:45])
• “Persuasion is very important...On the other hand, it takes pressure to close a deal.” ([19:50])
• “We’ve been light on pressure in recent terms...President Trump is the counterweight to that because as a negotiator he’s, he’s heavily dependent on pressure.” ([20:27])
• On dealing with Europe: “I was particularly enthralled with President Trump’s treatment of them in July because I think that’s been a long time coming...it was effective and it did take people aback and the US got better terms of trade out of it. That’s ultimately is the measure.” ([21:40])

Bill’s View:

• “Both approaches work. The conventional let’s have a negotiation that produces a win-win outcome...worked in the sense that it produced...18 free trade agreements...” ([22:15])
• Obama’s strategy was geopolitical relationship-building; Trump’s is transactional, sometimes unfinished: “In the short run he’s produced…these agreements are unfinished and unenforceable. And we’re in a state of perpetual negotiation...” ([23:32])
• Considers costs: “There are tangible concessions...but the agreements…have left a number of countries embittered by the way they were treated. So the question is, what are they going to do?” ([24:30])
• Forthcoming test: March WTO Ministerial in Cameroon—can the U.S. sustain outcomes when the “bullied” are key players? ([25:39])

Memorable Quotes:

• “America First is not equivalent to bullying…” (Scott, [26:22])
• “[Trump’s] negotiation style is I get everything, you get nothing, I win. And the question, the long term question is does that come back and bite him?” (Bill, [27:46])
• “The beauty of trade is it is win, win at its essence. Free exchange between individuals doesn’t happen unless both parties are better off.” (Scott, [27:35])

Notable Quotes with Timestamps

• “Basically, it’s a commitment to a fairly free ride for this category of pharmaceuticals.” – Bill, [01:20]
• “Our guys are going to be making higher profits.” – Bill, [02:40]
• “You are the wrong branch of government to be doing this.” – Scott, [10:35]
• “We are taking it out of the taxpayer’s hands via what is essentially a tax. And now Trump wants to give it back to him in the form of a check…Just let him keep the money in the first place…” – Bill, [18:16]
• “Effective negotiation often requires both [bullying and persuasion] in different measures.” – Scott, [19:46]
• “The beauty of trade is it is win, win at its essence.” – Scott, [27:35]
• “Trump’s a zero sum guy, you know, he doesn’t win unless somebody else loses.” – Bill, [27:46]

Key Timestamps

• U.S.-UK pharma deal deep dive: [00:45–09:51]
• Tariff dividend and U.S. tax revenue: [09:51–19:04]
• Bullying vs. persuasion debate: [19:04–28:17]

Takeaways

• The U.S.-UK pharma deal is a major, if complex, step in trying to rebalance costs in the global drug market, but whether U.S. consumers will benefit remains unclear.
• President Trump’s tariff dividend proposal is bold but, as the Trade Guys highlight, the numbers don’t work and the legislative obstacles are massive; the idea is more a “marketing” move than real policy at this stage.
• Trade negotiating tactics are not a binary: results in international deals are a mix of pressure and persuasion, and the impacts of the “Trump method” will face a real test in coming multilateral negotiations.

This episode delivers insight not only on headline trade news, but on the often misunderstood mechanics and politics that shape these foundational policies.