Chairman of the Council of Economic Advisers Stephen Miran on the Trump Admin’s Economic Agenda

Summary

Stephen Miran, Chairman of the Council of Economic Advisers, discusses the Trump administration's economic agenda at the Hudson Institute. Miran explains the U.S.'s role in providing global public goods such as security and monetary stability, and how these roles impact American economics and international relations. He emphasizes the importance of burden sharing in maintaining global peace and prosperity, and critiques other nations for not pulling their weight. Miran also highlights the administration's focus on rebuilding the U.S. industrial base, addressing trade deficits, and ensuring national security, while suggesting tariffs as a tool to rectify trade imbalances.

Highlights

• Stephen Miran discusses the Trump administration's focus on global public goods and how the U.S. bears the cost 🇺🇸.
• The need for burden sharing among nations to sustain global peace highlighted 🌏.
• Emphasis on U.S. industrial revival and fair trade terms to boost American economy 📊.
• Tariffs proposed as a crucial mechanism for fairer trade and domestic economic support 🛡️.
• The intertwining of economic and national security policies emphasized 📑.

Key Takeaways

• Stephen Miran emphasizes the U.S.'s global role in providing public goods like security and monetary stability 🌍.
• Miran suggests that other nations need to share the burden of global peace and prosperity 🌐.
• Rebuilding the U.S. industrial base and addressing trade deficits are key priorities for the administration 🏭.
• Tariffs are viewed as a tool to make international trade fairer and support U.S. economic growth 📈.
• Miran stresses the connection between economic policies and national security 🔒.
• The administration is focused on enhancing competitiveness and manufacturing resilience 😤.

Overview

The video features Stephen Miran, Chairman of the Council of Economic Advisers, who sheds light on the Trump administration's economic vision. At the Hudson Institute, he elaborates on the U.S.'s provision of global public goods such as security and a stable monetary system. These elements, he argues, have underpinned global prosperity and peace, often at substantial costs to the U.S. economy and workforce.

Miran calls for improved burden sharing, where other nations contribute fairly to the global economic and security umbrella. He notes that without equitable cost distribution, the U.S. cannot sustain its leadership role indefinitely. Miran supports tariffs as a means to address trade imbalances, mitigate undue burdens on the U.S. economy, and incentivize more equitable international economic practices.

Throughout the presentation, Miran emphasizes the interconnectedness of economic policies and national security. He argues that revitalizing the U.S. industrial sector, ensuring fair trade, and maintaining robust national security are pivotal to achieving sustainable economic growth. His remarks convey a vision of a self-reliant America that participates in and benefits from a fairer global economic landscape.

Chapters

• 00:00 - 03:00: Introduction and Welcome The chapter titled 'Introduction and Welcome' sets the stage for the content to follow. It likely contains an overview of the key topics and themes that will be addressed throughout the material. The chapter aims to engage the audience, providing a context and purpose for the information that will be covered. Additionally, it may introduce key figures, the scope of the subject, and the intended learning outcomes. Overall, this introductory chapter serves to orient the reader or listener, preparing them for the detailed exploration in subsequent chapters.
• 03:00 - 08:00: Thanks and Introduction of Dr. Stephen Miran The chapter opens with a warm greeting and introduces the purpose of the session, establishing a formal and welcoming tone.
• 08:00 - 17:30: Dr. Miran's Discussion on Global Public Goods In this chapter titled 'Dr. Miran's Discussion on Global Public Goods', the discussion opens with the host Joel Scanland, indicating the beginning of a dialogue centered around the concept of global public goods. Dr. Miran, presumably an expert or key speaker, shares insights on the economic, social, and political dimensions of public goods on a global scale. The chapter likely covers examples, challenges, and potential strategies for managing these goods, drawing on Dr. Miran's expertise and perspective.
• 17:30 - 28:30: Impact of Tariffs and Trade Deficits The chapter titled 'Impact of Tariffs and Trade Deficits' discusses the influence that tariffs have on trade balances and the broader economy. It features insights from a vice president at Hudson, exploring how tariffs can affect trade dynamics, including the implications for trade deficits. The chapter might delve into the economic theories behind tariffs and trade deficits, real-world applications, and possibly analyze particular case studies or historical examples where tariffs have significantly impacted trade relationships between nations. The role of government policy and international negotiations in shaping trade conditions could also be a focal point, as well as predictions and strategies for managing the effects of tariffs in a global economy.
• 28:30 - 40:00: Burden Sharing and Global Security Chapter 1: Introduction to Burden Sharing and Global Security This chapter introduces the concept of burden-sharing as an essential element of global security. It highlights the historical contexts in which burden-sharing has played a critical role in maintaining international stability. Chapter 2: Theoretical Frameworks Explores various theoretical frameworks that underpin the concept of burden-sharing. These include realist, liberal, and constructivist perspectives, offering insights into how states collaborate to address global security concerns. Chapter 3: Case Studies Presents detailed case studies demonstrating successful and unsuccessful attempts at burden-sharing in different geopolitical contexts. These cases illustrate the diverse mechanisms and strategies employed by states to achieve collective security. Chapter 4: Challenges and Criticisms Discusses the primary challenges and criticisms associated with burden-sharing. This includes issues of equitable distribution of responsibilities and resources, as well as the political dynamics that complicate international cooperation. Chapter 5: Policy Implications Analyzes the policy implications of burden-sharing for international relations and global security architecture. This chapter provides recommendations for policymakers to enhance cooperative strategies in defense and security matters. Chapter 6: Future Directions Examines potential future directions for burden-sharing in light of evolving global threats and technological advancements. Emphasizes the need for adaptive policies and innovative approaches to sustain global security.
• 40:00 - 50:00: Q&A: Reciprocal Tariffs and Trade Deficits The chapter titled 'Q&A: Reciprocal Tariffs and Trade Deficits' seems to involve a discussion or possibly a Q&A session focusing on the topics of reciprocal tariffs and trade deficits. However, the provided transcript only contains a partial line ('us in person on this lovely spring') which does not provide specific details about the content of the chapter. Therefore, the summary cannot be fully detailed with the given information.
• 50:00 - 60:00: Q&A: Trade Negotiations and Economic Policies This chapter discusses the complexities of trade negotiations and economic policies. It highlights the importance of understanding both domestic and international market dynamics to create favorable agreements. Experts share insights on how current economic policies are shaping trade talks, emphasizing collaboration and strategic thinking. The Q&A session provides a platform for addressing common concerns and misconceptions related to trade and policy decisions. The chapter concludes with an optimistic outlook on future trade relationships.
• 60:00 - 80:00: Q&A: China's Economy and Tariff Impact Q&A: China's Economy and Tariff Impact. The chapter involves a detailed question and answer session focused on the current state of China's economy and the impact of tariffs imposed on global trade. The discussion highlights key economic indicators, challenges, and strategies by China to navigate the tariffs. It also examines the international response and potential long-term effects on global markets.
• 80:00 - 90:00: Q&A: Future of Global Trade Rules The chapter titled 'Q&A: Future of Global Trade Rules' features a discussion or inquiry session focused on the future of global trade regulations. The dialogue likely includes questions and answers addressing the implications, potential changes, and future directions in global trade policy. Dr. Steven Myin is specifically acknowledged, suggesting his significant contribution to the topic or discussion presented in this chapter.
• 90:00 - 103:00: Q&A: US Manufacturing and Workforce Challenges The chapter "Q&A: US Manufacturing and Workforce Challenges" begins with introductory remarks about the session's focus on manufacturing and workforce issues in the United States. The speaker thanks attendees and sets the stage for a Q&A session, highlighting key topics like the current state of manufacturing, workforce development, and challenges faced by industries. As the chapter progresses, experts and industry leaders share insights on overcoming obstacles, fostering innovation, and strengthening the workforce through education and training. The discussion also delves into the impact of technology and globalization on manufacturing jobs, addressing skills gaps and the importance of policy and leadership in driving economic growth. The chapter closes with a collaborative dialogue on sustainable manufacturing practices and future trends. The overarching theme emphasizes resilience and adaptation in the face of evolving economic landscapes.

Chairman of the Council of Economic Advisers Stephen Miran on the Trump Admin’s Economic Agenda Transcription

• 00:00 - 00:30
• 00:30 - 01:00 good afternoon and welcome to Hudson
• 01:00 - 01:30 Institute i'm Joel Scanland executive
• 01:30 - 02:00 vice president here at Hudson we're
• 02:00 - 02:30 grateful to those of you who have joined
• 02:30 - 03:00 us in person on this lovely spring
• 03:00 - 03:30 afternoon and my thanks to those
• 03:30 - 04:00 watching online as well we're
• 04:00 - 04:30 particularly grateful to Dr steven Myin
• 04:30 - 05:00 for being here today for his remarks and
• 05:00 - 05:30 conversation with my colleague Tom
• 05:30 - 06:00 Dusterberg under any circumstances it is
• 06:00 - 06:30 not easy to get away from the daily
• 06:30 - 07:00 demands of the White House but in what I
• 07:00 - 07:30 think it is fair to call unsettled
• 07:30 - 08:00 economic times both for the US and
• 08:00 - 08:30 global economies there are few better
• 08:30 - 09:00 position to explain President Trump's
• 09:00 - 09:30 economic agenda what the president has
• 09:30 - 10:00 referred to as an economic revolution
• 10:00 - 10:30 the mix of policies that will form the
• 10:30 - 11:00 basis of his approach and the links
• 11:00 - 11:30 between US economic and national
• 11:30 - 12:00 security dr myron served with
• 12:00 - 12:30 distinction at the Department of Treasury and President Trump's first administration while still in the private sector as a senior strategist at Hudson Bay Capital last fall he authored the influential and widely read A users guide to restructuring the global trading system now he serves as the 32nd chairman of the President's Council of Economic Adviserss mr chairman thank you so much for being here at Hudson the podium is yours
• 12:30 - 13:00 [Applause] thank you all for being here um today I'd like to discuss the United States provision of what economists call global public goods for the entire world first the United States provides a security umbrella which has created the greatest era of mankind the greatest era of peace mankind has ever known second the US
• 13:00 - 13:30 provides the dollar and treasury securities reserve assets which make possible the global trading and financial system which has supported the greater era of prosperity mankind has ever known both of these are costly to us to provide on the defense side our men and women in uniform take heroic risks to make our nation and the world safer preserving our liberties generation after generation and we tax hardworking Americans mightily to finance global security on the financial side the reserve function of the dollar
• 13:30 - 14:00 has caused persistent currency distortions and contributed along with other count's unfair barriers to trade to unsustainable trade deficits these trade deficits have decimated our manufacturing sector and many working-class families in their communities to facilitate non-Americans trading with each other let me clarify that by reserve currency I mean all the international functions of the dollar private savings and trade included i've often used the example that when private agents in two separate foreign countries trade with each other it's typically denominated in dollars because of
• 14:00 - 14:30 American status as the reserve provider that trade entails savings housed in dollar securities often treasuries as a result of all this Americans have been paying for peace and prosperity not just for themselves but for non-Americans too president Trump has made it clear that he will no longer stand for other nations free riding on our blood sweat and tears whether in national security or trade the Trump administration has already in its first 100 days moved forcefully to reorient our defense and trading relationships to place Americans
• 14:30 - 15:00 on fairer ground the president has promised to rebuild our broken industrial base and pursue trade terms that put Americans American workers and businesses first i'm an economist and not a military strategist so I'll dwell more on trade than on defense but the two are deeply connected to see how it works imagine two foreign nations say China and Brazil trading with each other neither country has a currency that is trusted liquid and convertible which makes trading with each other challenging however because
• 15:00 - 15:30 they can transact in US dollars backed by US treasuries they able to trade freely with each other and prosper such trade can only be can only occur because of the US military might ensuring our financial stability and the credibility of our borrowing our military and financial dominance cannot be taken for granted and the Trump administration is determined to preserve them but our financial dominance comes at a cost while it is true that demand for dollars has kept our borrowing rates low it has
• 15:30 - 16:00 also kept currency markets distorted this process has placed undue burdens on our firms and workers making their products and labor uncompetitive on the global stage and forcing a decline in our manufacturing workforce by over a third since its peak and a reduction in our share of world manufacturing 40% we need to be able to make things in this country as we saw during COVID when many of our supply chains could not survive without being reliant on our biggest adversary China we clearly should not rely on our on We clearly should not rely on our biggest adversary
• 16:00 - 16:30 for equipment essentially essential to keeping our population safe and secure nor should our biggest adversary be allowed to benefit so much from an international security and financial architecture we finance there are other unfortunate side effects of providing reserve assets others may buy our assets to manipulate their own currency to keep their exports cheap in doing so they end up pumping so much money into the US economy that it fuels economic vulnerabilities and crisis for example in the years running up to the 2008 crash China along with
• 16:30 - 17:00 many foreign financial institutions increased their holdings of US mortgage debt which helped fuel the housing bubble forcing hundreds of billions of dollars of credit into the housing sector without regard as to whether the investments made any sense china played a meaningful role creating the global financial crisis it took almost a decade to recover until President Trump got us back on track in his first term in my view to continue providing these twin global public goods there needs to be improved burden sharing at the improved
• 17:00 - 17:30 burden sharing at the global level if other nations want to benefit from US geopolitical from the US geopolitical and financial umbrella they need to pull their weight and pay their fair share the costs cannot be solely borne by everyday Americans who have already given so much the best outcome is one in which America continues to create global peace and prosperity and remain the reserve provider and other countries not only participate in reaping these benefits
• 17:30 - 18:00 but they also participate in bearing the costs by improving burden sharing we can enhance resilience preserve the global security and trading systems remain the reserve provider for many decades into the future moreover it is critical not just for fairness but for capacity we are under siege by hostile adversaries trying to erode our manufacturing and defense industrial base and disrupt our financial system we will be able to provide neither defense nor reserve assets if our manufacturing capacity is
• 18:00 - 18:30 hollowed out the president has made clear that the United States is committed to remaining the reserve provider but that the system must be made fairer we need to rebuild our industries to project the strength needed to preserve reserve status and we need to be able to pay our bills to do so what forms can that burden sharing take there are many options here are a few ideas first other countries can accept tariffs on their exports to the
• 18:30 - 19:00 United States without retaliation providing revenue to the US Treasury to finance global public goods provision critically retaliation will exacerbate rather than improve the distribution of burdens that might make it even more difficult for us to finance global public goods second they could stop unfair and harmful trading practices by opening their markets and buying more from America third they could boost defense spending and procurement from the United States buying more US-made
• 19:00 - 19:30 goods and taking the strain off our service members and creating jobs here fourth they can invest in and install factories in America they won't face tariffs if they make their if they make their products in this country fifth they could simply write checks to Treasury that would help us finance global public goods as well tariffs deserve some extra attention most economists and some investors dismiss tariffs as counterproductive at best and devastatingly harmful at worst they're
• 19:30 - 20:00 very wrong one reason the economic consensus on tariffs is so wrong is because nearly all of the models that economists use to study international trade assume either no trade deficits at all or they assume that deficits are short-lived and quickly self-correct through currency adjustments according to standard models trade deficits will cause the dollar to weaken which reduces imports and boosts exports eventually wiping out the trade deficit if that happens tariffs may be unnecessary
• 20:00 - 20:30 because trade will balance itself over time and in this view intervening with tariffs can only make things worse however that view is at odds with reality the United States has run current account deficits for five decades and these have widened precipitously in recent years going from about 2% of GDP in the first Trump administration to a high of nearly 4% of GDP in the Biden administration and this has happened all while the dollar has appreciated not depreciated
• 20:30 - 21:00 as those models might tell you the long run is here and the models are wrong one reason they are wrong is that they fail to account for the US provision of global reserve assets reserve status matters and because demand for the dollar has been insatiable it has been too strong for international flows to balance even over five decades more recent economic analyses allow for the possibility of persistent trade deficits that resist automatically rebalancing that's more in line with reality that the US has experienced they
• 21:00 - 21:30 show that by imposing tariffs against exporting countries the US can improve economic outcomes raise revenues and impose huge losses for the tariff nation even with full retaliation in this sense analysis of what economists call the incidence of tariffs indicates that a large share and burden of the tariffs are paid for by the country on which we are applying the tariffs country that run countries that run large trade surpluses are pretty inflexible they
• 21:30 - 22:00 can't find other sources of demand to substitute for Americas instead they have no choice but to export and America is the largest consumer market in the world by contrast America has plenty of substitution options we can make stuff at home or we can buy from countries that treat us well treat us fairly instead of from countries that take advantage of us this difference in leverage means that other countries end up bearing the cost of tariffs we can reallocate our demand across borders more easily than other countries can move their factories across borders in
• 22:00 - 22:30 2018 2019 China bore the cost of President Trump's historic tariffs through a weaker currency meaning their citizens became poorer with less purchasing power on the global stage the tariff revenue paid for by China was used to finance President Trump's tax cuts for American workers and firms this time around tariffs will help pay for both tax cuts and deficit reduction lower taxes on Americans financed in part by revenue provided from foreigners will create economic growth dynamism and
• 22:30 - 23:00 opportunity the likes of which our country has never seen ushering in President Trump's new golden age deficit reduction will help lower Treasury rates and with them mortgage rates and consumer credit card rates stimulating an economic boom it is important to note here that tariffs are levied are not levied it's important to note here that tariffs are not levied simply to collect revenues for example the president's reciprocal tariffs are designed to address tariff and non-tariff barriers and other forms of cheating like
• 23:00 - 23:30 currency manipulation dumping and subsidies to gain unfair advantage revenue is a nice side effect and if it is used in part for lowering taxes it can help turbocharge competitiveness improvements and boost US exports burden sharing can allow the United States to continue leading the free world for many decades it's a must not only for fairness but for feasibility if we don't rebuild our manufacturing sector we will be strained in providing the security we need for our safety the safety of the world and
• 23:30 - 24:00 to underpin our financial markets and global financial markets the world can still have the American defense umbrella and trading system and reserve assets but it should start paying its fair share for them thank you and I'm happy to take some [Applause] questions well thank you Dr myron for
• 24:00 - 24:30 your um comprehensive uh explanation of the the superructure if you will of the policy that uh your administration has undertaken i wanted to start um by clarifying one of the great mysteries of recent times which is the formula that was used to uh announce uh the uh the quantities of the uh reciprocal tariffs last week um uh it wasn't based solely
• 24:30 - 25:00 on tariff rates could you explain where that formula came from and um how it fits into the overall um thinking about how to solve the problems that you articulated thanks Tom uh yeah that that that formula has has uh you know sort of has has driven some conversation recently uh you know we were CEA was involved in calculating a a variety of means of estimating you know sort of
• 25:00 - 25:30 approaches to to thinking about non-tariff barriers um and a variety of approaches were considered at the end of the day the president chose to go with a formula relating to um relating to closing trade deficits um suggested by by someone else in the administration and uh you know and and and and that was that was the approach that was ch that that was the approach that uh that was decided it would be would be taken Um I do think it's important to emphasize that the president declared an emergency with respect to trade deficits um the
• 25:30 - 26:00 executive order uh was with respect to trade deficits and so of course trade deficits would be heavily involved in calculating tariff rates because that was you know that was the the basis for the emergency and so you know it makes perfect sense that you would be using an approach like that if uh if you're trying to address trade deficits okay okay well let's go to the the next step um a lot uh of countries have come forth with ideas uh addressing the the
• 26:00 - 26:30 problems that have been articulated and the tariffs have been put into place uh you in your opening remarks and the president when he announced the new new policy um talked about a number of uh different problems we have currency manipulation is one subsidies is is another intellectual property theft is is another um to help um both the business
• 26:30 - 27:00 community and our trading partners to understand what it is that um um they should be doing or our trading partners should be doing is there a general way to think about weighing different factors that uh such as reducing subsidies reducing tariffs uh reducing currency manipulation uh how are those various factors going to be uh are um uh
• 27:00 - 27:30 put together to uh uh for your administration to make the decision that that that's enough they were making a good contribution to the overall rebalancing yeah thanks that's a that's a great question i guess let me let me say that you know I didn't I didn't win a landslide in the electoral college and the president did and so the president will at the end of the day decide uh what package uh you know if any um he wants to he wants to accept as a deal um
• 27:30 - 28:00 the president you know is is famous for his negotiating ability and famous for his ability to create deals when nobody thinks it's possible so um I would encourage folks to you know in other countries to to approach uh you know to to approach to approach with offers um I think that all of the things that you said um would be welcomed by the United States uh we've you know the the administration and the president have been very clear uh that we want increased access to foreign markets that would boost our exports right there are plenty of markets where American
• 28:00 - 28:30 products just either aren't allowed by fiat or there's you know uh you know sort of flimsy regulations designed to protect local incumbents and those regulations can be you know related to you know sort of you know bizarre health requirements that you know are very different than we have here or environmental requirements or or you know whatever that sort of keep our products out um and sometimes it could be tariff you know it could be tariff rates also could be subsidies it could be intellectual property intellectual property protections there's all sorts
• 28:30 - 29:00 of barriers to American exports around the world um and I can only imagine that the president would would really welcome uh barriers to American exports being taken down that would sort of make American manufacturing uh as competitive as it should be um instead of being artificially kept out of foreign markets okay um I I u ran a trade association for 12 years that was devoted to promoting the manufacturing sector in in the United States um and your remarks and the
• 29:00 - 29:30 president's remarks all uh uh emphasize a lot the need to uh return uh or grow American manufacturing but I wonder if there's not a broader way to think about this because what we're looking at in the in the future are high technology uh products but also things like software um uh social uh digital trade of one
• 29:30 - 30:00 sort or another social media these things are all uh important to our economy and one of the growth um accelerators in our economy is the digital economy so um and there are barriers to um American providers especially from Europe and China for our digital providers is that a major part of what you will be thinking about that needs to be rectified uh through through
• 30:00 - 30:30 the negotiation process so I think that I think that those things are important and I and I think that I think that manufacturing strength is important i think that digital strength is important and I think that services strength is important i think that all of those things are important i think it's undeniable that we've gotten a little bit tilted out of balance um against manufacturing in the scheme of those things that matter and it tilted out of balance to the extent that it becomes a national security threat um because you need to be able to produce stuff if
• 30:30 - 31:00 you're going to defend yourself you can't defend yourself with advertising algorithms right um and so those are important services are important i don't want to say that services are not important that we should not produce services um I do think it's also important to have a diversified economy um and a sufficiently diversified industrial base that should you need to defend yourself you are able to okay um in your um important paper a user's guide to restructuring global trading system you discuss ways to
• 31:00 - 31:30 address dollar over uh valuation and the president has remarked on this and uh Secretary Besson has remarked on this um president and his adviser have consistently argued that part of the means to achieve the global trade rebalancing is to reverse decades of an overvalued dollar how are you thinking about achieving this um and uh the uh simplified question often gets asked of officials
• 31:30 - 32:00 like you is are we really in favor of a strong dollar thank you um so first of all let me let me clarify a couple things about that about that piece uh first of all it's not important um you know I wrote it prior to prior to my consideration for this role it doesn't reflect administration policy uh lots of people have speculated that we're secretly following um you know sort of some some policy path laid out in that in that document nothing could be further from the truth the president has been very
• 32:00 - 32:30 transparent for months now about what he intended to do um and he continues to fulfill the promises that he made on the campaign trail and I have no doubt will continue to do so um second that piece uh really had two elements to it one was my diagnosis of the problem which I just elaborated on right my diagnosis of the of the of the problem behind manufacturing trade and trade deficits is is is sort of a an in elaboration of of of what I uh exposited in that piece
• 32:30 - 33:00 um but then beyond the diagnosis of the problem that piece really aims to provide a recipe book right here are the different tools you know in the toolbox and what you can do with them some recipes are easy to make some are difficult to make some will uh you know are are are a nourishing nutritious meal and some will leave you hungry again in a half hour uh some you know some might you know make you a little sick um you know that piece you know it attempts to evaluate the risks and potential potential risks and rewards associated
• 33:00 - 33:30 with each policy um it doesn't advocate for any of them and I think there's been an enormous amount of writing that has misconstrued uh myself as arguing um for any particular uh element any particular recipe uh I'm not the chef there's one chef and that's the president and he decides what he's going to make um what do I think i think improved burden sharing is the solution and I think that tariff revenue is a fabulous means of improving burden sharing um
• 33:30 - 34:00 because it allows us to finance the provision of global public goods it allows us to ease the tax burden on our on our citizens for providing those global public goods ease the the international flows problem on our citizens for providing those global public goods and that that is a key to resilience and making the system as it is last for many more decades into the future as opposed to reaching a point at which uh you know Americans express political frustration with that system um do you want me to if you've got more
• 34:00 - 34:30 to articulate here go ahead no that's yeah let's not there yet i'm gonna press save me from myself another goal of uh that the administration has articulated that is related to rebalancing is uh keeping interest rates low enough um and perhaps even declining at the longer end of the uh scale so that um the national debt that we have
• 34:30 - 35:00 will not be uh crowding out defense spending for one thing but uh won't be such a bur burden in the long run so you in another paper that you did and I'm sorry to go back to your academic uh career but you did a paper with Nuriel Rubini that noted that the Biden administration had engaged in a form of stealth quantitative easing to partially offset the tightening of the Fed and
• 35:00 - 35:30 contributing to the stubborn persistence of inflation this tactic involves skewing Treasury debt issuance towards bills instead of bonds it also had the effect of lowering interest rates on the huge US debt is this sort of policy something that your administration would think about to keep interest rates low yeah so um I mean I think I was pretty clear uh that Nuriel and I were were pretty clear in that paper that it this was not a policy that we thought was
• 35:30 - 36:00 healthy um for the country or for the country's finances for the long term um it you know sort of adjusting changes in actually let me take a step back and say first of all uh you know that question really should be addressed to the Treasury Department that's not my equities i you know I don't control the issuance of of treasury debt or or the policy but nevertheless speaking on the economics of it for a moment um you know it is orthodox issuance policy to respond to a sudden spike in financing needs with bills issuance um if there's
• 36:00 - 36:30 a war if there's a recession the deficit's going to expand dramatically uh you know you don't really want to disrupt financial markets in financing the deficit so you issue short-term debt instead of long-term debt because it doesn't you know it avoids the disruption to markets um that that's orthodox policy um you know sort of and I and it remains appropriate when you have a financing spike right um that is that's the that's the correct that's the correct approach to it um but no in in general you know I I I viewed sort of
• 36:30 - 37:00 deviations and I think Nor would agree with this we viewed deviations from uh from orthodox issuance policy as as not necessarily healthy for uh for the for the country or or or for financial markets in the in the long run in the long run yeah and but to be clear that doesn't mean that you know I that doesn't mean that I think that the Treasury is deter you know is is obligated to um you know immediately unwind uh the you know sort of the the
• 37:00 - 37:30 past in my view errors of of of the previous Treasury Department and I think that just because I point out that you know someone's building a ticking time bomb doesn't obligate anyone to throw themselves on it you know in in diffusing it um you know and and so you know I have I have no doubt that uh that that uh the Treasury Department will will keep our our finances on on safe and sound footing okay and and are you confident in your economic analysis that the variety of policies that you've put
• 37:30 - 38:00 in place um including the deregulatory um thrust of your policy uh the pro-energy policy that we can keep inflation under control um because the Fed seems to be worried that the accumulation of policies is moving us possibly back in the direction of a little bit more inflation yeah I mean I do I I think that the regulatory side of the economy is one of the most important determinants of the
• 38:00 - 38:30 supply side of the economy in general um for both potential GDP growth but also for prices and economists I think underappreciate it because it's difficult to study taxes are pretty straightforward to study you know someone has a 28% marginal tax rate or a 34% marginal tax rate and it's pretty you know it's pretty straightforward like how to think about that but you face a different regulatory environment based on what type of firm you have how old your firm is how big
• 38:30 - 39:00 your firm is how many employees you have uh what jurisdiction you operate in um how you know how friendly are you with your local regulators um your national regulators the the regulatory environment uh firms face is complex multi-dimensional and uh incredibly detailoriented and incredibly non-numerical as a result it's difficult for economists to study and I think that we have a classic lampost problem here where economists underappreciate the regulatory impact of the economy and if you think high prices are due to not
• 39:00 - 39:30 enough stuff to meet consumer demand the easiest approach is just make more stuff and the way to make more stuff is to get the government regulatory tape out of the way let companies adjust their supply to changing demand patterns let companies produce more reduce the you know it shouldn't take three years to get the permits or or longer to get the permits in place to build a factory uh or or to or to enter a particular market that should be much faster um and so I think that that is that is of critical
• 39:30 - 40:00 importance in thinking about uh thinking about prices and in this sense I think the Fed has a much better partner uh when it comes to inflation than the previous administration um you know this administration will be taking steps to expand to expand the supply side to expand the ability of the American economy to produce things that consumers want okay i want to change gears slightly here and focus a little bit more on China you mentioned in your opening remarks that um um uh classical economic
• 40:00 - 40:30 theory uh would suggest that uh trade deficits are uh self- adjusting in terms of mo movements in the currencies it assumes them away class classic economic theory just assumes away they call it a transversality condition but really what they do is they assume away the problem well we know it didn't work so and part of the reason it hasn't worked in reality is because mercantalist c countries like China um which break
• 40:30 - 41:00 every almost every rule in the uh economic playbook of free markets subsidization theft of intellectual property overp production uh closing off their own market um so uh many analysts have argued that China's weak economy in recent years is only held up by o overinvestment in production capacity and the exports which result from the goods production from their overinvestment uh this has been seen
• 41:00 - 41:30 again and again in industries like steel solar panels critical m minerals electric vehicles among others um and they depend on their access to foreign markets of advanced economies like ours which are more consumptionoriented um but the question is if China is really has a weak and weakening economy and it's dependent on exports the tariff policy that uh the
• 41:30 - 42:00 administration has adopted and the first Trump administration adopted uh should be especially uh effective against China so my question is is your analysis of where the Chinese economy is headed uh uh uh agree with the the idea that they're really weakening and they are especially vulnerable to the uh actions that your administration is taking in
• 42:00 - 42:30 the area of uh tariffs and um closing off some access to our markets i uh you know I I do think they're vulnerable to uh experiencing uh significant economic stress as a result of the uh historically bold action that the president has taken um and they have limited capacity to absorb that pain uh you know what you see from China is they tend to alternate between
• 42:30 - 43:00 um different drivers of their growth engine based on what they feel they can they can stomach at any at any moment um and they they you know they tend to have these top down um GDP targets and then okay what can we do to achieve that GDP target um and you know one moment it's exporting to America the next moment it's inflated housing bubble um then it's you know exporting to others uh you know other countries um and so you know
• 43:00 - 43:30 for the last year or so they've been in in a bit of this last mode where they've been trying to export their extra capacity um around the world um and so you know but at the end of the day there's just there's no substitute for American demand um and so I I don't know that they'll be you know that they'll be so successful at trying to avoid trying to find an alternative um and this is part of why uh the United States has leverage and uh and and other countries don't can we
• 43:30 - 44:00 talk about incidents are you going to ask me or can I bring it up now sure okay so the so so I think that the incidence of tariffs is one of the most important so economists use the word incident to sort of refer to who bears the cost or benefit of any economic policy whether it's a tariff a subsidy a tax a regulation you know whatever it is who who actually experiences the consequence and one of the core results in economics is that the person who bears the economic cost or benefit isn't really a function of who actually has to remit the payment to the government it's
• 44:00 - 44:30 a function of the relative elasticities which basically is easier to think of as who's more flexible and who's inflexible and the example that I like to use with people is about property taxes because I feel like this is something that most people can relate to and just imagine that you're buying a house and suddenly the town that you're looking to buy a house in says "Okay we're raising property taxes uh by 300%." And your property tax bill isn't going to be $10,000 a year it's going to be $30,000 a year that's a big jump right and so if you're very flexible an economist would
• 44:30 - 45:00 say elastic uh if you're very flexible you might decide hey I'm going to look at the next town over instead because you know like I could just live you know three miles down the road and have you know be you know just in similar community and it'll be fine um you can move your demand across a border the person who's selling the house can't move his house across the border the house is stuck in that town right so because you are flexible you can adjust your behavior to avoid the burden of the tax the person selling the house can't adjust his behavior he's stuck the house is stuck where the house is stuck so he
• 45:00 - 45:30 has to drop his selling price because demand for that house disappeared right and so that lower selling price has now cleared the market economists would say the incidence of the property tax fell on the owner of the home not the buyer of the home the buyer of the home changes behavior to avoid the tax the seller of the home was unable to change his behavior to avoid the tax right now when you think about this with tariffs you say okay who's flexible and who's inflexible we can reallocate our demand across borders factories that are already built cannot move they are stuck
• 45:30 - 46:00 where they are china has developed factories for selling to the US consumer market they have trained workers for selling to the US consumer market we can move our demand across borders those factories and citizens cannot move they're stuck where they are and so the incidents will fall will fall on them just as in the property tax example right now does this h automatically happen on day one no but will this happen over the course of over the o in the fullness of time absolutely this is just the basic economics of of of
• 46:00 - 46:30 incidents in in and public finance and uh you know and if the incidence is falling on other countries because they're inflexible the Chinese now have to find someplace else to absorb their demand to absorb their excess supply and guess what there isn't anywhere else to absorb their excess their excess supply who's going to buy as much as American consumers nobody right there is no place else to absorb their excess supply they are inflexibly supplying to the world market And that inflexibility as economists would say inelasticity means
• 46:30 - 47:00 that they bear the burden they bear the incidence of the tariffs and that is why the tariffs represent revenue to the United States Treasury that is financed by the countries that we are tariffing well let me if I may push back just a little bit on that on that because um there is consumer demand outside of the United States um let's take electric vehicles which is the latest Chinese uh industry that they're they're taking over and frankly we we cannot
• 47:00 - 47:30 compete with them nobody else can compete with them at the price point that we're at now um so they can sell in Southeast Asia and they are dominating that market uh they're trying to move into Europe europe will probably not let them do that but there are other markets around the world across Central Asia Africa Latin America that Chinese are are working on and there are some areas um and and I want to cite rare earths as
• 47:30 - 48:00 one where the Chinese um uh strategy is not only to be a lowcost producer but to run everybody else that might compete with them out of business and they've done that effectively with rare earths so the one conclusion that can be drawn from that is that we have to be as careful as we can to develop um um support from our allies or those
• 48:00 - 48:30 we hope will be our allies um in pushing back against uh China and there has been some criticism of the acrosstheboard tariff approach that that actually uh moves us in the wrong direction because the the negative reaction uh especially from uh from the Europeans from uh from others should we do take that into consideration more the
• 48:30 - 49:00 need for having allies in pushing back against China as we calibrate these uh this bevy of tariffs that we put into place sure um let me first address the narrow point of the of the electric vehicles um which is that we weren't importing any of those to begin with from China right and so uh you know so so none of the none of the incidents falls on us by definition because we're we're not you know the tariff rate on those goods isn't changing um but I
• 49:00 - 49:30 think that European example is a I'm glad you brought that up because you know the Europeans don't want to be the destination for this Chinese ex capacity either right and so you know I would expect other countries eventually to decide the same thing you know we don't want our own industries to be hollowed out by this overcapacity um and you know they will you know many many other markets will ultimately likely decide the same thing um which gets to the lack of alternatives right and gets to lack
• 49:30 - 50:00 of the lacks of the lack of uh lack of flexibility in in reallocating demand for uh sorry reallocating where supply goes to um the broader point um of uh policy visa v China um you know look at at the end of the day um at the end of the day you know the president won the election and the president um you know will will negotiate or not uh with various countries um for a totality of uh you
• 50:00 - 50:30 know sort of a package right you know and and I and I doubt that you know any one package will be focused you know one particular line item i imagine they'll have many line items line items like we discussed before you know tariffs and interior friers subsidies you know purchases whatever right um it'll probably be a variety of line items um in any you know theoretical negotiated uh negotiated outcome um my advice would be that
• 50:30 - 51:00 um you know my advice would be uh that some of those things that you described would be good to include um in any you know ultimate ultimate outcome um however the president is the one who will will make those decisions yeah okay before we go to questions from the audience just one final question um partly related to to China but um I I'll make the assertion that uh given everything that has happened in the trade world the last 20 years the
• 51:00 - 51:30 arrival of a mercantalist major mercantalist country on the scene the inflexibility of the world trade organization rules system changing the rules of that organization that the WTO was effectively uh almost dead um and on the other side the the Chinese through various means such as trying to undermine the dollar setting up their own financing system the belt and road
• 51:30 - 52:00 system the made in China 2025 the bricks they're trying to build an alternative economic sphere if you will that excludes us should we be thinking or is your administration thinking about the next step for rebuilding a rules-based order um maybe excluding China but not necessarily although they're probably not going to change the the direction they're going in should we
• 52:00 - 52:30 be thinking about um the the next stage in a global rules-based trading system uh you know I I I think that laying out rules is a good thing um and you know it's something that it's something that I I think would be helpful um you know the uh you know the the as as I've said you know there were you know there was a long period of time in which many news articles were pulled one or another you
• 52:30 - 53:00 know recipe out of my recipe book and said this is what's going on this is what's going on and I couldn't I couldn't respond because I couldn't speak publicly during the confirmation process um but then after I was confirmed then I could say no there there's no you know there's no secret plan here um you know the president is is sort of very clear he's focused on fair reciprocal tariffs um and that's you know uh that's what you know that that's how things developed um look the you know as I said before um the president is is a fabled negotiator
• 53:00 - 53:30 right who has been negotiating deals his entire career um and if there's anybody who can if there's anybody who can negotiate um to create a better trading system for America and the world uh it's President Trump um and I have no doubt that if anyone can do it he can um and so my advice to uh you know sort of any um foreign governments who who might want it is is uh you know sort of I understand that you know the phone's been ringing off the hook uh in various
• 53:30 - 54:00 places in the White House uh keep it you know keep it keep it ringing off the hook um uh you know okay um the audience very patient um and I want to go to questions i want to start with uh Mr stein of the Washington Post I believe are are you still here or Yeah sometimes if you don't raise your
• 54:00 - 54:30 hand you get the question um so obviously you've spoken here quite a bit about sort of the um the global trade deficit um which I think many economists um agree is a a serious issue to to discuss the criticism of course has been that the measures announced by the White House last week um may not appear responsive to that global question instead targeted quite severely um countries that um there seems to be
• 54:30 - 55:00 little indication were involved in contributing to the problem you outlined here today um could you explain why Lysoto has 50% uh tariffs global what what contribution are they adding to um the um problem you've identified of the um you know dollar dominance um and and h you know so I guess the more broad question is you're you're the the problem you've identified here seems to
• 55:00 - 55:30 have a gap between the sort of bilateral trade deficit measures that the president targeted so thank you for being here and thank you for taking the question thank you um let me first say that um I don't think that dollar dominance is a problem i think that dollar dominance is a great thing uh it has some side effects which can be uh problematic and uh I would like to find ways to ameliate the side effects that dollar dominance can continue for decades uh in perpetuity i think that would be that would be fabulous
• 55:30 - 56:00 um the my diagnosis of the problems of those side effects right is sort of a general generic um diagnosis of how international trade and international finance works right the reciprocal tariffs uh announced last week are one specific policy that aims to that aims to address uh you know that aims to address the unfair playing field between the United States and other and other
• 56:00 - 56:30 countries there are other policies the president has announced also right there other there are other tariffs um you know visav USMCA fentinel autos um you know there's other studies you know underway as well um the my framework uh is you know didn't directly cause in any way you know the reciprocal tariffs uh it's a it's it's one specific program aimed at the specific national emergency of trade
• 56:30 - 57:00 deficits because the national emergency is trade deficits the form of redressing the national emergency had to relate to trade deficits and that is you know that is a a portion of why uh why the tariff rates were were calculated in in in the way that they were um I can't speak specifically to uh you know any particular country um but I I do know that if if the you know if the emergency is trade deficits then trade deficits
• 57:00 - 57:30 should play a major role in thinking about how to fix fix the emergency okay who else um Mr bade thank you very much for being here Mr chairman gavin Bade with the Wall Street Journal so I wanted to ask about this point about negotiations you're up here saying keep the phone ringing off the hook we just saw news as well breaking I think while you were speaking that the Treasury Secretary will be leading negotiations with Japan but almost simultaneously we have a a an op-ed in
• 57:30 - 58:00 the Financial Times from Peter Navaro that very clearly says and I quote "This is not a negotiation and countries that have had trade barriers for decades that are coming forward to the White House shouldn't just think that you know we're going to if you reduce tariffs we will reduce them." So what why are there conflicting narratives coming out of the administration when it comes to whether this is a negotiation or not and very specifically can we expect any deal before the reciprocal tariffs go into place on April 9th if you could
• 58:00 - 58:30 specifically address that as well that'd be great thank you sure so there there are conflicting narratives because you know everybody everybody's got an opinion um and and that's fine right like dis you know disagreement is you know disagreement is is how you can sort of you know enhance your arguments and avoid group think and I think that's very healthy um I can't speak to whether there will be a deal um or not all I can say is that that choice will ultimately
• 58:30 - 59:00 remain with the president as has always been the case and to point everyone to as I did before the history of the president's ability to create deals when nobody thought it was possible nobody thought the phase one deal with China was going to happen in 2019 and yet it did because the president is such a talented negotiator and that phase one deal would have delivered a variety of concessions from China across the spectrum of important dimensions in trade IP uh market access currency
• 59:00 - 59:30 purchase of agricultural goods and I think it would have been fantastic if the Chinese had lived up to had lived up to it unfortunately the Chinese walked away from that phase one deal and the Biden administration decided to ignore it uh you know we gave the Biden administration a fabulous trade outcome and then they just decided to throw it away for for no reason whatsoever and I think that was enormously unfortunate um and it would have been nice for you know for China to try to live up to it you know at any point in in in recent years uh recent months um so you know I I
• 59:30 - 60:00 can't tell you what's going to happen or what's not going to happen other than to say that the president is the only one who will decide it um but I can point you to his history and his history on the subjects on on on the on the creation of deals is is pretty great if I may sir is the advice that you're giving the president on whether he should make a deal or not different from what say Peter Navaro is giving him well you know I'm not in you know I'm not uh you know sort of I'm not I'm not in between I'm not in between the two of them in in in all of their conversations um however you know I I think I'm I'm
• 60:00 - 60:30 I'm pretty clear that uh you know I'm I'm pretty clear that I think uh America deserves better trading terms um exactly what that looks like I've I've outlined that i'm not focused on any one dimension of better trading terms um and so my my opinion is that there's a variety of improvements that could that could take place um but at the end of the day you know the president the president is the decider and he is going to decide i think we've got time for one more
• 60:30 - 61:00 quick question uh Mr wilson here has been um could you identify yourself and make a question brief good afternoon i'm Patrick Wilson i work for MediaTek we're a Taiwanese semiconduct company so we're obviously watching closely but investing and continuing to invest in the US my question is about workforce i used to run a trade association in the manufacturing sector too and the number one issue for the n last 11 years for US manufacturers has been the scarcity of
• 61:00 - 61:30 skilled workers uh jobs go unfilled for many months at a time the unemployment laden manufacturing is lower uh than it is for the general economy um in the president's first term one of his greatest successes was the president's workforce policy advisory board and just as you said the Biden administration ignored a lot of those great recommendations that came out of President Trump's workforce policy i'm wondering obviously this is a part of the strategy to renew manufacturing in the US how does workforce factor into that and is there any way to sort of act
• 61:30 - 62:00 on those great uh recommendations that the president's adviserss gave last time so I agree it would be I think it would be a great thing to bring that back and I think you know my view is that investing in Americans is one of the most beneficial investments you could make human capital matters our people our future and we need to invest in them and I agree and I agree with that entirely let me turn it around on you though and ask you a question um you know should should companies be you know like why are companies not investing
• 62:00 - 62:30 more in training workers so I I happen to know this one off the top of my head because I remember that and that companies in the US spend nearly five times as many dollars uh on their own training programs as all state and and local and federal government combined it's a 5:1 ratio so certainly employers are very committed to to uh training their employees but I think the problem though is that with um uh there's a lot of competition for great jobs in our economy and so the very
• 62:30 - 63:00 manufacturing jobs that we want to bring back many of those are less attractive to American workers than the other really high-skilled jobs like perhaps working in a semiconductor factory which is a very attractive job and they get lots of applicants but some of the other things like assembly work for instance is less attractive to American workers i love that answer because I can respond by saying that if we improve demand for American products by opening foreign markets to our to our products and removing unfair asymmetric trade access
• 63:00 - 63:30 and unfair asymmetric trading terms uh all of our manufacturers will be more competitive all of our manu manufacturers will have a lot more business and a lot more demand and they'll be able to pay the wages that it takes to to hire to hire workers and uh you know sort of you know and and and it will be much more attractive to work at one of those firms you're mentioning relative to the other workers sorry relative to the the the others so uh Mr chairman um thank you for your
• 63:30 - 64:00 remarks i wonder I know you have to get back to the real world uh which is quite busy these days but is there anything that we haven't covered that you would like to talk about before we bring this to a close i'm sure but I can't think of it but maybe again in the future okay thank you very much thank you thank you