Trade WAR: Trump's Tariffs Explained (w/ Lori Wallach)

Summary

In this episode of the Bad Faith podcast, Lori Wallach from Rethink Trade discusses the complex dynamics of Trump's tariffs. She delves into the misconceptions surrounding tariffs, often painted negatively by the media, and offers a perspective on their legitimate use, especially for enforcement in trade issues like labor standards and environmental policies. Wallach critiques Trump's haphazard use of tariffs, arguing that while tariffs can be beneficial for rebalancing trade and strengthening domestic industries, their effectiveness is undermined by inconsistent applications and the lack of complementary policies. She highlights the historical context of U.S. trade imbalances, the potential for tariffs to incentivize more equitable global trade practices, and the political and economic intricacies influencing current trade policies.

Highlights

• Lori Wallach explains the legitimate uses of tariffs in trade. 🏗️
• Tariffs, when used strategically, can bolster domestic industries. 💪
• Trump's erratic tariff strategies obscure their potential benefits. 🤔
• Trade policies impact global as well as domestic economics. 🌍
• Insightful critique of neoliberal trade policies and their consequences. 🧐

Key Takeaways

• Tariffs aren't inherently bad and can be a tool for good when used correctly. 🔧
• Trump's use of tariffs, though chaotic, highlights the need for strategic trade policies. 🇺🇸
• A rebalance in global trade could benefit both the U.S. and international workers. 📊
• Understanding the history of trade deficits is crucial for informed policy-making. 📚
• Political motivations often cloud rational economic decision-making. 💡

Overview

The episode dives into the complicated world of tariffs with Lori Wallach, who brings a fresh perspective to the often misunderstood economic tool. She challenges the common narrative that paints tariffs as inherently negative and explains how they can be used to promote fair labor standards and environmental responsibility globally. Wallach emphasizes that while Trump's application of tariffs appears capricious, the idea behind using tariffs strategically is sound, if executed properly.

Lori Wallach traces the history of America's trade deficits, highlighting how they contributed to industrial decline and rising inequality. She argues for a balanced global trade approach, where tariffs are used not just as punitive measures but as incentives for fair practices. Importantly, she points out that tariffs alone won't suffice; they must be part of a broader strategy that includes domestic policy changes and international cooperation.

The discussion also tackles the political landscape around trade. Wallach underscores how economic decisions are often swayed by political motives and short-term goals rather than long-term benefits. She contrasts Trump's methods with what a more progressive approach might look like, suggesting that better-aligned tariffs could simultaneously support American workers and global trade equity.

Chapters

• 00:00 - 00:30: Introduction and Welcoming Lori Wallach The chapter introduces Lori Wallach, a prominent figure in trade issues, who serves as the director of Rethink Trade and is a senior advisor to the Citizens Trade Campaign. Lori is known for her expertise in trade policies, particularly looking through a labor populist lens, which aligns with the podcast's focus. The host expresses excitement in having Lori explain the complex trade wars and tariffs currently ongoing.
• 00:30 - 01:00: Donald Trump's Liberation Day and Tariff War Overview This chapter discusses Donald Trump's designation of April 2nd as Liberation Day, during which he plans to announce new tariffs. These tariffs are part of an ongoing tariff war that has heightened tensions with historically allied countries, including Canada. The chapter includes a conversation on the implications of these economic strategies and how they affect international relations.
• 01:00 - 01:30: The Left's Perspective on Tariffs The chapter discusses the mainstream liberal perspective on tariffs imposed by Donald Trump, which is largely negative. However, the conversation highlights a different angle, arguing that not all tariffs are necessarily detrimental. Historically, the speaker has criticized economic agreements like NAFTA and TPP, which they believe have disadvantaged certain groups. The chapter aims to delve into the complexities of tariffs and trade agreements from a leftist viewpoint.
• 01:30 - 02:00: Understanding Tariffs and Their Impact In this chapter, the discussion revolves around the concept of tariffs, their legitimacy, and their deployment, particularly by Donald Trump. The narrative delves into how tariffs can be a legitimate tool when used correctly. It contrasts Trump's approach as a 'master class' in improper use, while highlighting that for specific causes like climate change activism, tariffs can be strategically significant. The chapter seems to encourage a reevaluation of tariffs, urging the left to consider them a viable strategy under certain conditions.
• 02:00 - 02:30: Tariffs and Trade Abuse Policies The chapter discusses the role of tariffs and trade policies, specifically focusing on carbon border adjustment mechanisms and enforceable labor standards in trade agreements. Tariffs are presented as a crucial enforcement tool, contingent on the goals and intentions of their application. The importance of the objective behind the use of tariffs is emphasized over the tool itself. Furthermore, the chapter touches upon how the perception of tariffs has been somewhat shaped by political figures like Donald Trump.
• 02:30 - 03:00: Consumer Impact and Price Gouging The chapter discusses the complex nature of tariffs, often demonized in economic conversations but historically used by countries, including the United States, to protect against unfair trade practices like forced labor. It acknowledges the necessity and potential benefits of tariffs, especially from a progressive standpoint, despite their negative reputation.
• 03:00 - 03:30: Effects of Tariffs on Consumer Prices and Inflation This chapter delves into the concept of tariffs, explained through the lens of someone who hasn't formally studied economics. It discusses the implications of imposing tariffs on products from various countries, focusing on both consumer and broader economic perspectives. Tariffs are essentially taxes on imports, which can lead to increased costs for consumers as these taxes are typically passed down in the form of higher prices. From an economic standpoint, tariffs can lead to inflation as they increase the cost of goods. Additionally, they can affect international trade relations and economic growth by potentially discouraging imports.
• 03:30 - 04:00: Industrial Policy and Rebalancing Trade This chapter discusses tariffs as a tool used in industrial policy and trade rebalancing. It describes how tariffs are charges imposed on products when they cross borders, primarily aimed at raising the wholesale price. The chapter further explains that tariffs can serve various purposes, including as a response to countries that exploit trade by undermining worker unions and intentionally keeping wages low to attract investment, a strategy referred to as a 'low road' approach.
• 04:00 - 04:30: US Trade Deficit and Economic Implications This chapter discusses the challenges posed by trade practices such as massive subsidies, currency devaluation, and their impact on the US trade deficit. Examples include Mexico's trade practices that pose competitive challenges to other countries, making it hard for local businesses in those countries to remain competitive. Currency devaluation is highlighted as a tactic that makes imported goods cheaper when switched into dollars, impacting the US trade balance. Such actions by countries are often referred to as 'beggar thy neighbor' policies.
• 04:30 - 05:00: Democratic Stance on Trade and Economic Policies This chapter explores the Democratic stance on trade and economic policies, highlighting the use of tariffs as a tool to counter trade abuses by neighboring countries. It discusses the impact of such tariffs on consumers and companies, with a specific example of Walmart's decision on whether to continue importing from countries like China that might be accused of using forced labor or receiving abusive subsidies.
• 05:00 - 05:30: IMF, World Bank, and WTO's Impact on Trade This chapter discusses the impact of international financial institutions, specifically the International Monetary Fund (IMF), World Bank, and World Trade Organization (WTO), on global trade dynamics. It highlights China's significant trade surplus, describing how the country sells more goods than it imports, thus affecting trade balances worldwide. The chapter also notes the role of tariffs in international trade, mentioning that the US and other major developing countries like Mexico, Indonesia, and South Africa are impacted by these trade practices, which are considered to be unfair or 'cheating' by some parties. Tariffs are presented as a tool used by countries to regulate trade, as exemplified by interactions with large retailers like Walmart.
• 05:30 - 06:00: US Trade Strategy and National Security The chapter explores the intricacies of US trade strategy in relation to national security, using the example of pricing for consumer goods like t-shirts and tennis shoes when sourced from China. It discusses the implications of imposing additional charges on imports deemed unfair to balance market equity.
• 06:00 - 06:30: Trump's Tariff Strategy and its Limitations In the chapter titled "Trump's Tariff Strategy and its Limitations," the discussion centers around the impact of tariffs on importers, specifically using Walmart as an example. The tariffs incentivize businesses to either import goods from non-tariffed countries or find domestic suppliers to avoid the extra costs. If a business like Walmart decides to import tariffed goods, it faces increased wholesale costs. The chapter also touches on the misinformation surrounding how these tariffs affect consumers, using the example of a $5 t-shirt from Walmart to illustrate the potential cost increase.
• 06:30 - 07:00: Union Perspective on Tariffs The chapter discusses the impact of tariffs from a union perspective, providing a simplified numerical example to illustrate the point. It specifically looks at a product priced at 8 cents and demonstrates that a 25% tariff would effectively increase the cost by 2 cents, showing how minimal the impact might be in this case. This leads to discussions on how such markups might affect pricing and profits.
• 07:00 - 07:30: Intellectual Property, Investment, and Industrial Policy The chapter discusses how large corporations like Walmart can absorb tariff price increases from their significant profit margins. It specifically references the tariffs imposed by former President Donald Trump, who applied an average 20% tariff on $350 billion worth of Chinese goods. Despite these tariffs, the expected inflation did not materialize in 2018 and 2019.
• 07:30 - 08:00: Tariff Timing and Investor Confidence The chapter discusses the impact of tariffs on inflation and investor confidence in 2020. Despite the expectation that prices would rise due to tariffs, many sectors did not experience this increase. Instead, companies adjusted their supply chains by sourcing from different countries to avoid tariffs. This strategic move illustrates the intended effect of tariffs to influence market behavior and mitigate negative impacts.
• 08:00 - 08:30: Challenge of Trade Deficits and Policy Responses The chapter discusses the challenges posed by trade deficits and the various policy responses that countries may adopt. It explains how actions like environmental dumping or union busting by one country can provoke policy responses, such as tariffs, from other countries. Companies that purchase goods, whether for retail sale or as intermediate supplies, respond to these policies by seeking ways to avoid tariffs, thus maximizing profits. The discourse highlights the complex dynamics between international trade policies and corporate strategies to navigate these challenges.
• 08:30 - 09:00: Fentanyl Crisis and Trade Loopholes The chapter discusses the use of tariffs as a tool to influence economic and trade behavior. Tariffs, when applied to goods crossing borders, send price signals to wholesale buyers and ultimately to producers. These signals are intended to encourage producers to change their practices, such as reducing carbon emissions or halting union busting. However, the chapter also acknowledges challenges in this approach.
• 09:00 - 09:30: Trump's Influence on Tariff Discussions The chapter discusses how corporate concentration can lead to price gouging under the guise of tariffs. It highlights examples from Trump's original tariffs, explaining that the rise in prices for goods like washers and dryers was attributed to these tariffs. Many people have encountered this narrative through various media channels, indicating how Trump's tariff policies influenced market prices during his first term.
• 09:30 - 10:00: Global Implications of the Trade War The chapter "Global Implications of the Trade War" examines the consequences of tariffs imposed on consumer goods, specifically washing machines. It highlights how tariffs, though initially applied to specific products like washing machines, can have ripple effects on related products like dryers, even when they are not directly taxed. The discussion points out the concentration of production in this sector, where a few companies control multiple brands, allowing them to hike prices on dryers. The media narrative and public perception often blame tariffs for these price increases, even if they are indirectly related. Thus, tariffs have broader economic and market implications beyond their immediate scope.
• 10:00 - 10:30: Environmental Considerations in Trade Policies The chapter discusses the impact of tariffs and price gouging on trade, particularly in the context of North America. It highlights the problem of wholesalers exploiting tariff regimes to engage in price gouging, using Canadian machines as a case study. The discussion also includes potential consequences of policy decisions, such as those proposed by Trump, and emphasizes the need to address price gouging alongside the implementation of tariffs.
• 10:30 - 11:00: Global Trade Imbalance and Structural Adjustment The chapter discusses the dynamics of global trade imbalances and structural adjustments. It highlights how companies historically absorb tariff costs without passing them to consumers, especially in scenarios where antitrust consolidation occurs. This lack of competition allows companies to blame rising prices on tariffs, even when they are not the cause, drawing parallels to other economic dynamics not directly related to tariffs.
• 11:00 - 11:30: Broad Economic Implications of Trump's Policies This chapter discusses the broader economic effects of former President Trump's policies, with a particular focus on tariffs. It touches on the rise in prices of consumer goods such as eggs during specific events like the pandemic, attributing these increases to various factors including supply chain issues and tariffs. Sellers often redirect blame to uncontrollable events or 'acts of God.' The chapter questions whether tariffs can indeed serve a beneficial aim amidst these challenges.
• 11:30 - 12:00: Conclusion and Closing Remarks This chapter discusses the ethical considerations in international trade, specifically focusing on the purchase of goods from countries without labor violations or environmental issues. It then shifts to critically examining the motivations behind President Trump's tariffs on China, questioning whether these actions were driven by genuine concerns over Chinese emissions or other matters.

Trade WAR: Trump's Tariffs Explained (w/ Lori Wallach) Transcription

• 00:00 - 00:30 I'm so thrilled to have on the podcast today someone who can finally explain to me what's going on with these tariff wars that have been going on. We have Lori Wallik who is the director of Rethink Trade at uh American Economics Liberties Project and a senior adviser to the Citizens Trade Campaign. She comes highly recommended to explain these issues through a labor populist lens, which is the kind of lens that we like to hear about here on this podcast. So, welcome to Bad Faith, Lori. Thank
• 00:30 - 01:00 you very much for including me. No, it really is my pleasure. We're talking on April 2nd, which Donald Trump has labeled Liberation Day and is a day, as I understand it, where he's planning to announce a suite of new tariffs as part of what has been sort of characterized as an ongoing tariff war, ratcheting up tensions with people who have historically been countries that have historically been our allies, Canada and
• 01:00 - 01:30 Mexico. Now, the overarching sort of tenor from the mainstream liberal press about any tariffs coming from Donald Trump, even prior to coming into office, was that they were default negative. I was really interested to talk to you because at least in an interview prior to Trump coming into office, you were making the case that not all tariffs are bad and in fact you have been historically a critic of NAFTA and TPP, the kinds of um economic agreements that have historically disenfranchised
• 01:30 - 02:00 American workers. So I I want you to help us untangle how we on the left should be thinking about tariffs broadly and tariffs as they're specifically being deployed by Donald Trump. So Donald Trump has like done the master class of how not to use tariffs. But the reality is tariffs are a totally legitimate tool. And if you are for instance a climate activist who has been fighting for what are called seabbams
• 02:00 - 02:30 carbon border adjustment mechanisms or you are someone who is a union activist and you want to have labor standards that are enforceable in trade agreements. You're for tariffs like it or not. They basically are the enforcement tool in trade. That is basically dependent on what you're aiming it for. what is your goal is much more important than what is the tool in this instance. But because it's Donald Trump and because we've all had bashed into our heads since the first time in
• 02:30 - 03:00 high school in an economics or political science course, your teacher said tariffs, Satan spawn, cause death and destruction. We have this default notion that tariffs are bad, yet they've been used by every country, including the United States, for instance, to keep out unfair products that are made with forced labor. But again, to do things we as progressives would be totally for, you need a tariff. Okay. So I I it's interesting to
• 03:00 - 03:30 me because when you say when you when you learned about terrorism an economics class in high school or college I have to confess I never took an economics class in high school in college and I don't want to be too pedantic but let's let's just go there. What does it mean when we're talking about um putting tariffs on various products in various countries? what are we actually talking about and what are the typical effects that you see from the perspective of a consumer and also on the economy broadly
• 03:30 - 04:00 speaking. So a tariff is a charge that's put on a product when it crosses the border and the goal of a tariff is to raise the wholesale price. So their tariffs are used for different purposes, but like a really common one is for instance if there's a particular known instance of a country abusing trade. So they are cracking up unions and keeping wages low intentionally as their economic strategy, a low road strategy to get investment for instance in
• 04:00 - 04:30 Mexico. or they are doing massive subsidies from soup to nuts to make it impossible for even like the hardest working, smartest company in another country to possibly compete. Or they're devaluing their currency cuz like when something comes across the border, it's denominated in the local currency. When it gets switched into dollars, if you've devalued the value of your currency, you make it unnaturally cheap when it comes in to the other market. So countries use what are often called the beggar thy
• 04:30 - 05:00 neighbor trade abuse policies. You use a tariff to counter that. And so for instance, what does it mean for the consumer? Totally depends on the company. So a company in the face of a tariff on a product that uses forced labor or is you know being sanctioned for being um abusive of subsidies, the company decides, Walmart decides. Am I going to keep importing from say China
• 05:00 - 05:30 where a lot of those kind of policies are used? It's how China now has an enormous surplus in trade. It sells way more stuff than it buys from the whole world. So at this point like it's not just the US that has tariffs with China, Mexico, Indonesia, South Africa like major industrializing developing countries are also getting flattened by this kind of cheating. So the tariff basically says to the Walmart, hey, you
• 05:30 - 06:00 buy it from China, the price you pay Walmart, the wholesale price, which like for a t-shirt that they're going to sell for $5 is5, or for a fancy brand name tennis shoe that they're going to sell for $100 is $20. You are going to have a charge if you decide your choice to continue to buy that thing that for one reason or another we're saying is not fair and we're going to add a charge on it to make it more fair coming in. Now
• 06:00 - 06:30 Walmart, you can pick an import from another country that is not cheating and you avoid the tariff. You can try and find a domestic supplier and you avoid the tariff. But you, Walmart, if you decide to import the tariff good, then your wholesale cost is going to go up. Now, to put this in perspective of what it means to the consumer, because there's been a ton of of misinformation about this, you take the $5 t-shirt from a Walmart that comes in
• 06:30 - 07:00 and literally it's 5 cents, it's 10 cents, it's like nothing. So, you decide a 25% tariff on that means and I'm going to just do a number that's easier. I'm going to make it $8 so it's easier to add the the um that what they're selling it for and I'm going to make it that it comes in at 8 cents so it's easy to do the math. You're adding two pennies to it basically. So you come in, it's like, hm, all right, the markup is still
• 07:00 - 07:30 ginormous and Walmart can choose to take out of that enormous profit markup the cost of the wholesale tariff price increase. And that is what happened, FYI, because we've lived through this. Donald Trump won put on average 20% tariffs on 350 billion with a B dollars of stuff coming from China when he was in office the first time. Did we see inflation spur in 2018 and 20189? No, we did not actually. It was
• 07:30 - 08:00 co It was middle of 2020 before we saw inflation jump. Did we see suddenly the stuff that we buy every day have the prices go up? No, we did not. And by the way, there's a big study that actually goes sector by sector and shows in very few sectors were those prices passed on. Instead, what happened is some of these c companies said, "All right, I'm going to bring it in from X or Y other country and avoid the tariffs." That's exactly the kind of signal you want to send if you're trying to counter the bad
• 08:00 - 08:30 behavior because then the goal is the country that is doing the thing be it environmental dumping or busting unions or whatever it is says hm if I continue to do this thing all of these purchasers both of stuff to sell at retail but also what are called intermediate supplies so the car part that's going to be assembled in the plant in the US they're going to look for a version of that where they don't have to pay that tariff because they the final seller wants to have the biggest profit. So the the
• 08:30 - 09:00 tariff is used again a charge on a good crossing the border to send a price signal at the wholesale of basically go someplace else. That's to the intermediate buyer, the wholesale buyer, which is sending a signal to the producer of knock it off. Start controlling your carbon emissions. stop busting the unions and then a lot of decisions get made. Now, I just want to loop around and say a big problem is we
• 09:00 - 09:30 have so much corporate concentration that where there isn't competition, companies can use the excuse of tariffs to price gouch. And some of the examples we all heard during the original Trump tariffs is just that it's not really prices going up because of tariffs. It's like everyone who has, you know, looked at a podcast, been on social media or watched cable news has heard that Trump's tariffs raised the prices of washers and dryers in the first term.
• 09:30 - 10:00 And he did put tariffs on washing machines. Here's the thing, though. There were no tariffs on dryers. The companies, because there's so much concentration in that sector, basically a few companies are producing all the brands. They have different names on them, but the producers really have cornered the market. They just raised prices on dryers because there were tariffs on washers and they thought they'd damn get away with it. And the news helped them by saying that's what evil tariffs did. And then even on washing machines, prices went up on washing
• 10:00 - 10:30 machines in Canada. Canada had no tariffs. So they were just using the hysteria in the North American media market tariffs to actually get away with price gouging. And that's a really serious problem. So if when today Trump announces more tariffs, it's going to be a disaster if he doesn't simultaneously crack down on price gouging. So you're saying two things that I think are really important. One, that the wholesalers have the capacity
• 10:30 - 11:00 and often times historically do eat the cost of tariffs, eat eat the eat the eat the the the the tax basically and not pass it on to the consumer. But secondly, when there is the sort of um consolidation that antitrust is so concerned with, they don't have to do that because there's no competition and they can blame the tariffs on the rising prices. And we saw a similar dynamic not because of tariffs, but with things like
• 11:00 - 11:30 um egg prices and such in the context of the pandemic where the pandemic and supply chain issues or aven flu or whatever it was was blamed on these surges in prices. um with the with the you know manufacturers or whoever it is the sellers saying it's not my fault this is all acts of god out of my hands whe whether it's tariffs or pandemics that are causing um the price gouging basically. So if if that is true and if tariffs can have a beneficial purpose in
• 11:30 - 12:00 um incentivizing purchasing goods from countries where they're not labor violations or environmental uh problems and those those sorts of things. What is the problem fundamentally with Trump's uh tariffs? What is driving let's say Trump's increasing tariffs on China in particular? Is it that Trump woke up one day and decided, "Yes, I'm very, very concerned about Chinese emissions. Am I
• 12:00 - 12:30 very, very concerned about Chinese labor practices? Or is something else going on?" Well, let me step back and talk about another use of tariffs because, you know, the the first thing I say when I'm speaking to a progressive audience is, you know, friends, we use them, too. And I remind people that President Biden basically tripled the tariff levels on imported EVs from China on, you know, the kind of fancy modern energy capacity, batteries that you put in EVs,
• 12:30 - 13:00 but that could be also storage in a bigger scale for intermittent for wind or other kind of renewable energy on solar panels on things that were part of his industrial policy. he had 100% tariffs compared to like Trump's which were much lower. And we we think about tariffs in the use of those very targeted uses which have been going on forever. And you know not that this to me is the sign of you know kosherness
• 13:00 - 13:30 but the WTO even allows the use of tariffs like that. The other use of tariffs though and what is the theory of the case behind Trump is a use for what is called trade rebalancing. And so I want to step back and just for your audience to sort of get the context of this because typically you know 99.9% of everything Trump says or does is both wrong and probably evil. On this one he's actually
• 13:30 - 14:00 right. And I want to just like point out that when I came up in trade world as a recovering trade attorney in the early 90s, it was the Democrats who were saying this he has stolen this agenda and it was a certain independent house member. Then Congressman Bernie Sanders very lonely with a few others David Bonner Rosa Deluro who were saying friends we can't have this consistent trade deficit. It is becoming increasingly difficult to buy a product
• 14:00 - 14:30 manufactured in the United States of America. How are we going to create jobs for our kids if we don't have a m manufacturing sector? And I very much agree with that sentiment. Mr. President, we have got to stop giving large profitable corporations tax breaks for shipping jobs overseas and start giving immediate tax relief to businesses who bring jobs back to the United States. Because here's the thing,
• 14:30 - 15:00 economic theory predicts if you have a very large persistent imbalance in trade. So what's a trade deficit? We import a ton more stuff than we export. And so the US has had a chronic trade deficit every single year since 1975. And I hope you ask me why that is because there's some very particular reasons for that. However, what the prediction of economics is is when you are basically not making very much of
• 15:00 - 15:30 the stuff you're consuming and you are buying it elsewhere and then you're buying it, sending all those dollars out to other countries making your stuff. Then they invest those dollars. They have to come back. That's the balance. They come back and they have to invest. They invest in the stock market in luxury real estate, taking regular housing stock out of the market to be like the third or fourth apartment you have as an investment that's often empty. Debt, so US treasury bonds, etc.,
• 15:30 - 16:00 private sector bonds for companies, you end up having a return that goes to capital. And the result is you simultaneously de-industrialize. You can't sustain your own factories. You have this flood of imports crushing your own production. Again, a bunch of them subsidized, taking advantage of suppressed wages, taking advantage of unfairly devalued currencies. So, it's not even kosher competition. You're just getting squash elated. And then in addition, you have basically
• 16:00 - 16:30 de-industrialization, but increased income inequality. That is a prediction of a persistent large trade deficit because the return is going to all of those capital oriented market financialization venues of the dollars coming back in and wages are getting pushed down because number one we're not making stuff in the industrial sector that was heavily unionized etc. but where wages are higher for the twothirds
• 16:30 - 17:00 of Americans who don't have a college degree to have a job in manufacturing paid more than a job in services. And so we've seen in this country this horrible chronic imbalance gut major parts of the country. And it's not the rumor it's just the rust belt. Not that one should say just the rust belt. It's California. It's Texas. It's New York. It's basically all of what you could call a factory town. These were places where
• 17:00 - 17:30 very smart, very hardworking people who did not happen to have a college degree had a middle class income. And communities were supported by the tax bases of those companies and those decent wages. And unions help make sure the return was a share into wages, not just stock buybacks and profits. and you saw a much more equal and frankly much more peaceable country compared to today where if you don't have a college degree you're going to live on average 8 years
• 17:30 - 18:00 shorter lives like that is scandalous. You are going to and our overall life expectancy is going down. Not because of really old people dying faster because working age people under the age of 60 of all races and colors and creeds who are non-olageed educated dying of deaths of despair related to marginalization which is also fueling this rage and
• 18:00 - 18:30 political polarization in our country. So we have the story of having done ourselves in by having these chronic imbalances and tariffs are one of the things you can use to force a rebalance. And I can explain the different methodologies of how you do that. But that is the theory of the case of reindustrializing. He's not so much thinking about the people as he's thinking about how do we get that production back for you know Donald
• 18:30 - 19:00 Trump. They're also just thinking about the national security part of it. I am obsessed about the people I went to high school with in Wasau, Wisconsin, who at that point in the 70s had the standard of living that was very similar if you had a parent in a union job in one of those manufacturing facilities that was very similar to what your high school friend who's had a f had a parent who was a doctor or a
• 19:00 - 19:30 lawyer or whatever. It was in the realm. And that vision of a more rebalanced trade is why we should all think back to Congressman Bernie Sanders and all the other progressive Democrats who say we can't have this trade imbalance. We're going to cause a catastrophe and it's kind of come to pass. H the predictions being what they were and Bernie Sanders and the others you mentioned ringing the alarm bell all
• 19:30 - 20:00 those decades ago, why has it been the case that those warnings weren't heated? Especially as the warnings started to come to fruition. It seems like I think I was reading this recently on Matt Stler Substack that there people saw this happening and the the neoliberal political cohort said it's fine. It's good. Get over it. We're never you can't be an industrial powerhouse forever. We it's going to be a service economy.
• 20:00 - 20:30 There's going to be benefits at the top and I guess they'll trickle down to the rest of us. In a way that sort of sounds like the rhetoric we're getting now about how AI is going to, you know, it's going to be fine. It's going to free us all up. we're going to have uh you know you're not going to have to work anymore and just trust that all the benefits of this are going to trickle down to you when you no longer are employable. I mean people were just making this argument it sounds like without any real um mechanism or real accounting for how
• 20:30 - 21:00 the populations that used to be buoied by manufacturing were going to be able to persist. I would call it faith-based economics with a major overtone of greedfueled willing knowledge that this financialization of our economy where the major thing we produce now is dollar denominated assets not the stuff we need to have resilience as we all saw during
• 21:00 - 21:30 COVID where we could not get the basic damn stuff that we needed to keep our families safe and happy. Where we don't have diverse import sources, where we have basically hyper globalized under these rules we are all told were natural, were the way forward, were inevitable, which has resulted in too much stuff being produced by too few companies in too few places. So that when you have the inevitable pandemic,
• 21:30 - 22:00 now the climatefueled weather disaster, the earthquake that is always going to happen somewhere, you have no resilience. And it's not just we should be making all of it. That's not the point for key things. We need medicine, communications equipment, energy equipment, things, basic infrastructure stuff, steel, aluminum. We need to make some. But also part of the use of tariffs and rebalancing trade is to
• 22:00 - 22:30 diversify the places we also import stuff. And it's both a matter of justice for the people who will make some of that stuff here again. But honestly, it's an issue also of resilience, of basically fairness combined with security. Because even if you're not going to be the person making it, you need the access more reliably to these things as we go forward into a foreseeably we can't have all the stuff
• 22:30 - 23:00 made in any country. Like skip it, China, which has another level of hm, is that a good idea? But any country you can't have single source as we saw during co so this imbalance issue people sold it as if it was an inevitable I was in those fights during NAFTA and WTO it was extremely painful anyone who brought up you know not nitwits like canes and pointed out like
• 23:00 - 23:30 hello uh the UK went through the thing we're about to do to ourselves In the inter war period, the US dollar has become there have been choices that were made after World War II with the so-called Brett and Woods institutions. What was then the GAT, the General Agreement on Tariffs and Trade became the World Trade Organization, kind of a corporate hijack, subject of a different podcast, but an interesting one. Written a book on that literally. But you have
• 23:30 - 24:00 the WTO, you have the International Monetary Fund, you have the World Bank. And they had this set of roles at the end of World War II. And the US made certain decisions that for instance the dollar would end up as the global reserve currency. So what that means is unlike other currencies where like if you have a huge trade deficit, your currency devalues. There's a natural market correction. But we're the global reserve currency. So we don't control the value of the dollar. Other countries
• 24:00 - 24:30 hold dollar reserves because that's what they need to trade in and or they do it to manipulate. So you know China has reserves of dollars many times more than their balance of payment needs. That keeps the value of the dollar up. So it makes our trade uncompetitive and relatively speaking it brings down the value of the Chinese currency. A bunch of other countries do that intentionally. Germany has the benefit of for instance
• 24:30 - 25:00 having trade currency manipulation without doing it because they're trading in euros not in a deutsch mark that actually reflects the strength of their economy. So they who have a huge trade surplus with the world have that in part because they basically have a devalued currency they're trading in. So at this point there are 19 countries in the world that have ginormous persistent trade surpluses. They are using what are
• 25:00 - 25:30 sometimes called beggar thy neighbor policies. A combination typically of subsidies suppressing wages or suppressing consumption. Germany it's suppressing consumption more than suppressing wages. And this is done by the way through tax policies through other interventions. And they also these countries typically have some currency benefit they create. You know Korea buys a lot of dollars and brings down the value of their currency
• 25:30 - 26:00 and pushes up the dollar but also pushes up other currencies by intervening in the markets. 19 countries have a trade deficit with the world. sorry, have a trade surplus with the world. 66 countries now have global deficits. The US has the largest honken one by far. But at this point, we have a global imbalance where if this were not Donald Trump, but this were President Bernie Sanders, he would sit down with the 66
• 26:00 - 26:30 countries who are also in this de-industrialized more income inequality quagmire of what a chronic trade deficit does to you. He would get with the hundred countries that have relatively speaking balanced trade and then he would say, "Y'all, we need to get together and with those 19 countries that are basically abusing trade rules to make it impossible for the world to get the benefits of trade because there are benefits. But if the system doesn't clear, if the system doesn't actually
• 26:30 - 27:00 work and is imbalance and you're getting the benefits, but you have a block of countries basically squashing everyone else, you're going to have the mess that we have now. And so the countries if you know if you were trade representative under under President Bernie Sanders, you would get with all those other countries and then say to all 19 of those countries that are the surplus countries, say, "Y'all, here are your options. You guys can either knock it the hell off and you've got 6 months to
• 27:00 - 27:30 show us you're doing it or we are all together putting up a 60% tariff against all your all stuff and you guys are just going to have to consume more of what you produce. You will not be dumping that in the rest of the world. Good. It will be good for your workers. You want to you want to accumulate that wealth and that power doing that as the governments times up. You're go your own workers are going to have to start consuming the stuff and it's good for them that they are not now able to afford. The wages in China will go up. Germany, you're going to have to work on
• 27:30 - 28:00 your tax policies there because you're not going to dump all that stuff on the rest of the world. That would be a way to rebalance trade. And the problem of what Trump is doing is his use of the tariff tool is so chaotic. So following a different goal every hour of every day that that totally logic vision of what you would do with the tariff and why you need to rebalance trade is like in a different time zone from what they're
• 28:00 - 28:30 actually doing. Okay. So what is motivating Donald Trump to the best you can you can figure it out? If it's not rebalancing trade, what is it? I think part of it is rebalancing trade. And part of it is um rebalancing trade on a vision that is not that actual accurate logical one I just laid out, but rather is this sort of peculiar victimization? I say peculiar because
• 28:30 - 29:00 the US government and US multinational corporations had a big hand in writing the current rules. So, you know, were they screwing most Americans when they were doing it? Did they get away with it? Selling what you called the neoliberal myth? They sure did. But, you know, part of Trump's thing is everyone's treating us badly. And the way to really think about it is a bunch of, you know, Wall Street and London City and, you know, German financial
• 29:00 - 29:30 gurus, plus the big multinational manufacturers from numerous countries, plus big pharma from numerous places. They all enjoyed the benefits of that system that was basically rigged against workers and consumers. But it's it's this victimization theory that then has Trump thinking of tariffs as like a tool to beat on countries because they are hurting us or attacking us or it's unfair. And I mean obviously some
• 29:30 - 30:00 countries, the ones that are using these beggar thy neighbor policies are not just us but the whole damn world. They are intentionally trying to favor themselves at the loss and damage of everyone else by using these unfair trade practices. But so Trump's sort of victimization thing means you do and and personal also like I don't like so and so. Let's tariff them. It's like I think the man was obsessed with like Justin Trudeau's socks or something. He just
• 30:00 - 30:30 hated the socks. Like why would you go after Canada? Like hello we have a trade surplus with Canada. I mean, there's an artifact of what looks like a deficit, but that's because Canadian crude oil for decades has been processed in refineries in like Detroit and in other parts of the northern tier of states for use and sale as gasoline in the northern part of the country. And so if you take out the crude oil, we have a damn trade
• 30:30 - 31:00 surplus with Canada. We have a not small one in manufacturing. So like why would you go after Canada? But they left out in their first trunch of tariffs countries with whom the United States actually has real like unfair trade imbalances like Vietnam or Japan or Korea or Germany, but they went after Canada. So it's that sort of victimization. I will use a tariff just to beat on people, you know, threatening Denmark over Greenland lust with
• 31:00 - 31:30 tariffs. Hello. If you want to rebalance trade, like focus on where the trade imbalances are. If you want to actually boost manufacturing, because this is the other thing, you can't just do the tariffs. You got to do a set of other policies to actually make it do the thing. So, the Biden administration got the highest rate of factory construction in 30 years by combining extra high tariffs to keep out the cheating stuff. So you have some chance of actually being able to have fairness in your
• 31:30 - 32:00 domestic market with tax credits that generated demand for domestic stuff. You buy a domestic EV, you get this tax credit. Your solar credit is bigger. If you buy equipment from the US plus generating demand from the government, so you boost buy local, buy American, buy whatever state. And so the government also wants Americanmade stuff. And then on the investment side, you use different incentives, low interest loans, loan guarantees, some
• 32:00 - 32:30 you know some basically subsidies targeted to get the construction going. You want to get you want to signal to the private sector, hey this is going to be an auspicious sector to invest in. If you make domestic EVs, we got the whole package here that gives you an opportunity to get a return on your investment. In fact, right now, you couldn't compete against a Chinese EV, but we're going to do the tariffs here. We're going to do demand over there. We're going to help you with a with a basically investment tax credit. Knock
• 32:30 - 33:00 yourself out. You can make money doing this thing we need you to do. You put that whole package together, sometimes called industrial policy. Tariffs are a critical part of it, and you get the outcomes. you just do the tariffs, who knows what you're going to get because you do have protection, but like is the company that already has a dominant position going to enjoy the protection and then do more stock buybacks or just like give out ginormous dividends, like
• 33:00 - 33:30 if you don't do the rest of the package to actually get the outcomes and then you need to accompany that with new domestic policies. So like you need to make it you need the PRO act. You need to make it easier to join a union so folks in those protected industries can say hey this is not just going to the investors. We're going to get better wages and we're organized as a union to do it and if you don't do that your benefit here under protection is going to have a heart attack because we're going to have a strike. Or do you make sure there's anti-pric gouging enforcement? Now, there are
• 33:30 - 34:00 things you can do right now under the the what is called the Federal Trade Commission, the FTC, where Lena Khan was running the show until recently. They under their statute right now, they have the authority to surveil prices. They can actually require companies to tell them what they're up to. And I just looking at my statute here, it's section 6B. For all of you who want to follow along at home, uh you can pull it up on Google and take a look. It's a right to
• 34:00 - 34:30 surveil corporate prices and then there is a fair and de anti-deceptive practices statutory authority that if they're price gouging if they're raising the retail that's what what is price gouging raising the retail price above what their actual increased expense is. So, if we go back to that t-shirt, if they go, you know, if the price ends up, and sadly companies will do this, we're sorry, in anticipation of tariffs, our $5 t-shirt's not going to be $10. And
• 34:30 - 35:00 then you realize like, wait, the actual tariff charged on that was 4 cents. So, the reason they're doing that's price gouging. And so, you have to actually act on all of those other pieces to have the tariff tool translate into the outcomes I think progressives would support. But again, you ask what the hell with Trump. None of that is being organized. And then the final thing is you got to be consistent. So the whole point of a tariff is you're sending an economic signal. You're saying, "Hey,
• 35:00 - 35:30 you do this thing and you're going to make money here, Mr. Private Investor. Put your money here. Build a factory." But if you have a tariff at 8:00 a.m., you have a half a tariff at noon. you have no tariff at 6:00 p.m. and maybe at midnight you have the tariff back. That kind of roller coaster is much more likely to have like investors in a future US factory like reach for a barf bag than their checkbook. That actually is guaranteed not to have the signaling
• 35:30 - 36:00 turn into new manufacturing. And that's another thing that Trump has been doing. So wrong targets, goals, you know, what is he doing it for? beating up or actually wrong mix of policies, wrong countries, inconsistent means like exactly how not to use a tariff. I I heard you speak to this this idea that one of Trump's rationale with respect to Mexico is that he's trying to
• 36:00 - 36:30 prevent drugs coming across the border. this is um a sort of an anti-fentinel policy. But again, even that you know version that that rationale is undercut by again the failure to implement uh policies that actually target where most fentinel comes across the border. Is is that right? So the the the hitch there is unfortunately as the like border
• 36:30 - 37:00 intervention of actual drug smugglers has increased. One of the ways that traffickers have started to try and get particularly fentanyl laced pills but also the precursors into the US is to use a trade loophole that is called the dimminimous entry. And what that means to translate it back is, you know how like you come in from uh a vacation that maybe had you overseas and you get that form that
• 37:00 - 37:30 says, "Do you have more than $200 worth of stuff you're bringing back?" So, if it's $200 or less on the plane or by shipment, $800 or less, every US resident can import every day that much stuff going around normal customs forms. So, you're not sitting there on the airport like figuring out what the tariff code is of the, you know, the knickknack that you bought. You don't have to pay tariffs. You don't have to pay taxes. And the stuff isn't
• 37:30 - 38:00 inspected. So that loophole was relatively small. And then in 1995, they made a little twist to it that basically said the importer of record who counts for the $800 or $200 is me, the consumer. It's not the company importing it. That exploded e-commerce. So the big e-commerce platforms like Shien, Timu, the ones who are being accused of using forced labor, those guys can bring in endless amounts of stuff that totally
• 38:00 - 38:30 skirts Trump's tariffs, any tariffs, any kind of tariff, cheating tariffs, normal tariffs, because $800 a day is acred to me. So you would think like, oh, first thing in the morning, Amazon shut down. They sent out two mailings and they've hit $800. Uh-uh. That's cuz you have the count. I have the count. So, we now have, brace yourself, 4 million online small value packages coming in as this tax-free workaround.
• 38:30 - 39:00 It doesn't get inspected. 4 million every day. Every day. This is like from when this got opened, it's gone from, you know, 50,000 a year to 4 million every day. The result is the traffickers realize in that avalanche of, you know, fast fashion and whatever, they can just bury this illegal stuff cuz none of it's getting inspected. And so you hear these horrible stories of people buying what
• 39:00 - 39:30 they think is a generic online of like a muscle relaxer, a sleeping pill, something they've been prescribed, but they don't have time to go to the pharmacy or the pharmacy wants to charge too much. and then like they take the pill and they never wake up and it turns out to be fentanyl poisoning. That stuff, that epidemic of those kind of deaths, that's a dimminous problem. And now the actual commercial smugglers are using that as a way to bring in the chemicals that are precursors to the drugs from China,
• 39:30 - 40:00 which is mainly where they are made. Because if it's on a ship and it's coming in through normal trade, you have to list everything in detail with lots of technical codes. It's a lot easier to try and figure out what is not okay that's coming in and the stuff gets inspected. But this dimminimous thing, so the cynicism of Trump announcing that his tariffs were supposed to be stomping fentanyl when he has the existing authority at this moment to close that
• 40:00 - 40:30 loophole that really is a significant source and growing source of both the precursor chemicals, but also the pills that are killing people is like the height of rotteness. And here's what's even worse. When he first did those tariffs on February 1 and Mexico can in China, he closed the loophole. He met with the FedEx CEO 4 days later. FedEx delivers those packages. They make a ton of money on this loophole and he reversed it and it stayed open since. It
• 40:30 - 41:00 has stayed open ever since. All right. Okay. So, sounding like Trump is a bad faith actor. I I want to ask you though, Sean Feain of the UAW um gave a statement on how he feels uh about the the tariffs. Um he recently said, "We applaud the Trump administration for stepping up to end the free trade disaster that has devastated working-class communities for decades." What do you make of what seems like sometimes qualified, but sometimes
• 41:00 - 41:30 relatively unqualified union support for the tariffs more broadly? Is there are there good things that we should be celebrating here that Trump that Trump is doing? Absolutely. So the UAW sort of theory of the case, which by the way is mine. You ask me all the things that Trump is messing up. I'm not attacking the use of these tariffs overall. I want to see it's an experiment to see what they're going to do. They could get it right. There are some people in this
• 41:30 - 42:00 administration that despite the president's chaos and lack of focus and wrong thinking about the cause of the problem, theoretically they could actually target some of the right things. They did do some very smart things with tariffs in the first term despite Trump because his advisers knew how to do it. So what the UAW is saying is, hey, we have had decades of devastating trade policy. I mean just since the early 90s when the NAFTA, the
• 42:00 - 42:30 World Trade Organization, China joining the trade organization, all that neoliberal laooa that Congress approved, we have lost 90,000 US factories. We have lost net 6 to 7 million manufacturing jobs. If you drive into the non- urban parts of almost any state where there were middlesized towns that had manufacturing, you can see the
• 42:30 - 43:00 devastation that is that economic statistic I was talking about of economic inequality. So we have seen the results and the unions are basically saying hey we have got to do something about these unfair imports from those 19 countries that are systematically breaking the rules and cheating. We will never be able to have the ability to make things here in the union factories we want to organize, to have the resilience and stability for Americans to know we make some of those key things
• 43:00 - 43:30 here. But also in other countries around the world that are also getting squashed by those unfair imports, they will make it. So if our system goes down, we have another place to import it. That's just not one source. That whole vision involves using tariffs. as I said to rebalance. Now will Trump do it right? It has not looked auspicious. But what the unions are saying is this old system has destroyed our working
• 43:30 - 44:00 class really opportunities for good jobs to make the things America needs to stay healthy, to stay happy, and to stay safe. And so what they're saying is yes, thank goodness people are using tariffs in the same way they celebrated 100% tariffs that Biden did. And in fact, a lot of Democrats celebrated those Biden tariffs, which you know, more strategic, had the rest of the package. But it is a huge policy mistake and an even bigger
• 44:00 - 44:30 political mistake for Democrats to just attack tariffs. I mean, it's super tempting, right? There's been enormous chaos the way Trump has used them. So, you know, we definitely should attack the Trump nonstrategic, unsuccessful, chaotic use of tariffs. But to attack tariffs overall is basically as as Congressman Chris Delusio said in a New York Times oped a couple weeks ago, if we say we're against all tariffs, we're saying we're okay with a system that
• 44:30 - 45:00 basically doesn't have a route for working-class Americans to make the things in this country being paid a decent wage with decent environmental and health standards or people in other parts of the world who want to raise wages and who want to actually in countries raise environmental standards to be able to compete against those 19 countries that are doing the squash everyone else standard. And so we should be thinking about how to smartly use
• 45:00 - 45:30 tariffs. Again, that may not be what Trump's going to do, but just going against them all in all is a losing maneuver. And so the unions are basically saying, "Hey, we've had 40 years of being killed by this old trade system. Yeah, we do need to break all the furniture and the first thing we need to do is stop these unfair imports. So that's why they're celebrating it and they are not wrong. I have just written a bunch of articles folks can see like in the American Prospect folks can see in Project Syndicate where I lay out here's how you use tariffs. Here's why
• 45:30 - 46:00 we should be for tariffs when they are used in a smart way. We're going to need them in the future even if Donald Trump is totally screwing it up right now. And we don't know what will happen today. It could be that the actual tariffs that they announced today could be some of them smart. We don't know yet. But certainly the first, you know, two months of tariff use has not been auspicious. I want to ask something that's been on my mind. There's this
• 46:00 - 46:30 idea that, you know, we're at the end of a failing empire in China's descendants and that causes a lot of anxiety for people for various reasons. It might just be the way things are going. And there are some there is all kind of sort of stable rattling that gets deployed with the um on the basis that we have to do this to protect our like
• 46:30 - 47:00 this upcoming war with China including actual sort of like military escalation saber rattling but also with respect to some of these trade battles and there's a way that I I observe you know labor practices in China or emission standards in China being used as a rationale for let's say a trade war with China when sometimes it does just feel
• 47:00 - 47:30 like protectionist and I know you know I don't I don't want to be like a the left gets criticized for being like overly sanguine about China and like what the consequences of China's rise are going to is going to be and hating America and American empire so much that we're willing to like take the country regardless of the consequences. So, I'm sensitive to that criticism. But let me let me just get to the point. If we really did care about the environment, let's say, isn't there an argument that says we should be happy to
• 47:30 - 48:00 import cheap Chinese electric vehicles? Yes, it would be great if we made them domestically, but today we are not in a position to similarly make cheap um EVs that we are on the precipice, not on the precipice, we were kneedeep in this environmental crisis and exigency demands that we just all be quickly as possible converting to um lower emissions vehicles. And if they're making solar panels cheaper, we should be buying them and putting them on our
• 48:00 - 48:30 roofs ASAP. And yes, moving toward growing our own industrial capacity, but are we really are we using these ideas like um uh you know a desire to grow the American workforce and make more things at home? The the desire to not exploit low labor standards uh in China. Are we using those ideas really just
• 48:30 - 49:00 to justify, you know, a a kind of um bringsman bringsmanship with a country that ultimately is on an ascendant path while we're on a decline? Do do you want I'm sort of getting at. Okay. Yeah. So I mean there are four important points about that question particularly with like the solar the EVs but let me just say the paths of various countries are not sort of an act of God. It has to do
• 49:00 - 49:30 with policies and planning and strategy and part of whatever the role of the US is in the future. Part of what you would hope the government is doing is thinking about how we have a country that can provide the stuff that people who live here need in a reliable way and that we are basically, you know, from a progressive perspective, we would say girding for the downsides that we can see of future climate chaos and doing
• 49:30 - 50:00 everything we can to not make it worse. So part of the whole notion of what is the economy we need to meet our goals and what tools do we use to create it would be the progressive way the industrial policy way more the Bidenesque way of thinking about why we want to make this stuff here because number one to get just directly to your question about the the energy stuff the way it's produced in China and in some other countries is not a net
• 50:00 - 50:30 environmental cost. So it may be cheaper and it may be faster in the short term but they are making it burning dirty coal. So the life cycle analysis of that solar panel of that EV even if you are feeling virtuous using it here is you have done so much damage to the climate in the making of the cheaper thing on the other end that life cycle wise and there's a lot of analysis done about this very question in trying to figure out you do you sequence stuff in do you
• 50:30 - 51:00 go right away the white house was doing this during Biden in the climate part of the white house trying to do the math of like hm Should we let more of these dirty panels dirty in the sense of the value of carbon emitted making them was going to be more than you could possibly save in the 30-year life cycle of that thing on your roof or in an electric. So number one life cycle analysis it doesn't actually meet the goals. Number two availability and reliability of
• 51:00 - 51:30 source is a big deal. So as we saw during co if one part of the world is the only place something is mainly being produced and right now China is producing for instance 80 80% of residential solar so if whatever happened and they concentrate the areas where these so in so you know the the they call it solar city in the part of China where this is largely being done if it went down the implications are enormous of having it so concentrated
• 51:30 - 52:00 with respect to even if it wasn't nuts carbon net loss, you just wouldn't be able to get this stuff. So that's number two. Number three, you can't have a scenario where how you save the planet is you use weaguer forced labor and basically have production based on torture and you know vicious suppression of basic human rights. That is not a long-term I'm not signing up for that to have that in my house when we have another option. So yes, can you have
• 52:00 - 52:30 people exploiting those arguments for pure protectionist reasons? That is true. Do we also know that in fact in Mexico real independent labor unions are still getting squashed? It's somewhat better under the, you know, NAFTA 2.0, but it's still a big honking problem. And that people are still being disappeared for standing up for their rights. And that is not okay. Yes. as a value. As progressives, we need to actually use our wallets to try and say nay, that is not okay. There are
• 52:30 - 53:00 international standards. Every human being should have those protections and I'm not going to incentivize the opposite behavior. And then number four is for thinking about the environmental stuff. If you think about how much carbon is emitted schleing heavy things from across the world, one of the most interesting analyses I've started to see out of Europe is what they call carbon
• 53:00 - 53:30 miles. And they do it for food miles, they do it for product miles, and they're trying to figure out life cycle analysis. Like, does it make more sense to grow blah blah in a solar heated greenhouse in a cold place, some thing you want to eat in the winter that you couldn't otherwise grow in, name your Scandinavian country, versus having it flown, cuz for a lot of fresh food, it's
• 53:30 - 54:00 flown to make sure it stays um edible from wherever in the global south as compared compared to if you step back and look at our you know food trade policies this will shock people but right now the US has gone into a food trade deficit we export commodities we export corn wheat and soy and we are simultaneously one of the world's largest exporters of soy and a sizable importer of soy imagine the carbon
• 54:00 - 54:30 implications of the grain traders making money on like soy in soy out yet if we think about it and having not just the resilience of getting the stuff, but the cost of moving it from way far away. The reality is in this carbon counting era, we're going to have to have more production distributed around the world. And so like if I had a magic wand, I would set up some higher standards. So
• 54:30 - 55:00 put the international labor and environmental standards as a floor of decency. I would set up our region, North America and the Caribbean. We're one place you develop a high standards production capacity. And by the way, we want Central America and South America to be another one. And we want two of those in Europe. And we want to make sure the China block is operational. But then in other parts of Asia so that when it comes to things that everyone is
• 55:00 - 55:30 going to need, non-carbon energy production capacity, equipment, food, medicines, we have much more redundant production worldwide entirely separate from the geopolitics. But thinking about the world we're going into because of the climate crisis, we're going to need that just for resilience to make people safe and stable. Yeah, that that makes sense. I guess what I what I am needling on is that so much
• 55:30 - 56:00 of how I perceive trade conversations is like it's sort of a zero- sum game. And I guess what I'm trying to get at at bottom with the the way that China is sometimes framed in these conversations is that it feels like less like this um world that you allude to wanting to make with a you know the wave of a magic wand if you were in charge or if Bernie were in charge where the goal is
• 56:00 - 56:30 to you know take those 16 what was it 16 countries um that are have a trade surplus and make us all sort of neutral, trade, converge upon trade neutrality. Um, but it feels more like we're trying to get into a trade surplus ourselves or advantage ourselves to the diminishment of another country in a third world. And and the way that my understanding is that the IMF and the World Trade Organization have been
• 56:30 - 57:00 keeping the global south economically depressed since time in memorial, since since they were created. That was the purpose of their their creation. And I guess I am trying to better understand, you know, kind of which arguments I should be skeptical of because they seem like they're going to that end, a sort of just protectionist competitive end and which are genuinely the sort of trade policies that are
• 57:00 - 57:30 geared toward um empowering domestic workforce toward board um creating uh supply chain stability and emergencies um food security all of those kinds of things. And if it is the case that the only party that's really talking about using tariffs in this moment are
• 57:30 - 58:00 Republicans and so much of the way that Donald Trump is deploying this tool is in bad faith. I want to be better equipped. I I mean, and this is why we're having this whole conversation, but I do want to be well equipped to be able to discern, you know, what, you know, what what are the good faith trade arguments being made and not fall into this trap of being a Democrat saying trade is bad, but also not fall into the trap of basically
• 58:00 - 58:30 applauding uncritically this sort of scattershot methodology that Trump seems to be using and which is getting some push back, I should say, from some Republicans. Um, even though Donald Trump typically has a kind of like a lockdown on on his party and is not very um open to these kind of criticisms, I I saw um what was this fellow's name? um one Congress member in particular who was saying that there
• 58:30 - 59:00 there was some regret that Congress had basically given up so so much authority to the executive to control trade policy and that maybe they should start ratcheting back the power of the purse. So it's super I think the final word on this is it is you have identified how super confusing the crossurrens are because it's Donald Trump who's using the tool and how he talks about and how he thinks about it is so different than how a president Bernie Sanders would use
• 59:00 - 59:30 the tool which I suspect he would use with the same level of um experimental joy I would put it which is to use the tool in a way that there has been a bipartisan neoliberal elite consensus of tariffs as antichrist managing trade to have particular outcomes as dangerous and stupid when in fact tariffs are just a policy tool.
• 59:30 - 60:00 Trade is just another mechanism that you use to achieve goals. And so when you see Republicans starting to actually criticize Trump, those are the most sort of pro- old neoliberal trade chamber of commerce adjacent Republicans who are longing to go back to the old NAFTA, WTO, offshore everything, import forced labor goods. They have a view which
• 60:00 - 60:30 sadly would characterize where I would say you know President Clinton was President Obama was that is this old vision you started out asking how is it people bought that baloney for so long. Yeah. Yeah. And you've got this shift that President Biden grabbed on to that USR Katherine Tai who's been speaking about this use of tariffs by Trump chaotic and likely to backfire. But
• 60:30 - 61:00 should we as progressives have this tool in our toolkit? Should we this old system? Did the Biden people try to upend decades of that old system that some of these Republican senators with the Chamber of Commerce are starting to stick their heads up going, "Wait, we want to go back to the old way." And yes, the way that a progressive president would use tariffs versus the way Trump thinks about it, extremely different. But woe be the
• 61:00 - 61:30 Democrat who is in any way associated with longing to go back to the stability of that system that has so dramatically failed working people, independent farmers, consumers. And you know, one thing to think about is when you were saying the IMF, the World Bank, the WTO have been designed to stick it to developing countries. One of the smartest things that was said to me at
• 61:30 - 62:00 the time the WTO was hatched by a very prominent developing country, super progressive economist. He said, "You just look, the WTO is structural adjustment for the North. This is corporate structural adjustment." Structural adjustment is the technical term of what the IMF and the World Bank did to developing countries where they basically grabbed them by the neck and said, "You want these loans? Privatize your education, cut your corporate
• 62:00 - 62:30 taxes, crazy big intellectual property rules that make it impossible for, you know, small farmers to get seeds or people to get medicine." And they just basically at the price of we'll do your loan, but here's what you're going to have to do to that was a structural adjustment program. And this person had the insight of saying, "Yeah, these this corporate globalization, this version of basically corporlobalization that marginalizes
• 62:30 - 63:00 working people, small farmers, consumers, and has this the market will decide allegedly, but like it's full of protections and privileges for certain interests." that the way to think about that is basically multinational capital versus everyone else. And you northern countries who've had your social contracts and your FDR New Deal, you just look, you are going to get structurally adjusted through these trade agreements that have all these one-sizefits-all rules. You are going to
• 63:00 - 63:30 get de-industrialized. You are going to have your future taken away and your democratic control taken away. And the reality is that very classoriented corporations versus people's capital versus working people analysis is actually 35 years later proved to be precient of how those institutions did work. And so it's a little bit more of a big capital versus people as compared
• 63:30 - 64:00 to north versus south, which certainly is how the Brettonwood system may have started, but over time it is really a kind of Bernie Sanders was right moment about how this has worked and why we need to bust it up. It feels so bizarre. This is the last thing I'll say. I know I'm like spinning my wheels a little. It's just it's it feels so bizarre to have watched Donald Trump effectively message on um NAFTA was bad in 2016 and
• 64:00 - 64:30 win, right? um and Hillary Clinton standing there defending those trade policies and for Bernie to have been popular and ascendant during that time making the same argument on trade as Donald Trump more or less you know in broadstrokes and for the Democrats to have lost then to see him make some of those same moves in 2024 and win and to still have Democrats not understand that that's a losing rhetorical battle. But is this one of those issues where it's not that Democrats are stupid, but
• 64:30 - 65:00 they're being paid to misunderstand the moment that they're still under the influence of whatever, you know, scions of global capital that are funding their campaigns that they they are unwilling to divest themselves from this policy that the American people clearly don't want. So, here's what's happened. Over time, the Democrats have consistently been on to this and been more representative what the public wants. Like the vote on NAFTA in 1993, majority of Democrats against,
• 65:00 - 65:30 majority of Republicans for and it's been that way ever since. I would say what's happened is the anti-Trump revulsion has basically shifted there. By the way, there have always been Democrats, many of them in the White House prior to Biden, who were exactly what you just described, which is they were part of the problem. They were in with that very set of powerful elite financial institutions. Democrats more Wall Street oriented, typically the
• 65:30 - 66:00 Republicans more agraous and you know, multinational manufacturing oriented. But either way, like it was in their political economic interest to do this position that was against most working people. But at this point, the Democrats still are much more have been congressional Democrats on the right place. So take him away from the presidential class of Democrats have been in the right place on these issues. But what's happened now, and this is why it's so confusing, and you have a bunch
• 66:00 - 66:30 of Democrats who've always been protrade justice, have fought against the Trans-Pacific Partnership, etc., who now are seeing it's Donald Trump saying the things they used to say, literally words out of their mouths, and they can't bear the idea of being on the same side of Trump in any shape or form. And they're starting to say things that sound like the Chamber Damn Commerce of, you know, save NAFTA. And I buy Trump I buy Trump derangement syndrome as the kind of rationale in this moment. But what do
• 66:30 - 67:00 you make of Hillary Clinton for instance? Do you see her as a Trump derangement syndrome person or a true believer back in those 2016 debates? True believer. True believer. Yeah. I mean she wasn't credible when she flipped to being TPP. I heard her talk in favor of TPP. She was a believer. Believe me, she was a believer. She would have like run in front of a train to save TPP, right? Until she had to say she hated it because she was not going to get elected saying she liked it. Yeah. Okay. This is fascinating. I I'm going to let you go. I could have you
• 67:00 - 67:30 here um all day. This has been really illuminating. I'm going to go right to the Hill and talk to Democratic Congress people about some of these very same things, but I better split. But let's do it again. I love to talk about this stuff as you might have noticed. Thank you so much for joining us. Do you want to tell the audience before you go where they can find more of your writing and other work on the internet and beyond? Please. Um, so I direct a thing called Rethink Trade. It's a part of the American Economic Liberties Project and you can find our website at
• 67:30 - 68:00 www.rethinktrade1word.org and there you can find a lot more materials about all of these issues including some of my recent publications of basically how to understand tariffs as a progressive. And thank you so much for this really interesting conversation. Fantastic. Thank you, Lori Wallik. Thank you to all the listeners. You know, you can get an extra episode of BadFaith Podcast every Monday at patreon.com/badfaith. And as always, take care of yourselves and keep the faith. Hey YouTube, thanks for watching. Just a reminder that this is a podcast.
• 68:00 - 68:30 You can catch an extra premium episode every Monday for $5 a month at patreon.com/badfaithpodcast. That's patreon.com/badfaithpodcast for $5 a month. an extra episode every week. Additionally, please do consider liking this video, subscribing to this channel. It helps us out. It helps independent media beat the algorithm. We appreciate you. And as always, keep the faith. [Music]