Fresh Air - Confused By The U.S. Economy? You're Not Alone

Episode Date: October 22, 2025

How are changing tariffs, the AI boom, immigration policies and uncertainty in employment and the stock market impacting the economy? Zanny Minton Beddoes, editor-in-chief of The Economist, explains.Learn more about sponsor message choices: podcastchoices.com/adchoicesNPR Privacy Policy

In the U.S., national security news can feel far away from daily life. Distant wars, murky conflicts, diplomacy behind closed doors on our new show, Sources and Methods. NPR reporters on the ground bring you stories of real people, helping you understand why distant events matter here at home. Listen to sources and methods on the NPR app or wherever you get your podcasts. This is fresh air. I'm Terry Gross. President Trump's immigration policies, his tattered. enabling doge to fire or lay off tens of thousands of federal workers are all creating an environment of financial uncertainty. It's rattling consumers, as well as many businesses,

investors, and global leaders, and yet the stock market has remained high. Why? To explain the impact of these policies and proposals, with an extra portion of uncertainty caused by the government shutdown, we invited the editor-in-chief of the economist Zanny Minton-Bettos to join us. She is also the host of The Insider, The Economist's New Streaming Show. She previously was the publication's business editor and economics editor, and as a former economist for the International Monetary Fund. We recorded our interview yesterday. Sandy Mittenbertoes, welcome back to fresh air. Of all the financial moves, Trump and his administration have been making, is there any one thing that you find most confounding or most impactful?

Well, first of all, it's very nice to join you again. That's a hard one to answer because what is remarkable is that in the face of a lot of shocks, some positive, many negative, the economy is doing remarkably well. And the stock market is doing remarkably well. And I think the sort of simple way to explain that is that on the one hand, we have a number of policy shocks. And I would put the president's immigration policy right at the top and his tariff policy right at the top. and we can talk about both of those, but also generally the uncertainty that surrounds what President Trump does.

You know, he is very pro-business on one hand, but on the other hand, it's very, very hard to plan and predict. But set against that, there is a frenzy, almost a euphoria in the United States right now, around artificial intelligence, and that frenzy is driving investment, and it is really what is behind the stock market. So you have this sort of tale of two economies, if you will. The real economy right now, in the here and now, I think. think being hit by particularly the tariffs. And on the other hand, this optimism in the markets

that comes around the expectations for AI. So how much of the stock markets boom right now is a result of AI? I think you've written that like 40% of... Yeah, a huge amount. If you look at really the stocks that are doing extraordinarily well, it is the big tech companies, the magnificent 2007, as they're often called. Meta, Tesla, Alphabet, formerly Google, Amazon, Nvidia, Microsoft, and Apple. It is the big tech companies that are driving this frenzy. And then other companies that investors think are going to benefit from it. If you took those out, the performance of the stock market is much more lackluster. So for people who aren't invested in those companies, how are they doing? Well, if they're invested in the stock market at all,

they're not doing nearly as well as if they were invested in those companies. And if they don't hold whole chairs and many Americans don't, then the economy is much tougher because you're seeing inflation quite a lot higher than it really should be, maybe not as high as we might have feared six months ago, but still pretty high. You're seeing the labour market weakening. Although the unemployment rate hasn't risen very much, the pace of job growth was slowing. Of course, we don't exactly know what's going on right now because we aren't seeing any economic figures being public. because of the government shutdown.

And the tariffs aren't all on place yet, so businesses really don't know what to do, so we're also not seeing the effects on consumers yet because of that. Well, the story of the tariffs, Terry, is interesting because if you cast your mind back to the beginning of April, if you remember President Trump stood in the Rose Garden with that big board on which somebody had printed countries and the new tariff rates, and it was called Liberation Day, and there were incredibly high tariff rates being proposed. And at that point, and I think you and I spoke soon after that, there was a very real fear that we would go into something like the 1930s when there was a trade war globally and the US put up its tariffs under the Smoot-Hawley Act

and then other countries retaliated and the Depression was made much worse by that. Compared to that outlook, it hasn't been as bad as we feared. In fact, I would be the first to admit that the impact of the tariffs has not been in the short term. as dramatic as I think I probably suggested it would be back in April. And the reasons are several fold. Firstly, President Trump threatened a lot of tariffs and then back down. You know, there's now this acronym, the taco, he's the taco president. Trump always chickens out. And so a lot of the tariffs have not been put in place. Many countries, rather than retaliating against the United States with their own tariffs have actually cut a deal with the US. And so if you went back to April,

Economists were looking at the threats the President made and they thought that the overall average, what economists call the average effective tariff rate, which means the kind of average rate for the economy overall was going to rise to something well above 20%. In fact, if you look at how much revenues being raised from tariffs, the actual rate right now is closer to just over 10%, which is still significant increase. It's still the biggest increase since the 1930s, but it's much, much less. than people feared back in March. And then not only is that tariff level lower, interestingly, many, many companies have not passed on the cost of that tariff to consumers. They have swallowed the cost of the tariff in their profit margins. And in the long run, that's not going to be possible. Companies will have to pass on to their customers,

the cost of the tariff. But in the short run, probably one of the reasons they haven't done so is partly I think they're scared of being the target of the president's ire, but also because there's so much uncertainty. People aren't sure what is going to happen with tariffs going forward. But all this means that right now we haven't, I don't think, seen the full impact of the tariffs. It is going to put pressure on consumers in an ongoing way. And actually, if you look at some sectors of the economy, it's already hitting very hard. I mean, I'm sure you've been following what's happening to American farmers. It's really.

tough if you're in the farming industry now. And so you're seeing parts of the economy that are already feeding the pain. Well, the most consequential of the tariffs right now will probably be the tariffs with China and China's retaliation against the tariffs. There's threats, but it's not worked out yet. The Treasury Secretary, Scott Besant, is going to meet with China's number two later this week. President Trump is going to meet with President Xi. Sometimes soon, they say. So we don't even know what the result of that is, but Trump is threatening like 100% tariffs on Chinese goods?

Or is it 100% in addition to what he's already proposed? I lose track. You're right. It is hard to keep track. But China is a really interesting case. And it's, to me, an interesting case of a country that has stood up to President Trump and actually prevailed. Because if you look at what happened in April,

there was a mini, you know, war of tariff threats between President G and President Trump. I can't even remember what it went up to, but they threatened retaliatory tariffs and counter-threatened. And at one point it looked like they were both going to be well over 100%. But then, in effectively, President Trump chickened out and a deal was struck. And I think it shows that President Xi and China realized that actually the U.S. couldn't afford to put the kind of tariffs on China that it wanted to, because it just would have hurt consumers too much. And now, if you fast forward to what's happening now, it's now China that is paying hardball with the United States. Just a few days ago, the Chinese laid out a new set of export

controls and licensing requirements on rare earths, which are these kinds of base metals that are required and minerals that are required, particularly for computer chips and for the magnets that go into all manner of vehicles and so forth. And they're also very, very important for the defence industry. China essentially controls the production of those rare earths. And it's just announced that it's going to require, you know, essentially a complicated licensing arrangement for anybody to have any access to rare earths. And it's really flexing its muscles and saying to the United States, we can play at this game of using our economic power as a weapon too. And I think what you're seeing, and the reason that there's a lot of uncertainty about the

meeting now, both between the Treasury Secretary and his Chinese counterpart and the president, is that there's a big game of sort of threats and counter threats and chicken going on. And the brutal truth is that, yes, the United States has a lot of leverage over China, particularly in financial area, but China also has a lot of leverage over the United States. And it's really the one country that I think the U.S. can't essentially push around through using economic weapons. Do you think that Trump did not count on retaliation? I think President Trump has a very strong sense of America's ability to use its military and economic power to push countries around. And also of his own personal power. Yes. I think he's extremely good at

He's extremely good at recognizing weakness in others and using the clout that he has as America's president to further what in his view is, you know, America's advantage. I would not be so sure that often it is in America's advantage, but he sees it as at that. But I think China is a case where he's sort of met his match and President G is being as tough in return and is playing hardball. And when President G is playing hardball, it becomes clear that President Trump is keen to negotiate. But whereas with other countries, he and his team have been able to bully them into deals where they have agreed to pay tariffs on their exports to the US. Because, for example, let's take the case of the European Union. Very close to home here for me. You know,

the EU did a deal with the United States, which essentially accepted tariffs on European goods going into the United States and made all kinds of promises about investing in the United States. And the reason that the Europeans went along with this is that they really, really need the U.S.'s support in NATO. They're worried that, you know, President Trump would no longer be committed to the NATO alliance or indeed might try and push a very pro-Russia peace in Ukraine. And so where the U.S. has clout in this administration is very effectively using it. There's a phrase that I've heard used to describe this, which is that the U.S. is monetizing. its military and economic power. It is essentially, and the way the Trump administration would describe it,

they would say, look, the international system was essentially rigged against us. And we are, you know, moving the goalposts more in America's direction. We're getting a fairer deal for America. But they make no apology about the fact that they are using America's power to push other countries to do something differently. But I think in the case of China, it's proving, hard to do because China also has power. Something that I'm really struggling to understand is one of the things Trump is proposing

is a 100% tariffs on brand name drugs, not generics, but brand name drugs that are manufactured outside of the United States. He has an exception for companies working to try to manufacture drugs in the U.S. So if you add 100% tariffs to brand name drugs, manufacturing, you. outside of the United States. And at the same time, you're allowing, because this is what Republicans are trying to do, you're allowing Obamacare costs to skyrocket for individuals on Obamacare. That's a kind of bad recipe for a lot of people's health care. Yes, it is. But I think to be fair to the administration, I think President Trump has identified something that,

he sees as an unfairness, which is that global drug companies sell their drugs more cheaply in other countries than they do in the United States. The United States is the biggest market. It's the place where the newest and best drugs come to market first, but consumers pay more in the United States. Whereas in somewhere like in the UK, where I'm from where we have the National Health Service, the National Health Service drives a very hard bargain with drug companies and will only agree to buy drugs if they feel.

that they are not just effective, but also cost effective. And so they end up forcing the drug companies to sell at a much cheaper price. And the Trump administration has basically said, this is not fair on Americans, we're being ripped off. But the sort of remedy that he has proposed, as you've described, of tariffs, is not one that is going to help this. And certainly the impact of having tariffs on imported drugs, plus, the end of subsidies for health care is a double whammy for the U.S. patients. Absolutely. So if you have like over 90 countries with different tariffs for each country and then cutouts for certain goods that Trump does not want to impose tariffs on, it sounds to me, and I don't know anything about the administration of tariffs, but it sounds to me like an administrative nightmare. And I've been wondering, is Trump going to have to reestablish part of the quote administrative state that he's been trying to destroy just to administer the tariffs?

You raise a very important point, which is, and this sounds abstract, but it's actually really important. For most of the world for the last 80 years in the post-war era, we had a system of global rules for trade, which was based on something called MFN, most favor. nation status. And what that meant was it was essentially a rule that said when a country imposed a tariff, it had to impose the same tariff on all countries. So you couldn't, you know, have one tariff on France and another tariff on India. If you imposed a 5% tariff on a good coming into your country, you'd impose it on everybody. And what the United States has done under the Trump administration essentially has completely thrown away that system and said, we're not playing by those rules any longer. We are going to have different tariffs for different countries.

And indeed, we reserve the right to change those tariffs all the time and we're going to threaten to change them. And remember that President Trump has used tariffs not just to negotiate trade deals, but to impose punishments on countries for all kinds of things. Tariffs were imposed on Brazil in August because President Trump didn't like the way that the current government was prosecuting former President Bolsonaro. And he was made very clear that was one of the reasons that very high tariffs were imposed on Brazil. So if you're using tariffs to punish countries for all manner of things and you change your mind about tariffs a lot, you have, as you say, an incredibly uncertain system. And you have an uncertain system that has different tariff rates for all manner of countries.

So yes, it's extraordinarily complicated and confusing. And the other thing is that the U.S. has now recently got rid of what's called the day minimum. provision and the de minimis provision meant that any imports of a small amount, and I think it was up to $800, were tariff-free. And those big Chinese consumer companies like Sheehan that were the ways in which people could buy very cheap clothes from China, they would come in. Very cheap. Yeah, I'm not passing judgment on whether they were a good idea or not, but they came in through this de minimis arrangement. And now lots of small importers kind of mom and pop stores that import goods from China and then sell them on, they can no longer

bring their goods in through that provision. And so it is, the impact is at the very least confusing. But I think you're right. It's a kind of bureaucratic nightmare. And there are quite a lot of countries and companies that are simply no longer willing to provide career services or packaging services to the United States because it's just too complicated to do the administration of the tariffs. Now, it's not even clear if these tariffs are legal because it's Congress's power to inflict tariffs. It's not the president's power, but the president is using a provision of a federal law that addresses trade issues. This is trade issues that present a threat to national security. And this part of the federal law doesn't even mention the word tariff. So the Supreme Court

is scheduled to rule on the legality of these tariffs. And if the Supreme Court rules They're not legal. Then what? Do we pay the countries back? I mean, where does that, what does that leave us? You're right. The broad tariffs have been put into place under this emergency, so-called emergency. Economic powers act. Yeah. Exactly. And that is being challenged, and it's going all the way to the Supreme Court. And I don't think it's at all clear which way the Supreme Court will rule. And we've developed my colleagues a scotor spot. which is an AI bot that on the basis of the justice's previous writings and so forth predicts what the outcome is. And I believe our scotus bot suggests that it isn't going to be struck down. If it is struck down, there are other laws under which the administration can impose tariffs, Section 301, Section 201 laws, which are narrower, but do give the administration the ability to impose tariffs.

And I think that the US trade representative and his staff have been working very hard to figure out the sort of Plan B route to imposing tariffs. So unfortunately, I think this administration is going to find a way to continue to use tariffs, even if this sweeping ability is removed by the Supreme Court. But yes, you're right that technically, if that is the case, then they would have to technically pay back the tariffs that have been collected under that ruling. Do you think if there is any hint that they're going to strike it down, that they would do it on an emergency basis? Because if they strike... I don't know. I think this is such a central part of this administration's economic policy platform. It would be a big decision for the Supreme Court to rule against the president on that.

And thus far, if you look at the behavior of the Supreme Court, it's shown itself disinclined to pick those kind of fights. But I also think that even if it is struck down, as I said, I think there are other ways in which the administration will use tools to continue to impose tariffs. It's worth remembering that, you know, President Trump has been in favor of tariffs for 40 years. He first took out ads in the New York Times in the 1980s, railing against Japan. It was Japan in those days that was the object of his ire and saying that you had to have tariffs. He's a tariff person. He said, I love tariffs. This is central to his presidency. And he campaigned on it and everyone knew that's what he wanted to do. And so I can't imagine that

the administration will suddenly go, oh, okay, we can't use tariffs, right? We're not going to do, that's not going to be part of our policy any longer. Let's take another break here. If you're just joining us, my guest is Zanny Minton-Bettos, editor-in-chief of the economist. We recorded our interview yesterday. We'll be right back. I'm Terry Gross, and this is fresh air. This is fresh air. Let's get back to my interview with Zanny Minton-Bettos, editor- and Chief of the Economist. We're talking about the impact of Trump's tariffs, immigration crackdown, and other policies on plans, the impact on everything from consumers to the global economy. We recorded our interview yesterday. Let's talk about immigration. So I think you've said that we don't quite appreciate how much Trump's crackdown in immigration is affecting the American economy. Can you elaborate on that? Yes, of course. We've spent a lot of time talking about tariffs and rightly so because tariffs have been a big part of the discussion of the last six months. But one of the striking things that I think much less remarked on is just how dramatic the shift in the numbers of people coming into the US has been. Now, we all know that President Trump proudly says that he has, you know, stopped the flood of people coming across the southern border and he has. But the consequences that the U.S. is that the U.S. The US has gone from a country that had, under President Biden, net immigration of some two and a half

million people a year, to this year having the estimates are, you know, very, very low hundreds of thousands, or even some forecasts I've seen have suggested that this year the US could see a net outflow of people, i.e. more people leaving the US than coming into the US. And that would be the first time since the Depression that the US would have a net outflow. And on the one hand, That is exactly what the president said he was going to do, you know, stop people coming in. But that's a very big shock to the labour market. And to understand the impact of that, I think it's worth separating two things. The stop of low-skilled people, the people broadly coming across the southern border,

and the much more unfriendly attitude towards higher-skilled people. And if you remember just a few weeks ago, the administration suddenly announced that H-1B visas, which are the high-skilled visas, would now, henceforth, companies would have to pay $100,000 to get one of these visas. So if we split those two up, low-skilled immigrants coming across the border, you can argue about whether it was a good or bad thing, and I'm not going into that here, but what is certainly true is that there are a large number of industries in the US, particularly agriculture and construction, where foreign workers, particularly, and many of them in the US illegally, were a

huge part of the workforce. I mean, the estimates suggest it's, I think, you know, as high as 50% in agriculture and 25% in construction. You know, that's a big hit if suddenly the sort of pipeline of those workers is cut off. And because of the aggressive actions of ICE, of the immigration enforcement agency, you know, you are seeing a lot of people very worried and very worried about going to work in those communities. So it's hitting poorer Americans. The other impact on at the top end of the labor market, I think is a much more medium to long term impact. But there are, in certain areas, take AI, for instance, you know, many, many of the top researchers in AI in the United States are foreign born. Elon Musk, for heaven's sake. Yes.

In fact, four of the CEOs of the Magnificent Seven that we were talking about, four of them are foreign-born. And so if the US genuinely becomes a place that is less hospitable to foreign-born folk, then I think it has a very big medium and long-term costs to the United States because by and large, these people are some of the most productive and most skilled. And they are the people who have come to the US because the strength of the US has been that this is a place. which attracts the best and the brightest from around the world, has the biggest and deepest capital markets, and so is a magnet for smart people, good ideas, and they get them funded there, and that's the engine of US growth. And if you suddenly develop a reputation for being a place

that doesn't really like foreigners and doesn't want high-skilled foreigners, I think it will really hurt the US's ability to maintain its position as one of the most innovative and successful economies. There's a study that suggests that something like between 30 and 50 percent of America's productivity gains between 1990 and 2010 were thanks to skilled immigrants. It's an extraordinarily high share. Can I ask you a question, though? What is the logic behind President Trump placing a $100,000 fee for visas on high-skilled workers coming to the U.S.? I think if you asked a member of the administration, it would be these H-1B visas have.

for too long been a way for companies to get cheap skilled workers from abroad, whereas in fact they can and should give those jobs to Americans. And by raising the price of H-1Bs, you know, we're encouraging companies only to apply for those if there is a really high-skilled person that they need from abroad. At some level, there is an economic logic that says you should create a market and pay a price for these visas. But I don't actually think. think that's really what's motivating this. I think that there are a number of people in the administration who are just migration restrictionists and who just don't want foreigners. And it's for that reason that I think it's a dangerous direction to go in. And for us in Europe,

you know, this is a tremendous opportunity. I'm not at all sure that European governments will grab it. But Europe has a huge number of highly skilled people, particularly in areas like AI. And many of these people have been going for years now to the United States because that's where a lot of the opportunities were. Well, if the United States doesn't want high-skilled foreigners any longer, then they are coming back to Europe, which is a huge, you know, influx of talent potentially for Europe. What about like hospitals and doctors? I know from personal experience with, you know, family doctors and emergency room visits and, you know, all of that. that so many doctors and nurses are foreign-born.

And if we cut off that flow, if we make it more difficult for hospitals and other medical practices to have foreign medical workers come to the U.S., we're hurting the health care system, we're hurting people who need doctors and nurses. I mean, there already seems to be a shortage. Yeah, I think that's absolutely right. And I think that's, you know, that is true in the medical area. It's true in the high-tech area. It's true in lots of areas. Oh, and I should also mention caregivers. So many caregivers are foreign born.

And the United States has always been, or at least for most of the past hundred years, has been a country that has been, you know, a magnet for migration. Now, what is certainly true is that under the Biden administration in particular, was an absolute surge of migration, illegal migration, across the southern border. And it's also true that that caused real political disquiet. I think, frankly, in both parties. I understand that and I understand that people felt that there was a sort of loss of control of the border. And what the Trump administration is doing is in reaction to that. And the reason it is actually quite popular is because people felt the border was out of control. So I absolutely understand why a country needs to be able to secure its borders. But we are now, it looks like, going from a world of

extremely high levels of migration to what looks to be zero or possibly negative. And my worry is if that is sustained for any number of years, particularly in high-skilled migration, but frankly also in in less skilled migration because you need farm workers, you need construction workers, you need, the U.S. needs people for its economy to grow. I think it will really hurt the U.S. economy. Okay, I got to reintroduce you again. We have to take a break. If you're just joining us, my guest is Zanny Minton-Bettos, editor-in-chief of The Economist. We'll be right back. This is Fresh Air. This is Fresh Air. Let's get back to my interview with Zani Minton-Bettos,

editor-in-chief of the economist. We're talking about the impact of Trump's tariffs, immigration crackdown and other policies and plans, and everything from consumers to the global economy. We recorded our interview yesterday. Let's get back to AI. The frenzy around AI is driving up the stock market. But what impact do you think AI is going to have on the larger economy since so many jobs are already being replaced by AI? Well, let's stand back. artificial intelligence is, I think, going to prove to be the biggest transformational technology

since the Industrial Revolution. I do think this is a sort of epochal change over the next few years in the way our economies are run and in the capacity that artificial intelligence brings and the potential disruption. So I think this is a big, big deal. I don't think it's a question of the next year or two. it'll be, you know, probably decades until we see the full effects. What we're seeing in the stock market is a kind of collective realization by investors that this could indeed be a big, big thing.

And then a massive frenzy, a sort of gold rush, if you will, of piling into the companies that investors think are going to be the winner. So take Nvidia, for example, which is the chip company. Its share price has absolutely gone through the roof because it is essentially part of this. gold rush. But the impact on the broader economy depends on the time frame you're looking at. What I think it will do will improve the productivity of the economy. It'll make us as a society much more productive. There'll be lots of ways in which our lives will be transformed for the better. But it is going to be very disruptive. And I think as there have been in previous

bouts of technological innovation, there are definitely going to be losers from this. And I What worries me a bit, particularly given the political environment we're in right now, is that we don't have the political capacity to deal with the consequences of that kind of disruption on ordinary workers. Because if you look back, Terry, at the whole era of the sort of 90s and 2000s after NAFTA and after those trade deals and jobs moved, jobs were displaced thanks to trade, That was really the origin of a lot of the polarization and anger in many parts of the United States. And if you imagine that the impact on jobs from AI could be even bigger than that and faster than that, you can imagine that it's going to be politically very, very difficult to deal with. So that's the sort of worrying scenario. On the other hand, it could also be technology that really allows the U.S. economy to grow much faster

and to have, you know, a kind of prosperity that it hasn't had for a long time or indeed ever. And so we're at the very beginning stages of this. And what the stock market is doing is essentially, you know, encapsulating all of the hopes around the technology. But at the same time, as you point out, it could have all kinds of impacts for real people in the real economy, which are much more negative. So there's a debate going on about whether the stock market gains are a bubble, whether the valuation of AI-related stocks are a bubble. If it is a bubble, and the bubble burst and the stock market crashes, would it be different than previous crashes?

The word bubble is one that is bounded around a lot, and certainly I use too, but we have to be a little careful what we mean by bubble. Clearly, these are very richly priced stocks, and it's pretty clear that even if the AI delivers in the most optimistic way possible, not every company is going to do as well as its current stock market price assumes it will do in terms of future revenues. So there will be some losers and there will be companies that don't fulfill the expectations that are currently priced into their stock prices. However, does that mean it is a dangerous and pernicious bubble? You know, in 2007 and 2008, we had a housing bubble. And the bursting of that housing bubble caused the global financial crisis. And the reason that was so catastrophic and painful was because essentially it was the ripple effects to banks and the financial system from the collapse of that asset price, the housing prices.

This time round, it's much less connected to the banking system and the financial consequences. They're not going to be zero. There's definitely going to be a hit to those people who are invested in the stock market who will lose a lot of money. And there will be some knock-on consequences to the financial institutions that have lent to these companies or lent to companies that are investing in data centers and so forth. But I think it is likely to be less sort of financially corrosive than the global financial. crisis. Is Trump still interested in investing money from the Federal Reserve in crypto? Is that still a thing? I don't actually know, but what is very clear that this is an administration that is extremely pro-crypto. I'm not as convinced as those in the Trump administration are that this

is a sensible direction to really go in, but what's very clear is that crypto is going mainstream for good or ill, and this is a bit of a gold rush. It's one that the president, and his family are personally benefiting from to an extraordinary degree. It's more broadly an administration that, you know, has legislatively now underwritten, you know, we want America to be a place where cryptocurrencies blossom and where the whole crypto universe blossoms. And actually, this is something it leads, and I will say this very quickly, but this is an administration that from financial services to energy to all manner of areas is trying to

cut regulation and make it easier for business to do things. And I think that's an important thing to remember because it's, you know, CEOs in the United States are very upbeat right now. And they're certainly not saying anything publicly against the president, perhaps because they're worried. But they are also seeing an administration that is trying to, you know, make it easier to invest in the United States and is trying to make it easier for businesses to do well. So I do think it's kind of important that we don't focus only on one side of the it's not that the Trump administration is only doing things that are hurting the economy. It is also trying to do things that encourage investment, that encourage businesses to invest in

financial services. They're definitely pushing back against regulation. That may or may not be a good idea, but broadly, I think most people agree that there was too much and too onerous regulation in the Biden administration and having a bit less of it would be a good thing. But also just one thing in terms of encouraging business, not the alternative energy. world. Those companies are not not being encouraged by the Trump administration. Absolutely. You're absolutely right. If you stand back a bit, what is really striking is how willing this administration is to pick winners and to say, you know, this is a good company, it's a bad company, you know, essentially the government taking a stake in Intel. These are kind of remarkable things for,

you know, notionally Republican administration to be doing. It's essentially intervening in business, in a very, very sort of heavy-handed and overt way, you know, calling out CEOs when they're not doing what the president wants, punishing those who have an agenda that he doesn't like. You know, look, I'm still a free marketeer. I'm still a good English liberal who believes in a limited state and is skeptical of untrammeled power and authority. But I'm really struck that, you know, the U.S. now all this seems to be sort of normalized this kind of behavior by the government. And it's, to me, very un-American. My guest is Zanny Minton-Bettos, editor-in-chief of The Economist. We'll be right back. This is Fresh Air.

This is Fresh Air. Let's get back to my interview with Zani Minton-Bettos, editor-in-chief of the economist. We're talking about the impact of Trump's tariffs, immigration crackdown, and other policies and plans, and everything from consumers to the global economy. We recorded our interview yesterday. So after slashing so many federal positions, and, you know, Trump is cutting back on spending, meanwhile, Trump wants to bail out Argentina to the tune of $20 billion. And that's only if the current president, Javier Milley, gets reelected in the October 26th election, because Malay is an ally of Trump's. Treasury Secretary Scott Bessent has advocating for rating the American contribution of $20 billion to as high as $40 billion. What does this bailout mean?

I'm unclear about whether we'd be giving them the billions, loaning them the billions, or investing the billions in the Argentine peso. The U.S. is essentially trying to provide enough financial muscle to shore up. confidence in Argentina and in President Malay. I actually think that what President Malay has done in Argentina is pretty impressive. And it's been a pretty remarkable turnaround in a country that has, you know, for decades, failed to get to grips with its fiscal problem. Basically, there's an election coming up. There's a lot of fear that he will lose in that parliamentary election and thus be unable to continue his reform program. And so the investors are nervous about Argentina, and what the U.S. Treasury is essentially done is to try and

provide with its U.S. dollar lifeline the confidence that prevents a run on the peso. Now, the peso needs to float the currency, and it's not sort of in principle crazy that the U.S. should provide a sort of underpinning of support. It's exactly what the International Monetary Fund was set up to do for countries. What's interesting is that this is done with such a sort of clear political condition, you know, as I think President Trump said pretty explicitly, we're going to pull the plug if he doesn't win. So it's one country rather than the International Monetary Fund has for decades supported Argentina. The US is now coming in with its own sort of bilateral support plan, but very clearly, as you say, for a political ally. It's an odd thing for the U.S. to do given that just earlier this year, it's pulled back from all manner of U.S.AID and foreign assistance of all sorts.

So it's showing that the United States under the Trump administration is indeed willing to support countries if they are countries where it particularly likes the leadership. Looking at the larger picture in the U.S. right now and in the economy, not knowing what the future brings, what do you see as the best and worst case scenarios when you try to look ahead? Is that a manageable question? Let me give you the best case. The best case is that the damage from the tariffs is limited. Modest corrosion of U.S. competitiveness, nothing too terrible. That the damage from immigration is such that they don't go full restrictionist,

but they do continue to make America be a place that welcomes particularly the highly skilled. And that the AI revolution is both an elixir for the economy, but not so sudden that it causes extraordinary disruptions in the job market. If all of those things go well, then the United States, I think, will remain the most dynamic economy in the world. and it will be able to essentially absorb these shocks if they're not too big. And I've learned in, gosh, almost 30 years about writing about the U.S. economy that you bet against it at your peril. And there are far more times that I have written pieces saying the U.S. is heading for a terrible period and been wrong than the converse. So I'm generally an optimist about the U.S.

So my upbeat case would be this is a huge country full of very incredibly hardworking, smart people, a magnet for talent from around the world. It's clearly ahead in AI. It has all of the ingredients for being an extremely prosperous country that can also deal with its very real challenges. And one we've hardly talked about, but the budget deficit and the debt problem are all. dealable with if you have economic growth and rational policymakers. Now, I'm not sure how much faith I put in that, but that's my upbeat scenario. The negative one, you know, depends how dark you want me to get. You know, I think that if you have continued protectionism, high tariffs, continued immigration restriction, a growing overvaluation in the stock market, which is ever

more reliant on a frenzy in a few big tech companies, an administration that wants to punish its critics, that wants to use the tools of economic policy to punish its critics, whether it is to push around the Fed or whether it is to go after companies that it doesn't like. Then you are systematically, I think, undermining the pillars that have made the American economy strong. And, you know, things could unravel quite quickly. And, you know, things like The US right now, because it has the dollar, the world's reserve currency, because it's the biggest, strongest economy in the world, I think there is a kind of presumption often in the US that it must always be this way. And that's not necessarily the case. Foreigners could take fright. They could leave dollar assets. The dollar could tumble further. Interest rates could rise. The US could suddenly become much less productive and a much tougher place and a much worse place for ordinary American workers who've already had, many of whom have already had quite a tough time. So you can you can paint a pretty grim picture if you put your mind to it. Well, it sounds like you didn't have to work that hard to paint that grim picture.

I really want, I don't think that has to happen. I'm not only by nature and optimist. I do think the resilience of the U.S. economy is remarkable. I also think that in the end, this administration will not want to preside over the destruction of the American economy. And so in areas where it sees that happening, it will actually reverse course. Well, Zani Minton Bedros, thank you so much for returning to our show. I really appreciate it. You're very welcome. It was great to chat with you, as always. Zani Minton Beddoes is the editor-in-chief of The Economist. She's also the host of The Insider, The Economist's New Streaming Show. Tomorrow on Fresh Air, filmmaker Guillermo del Toro joins us

to talk about his new reimagining of Frankenstein. It gets to themes he's been obsessed with, a man who wants to be a god, men who behave like monsters, father-son relationships, religion, empathy, and cruelty. His other films include Pan's Labyrinth and The Shape of Water. I hope you'll join us. To keep up with what's on the show and get highlights of our interviews, follow us on Instagram at NPR Fresh Air. Reschair's executive producer is Danny Miller. Our technical director and engineer is Audrey Bentham. Our managing producer is Sam Brigger.

Our interviews and reviews are produced and edited by Phyllis Myers, Anne Rae Boldenado, Lauren Crenzel, Teresa Madden, Monique Nazareth, Thea Chaloner, Susan Yucundi, and Anna Bauman. Our digital media producer is Molly C.V. Nestor. Our consulting visual producer is Hope Wilson. Roberta Shorok directs the show. Our co-host is Tanya Mosley. I'm Terry Gross.