The NPR Politics Podcast - Checking The Receipts On Trump's Tariff Proposal

Episode Date: November 26, 2024

In a post on Truth Social Monday evening, President-elect Trump announced he plans to enact tariffs on goods from Canada, China and Mexico on his first day in office. How could this plan work, what would the economic impacts be, and will it really happen? This episode: political correspondent Susan Davis, White House correspondent Franco Ordoñez, and chief economics correspondent Scott Horsley.The podcast is produced by Jeongyoon Han and Kelli Wessinger, and edited by Casey Morell. Our executive producer is Muthoni Muturi.Listen to every episode of the NPR Politics Podcast sponsor-free, unlock access to bonus episodes with more from the NPR Politics team, and support public media when you sign up for The NPR Politics Podcast+ at plus.npr.org/politics.Learn more about sponsor message choices: podcastchoices.com/adchoicesNPR Privacy Policy

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Hey there, it's the NPR Politics podcast. I'm Susan Davis, I cover politics. I'm Frank Ordonez, I cover the White House. And longtime friend of the pod, NPR's chief economics correspondent Scott Horsley is with us today. Hi Scott. Hi, good to be with y'all. Today we're talking tariffs because last night President-elect Donald Trump announced on social media that he's planning to impose tariffs on all goods coming from Canada, Mexico, and China, the US's three largest trading partners on his very first day in office. Scott, let's do a little service to our listeners here.

Let's start with the most basic question. What's a tariff and how do they work? A tariff is a tax that is imposed on imported goods. The President-elect likes to say that it's the foreign country that is exporting the goods that pays the tariff, but economists are pretty much in agreement that the lion share of this tax is borne by the businesses here in the US and the consumers here in the US that use the tariffs. So in this case, you can think of this as a 25% tax on guacamole

coming from Mexico three weeks before the Super Bowl. Okay, can you now talk through exactly what Donald Trump is saying he's doing and what the economic consequences could be? Well he says he's going to attach these tariffs on all imports from Mexico, Canada, and China until he gets some relief from those countries on illegal immigration and illegal drugs coming into the US. He says that those countries have the power to stop undocumented immigration and illegal drugs flowing into the US and that until they do so, they'll be paying a heavy price. And just to be clear, this is an economic policy that he would be enacting in response

to immigration and drug issues. It's not sort of an economic retaliation against these countries. It's because he wants them to solve a different problem. That's correct. Franco, a bit of a surprise announcement. I think we're back to the days where the president-elect and soon-to-be president is announcing policies at all hour of the night and day. But this isn't a surprise policy.

This is exactly what Donald Trump campaigned on. He would say over and over and over again, his favorite word is tariff. He used it as a weapon against other countries to get things that he wants. I mean, just one example is using tariffs against Mexico. He tells this story during the campaign that that's how he got the remain in Mexico policy. That's the policy, of course, that requires asylum seekers to stay in Mexico as their cases go through the courts. He tells this long story about having a conversation with a Mexican diplomat and them saying, no, no, no, no asylum seekers can stay in Mexico. He says, yes, yes, yes. They say no, no, no. And then he says, well, if you don't do this, I am going to slap these massive tariffs on you. He claims within hours,

they had a deal done. Now he says that's what he's going to do again. And this is the kind of thing that he does over and over again. I mean, we are eight weeks away from inauguration day to be this early. There is some tactics here. Scott, though, I do think it's important to remind people that this wouldn't be the first time Donald Trump has imposed tariffs. And in fact, the U.S. still has tariffs imposed that were imparted under Donald Trump that Joe Biden continued. That's true. The first Trump administration raised tariffs by a considerable degree. There were a lot of those tariffs that went through sort of due process at the Commerce Department or the US Trade Representative. Then there were threats of tariffs which came from the President's social media accounts, often late in the evening. A lot of those tariffs didn't

come to pass, so I think people are waiting to see whether this is going to be a genuine threat or just a lot of sound and fury signifying not much but just the threat of these terrorists has generated lots of headlines for the president-elect and you know maybe that's part of his goal here I mean on the sound and fury point I mean yes he definitely announced a lot of terrorists in his first administration he made threats of very widespread tariffs but in the end most of them were targeted tariffs that hit specific things. What he is proposing now are across the board tariffs

on Mexico, across the board tariffs on Canada, as well as China. This would have a much more significant impact. And this could just be a threat, right? I mean, in the past, he has threatened big consequences, but they didn't actually happen. This is the kind of thing that the president-elect does. I mean, this is part of his MO.

This is how he impacts change. And I will also add, this is something that bothers diplomats. When I talk to diplomats about, well, what would it be like going back know, going back to Trump versus Biden? This is something that is often brought up. You were talking about kind of using trade to talk about border policy, kind of like they're mixing the buckets of issues. This is something that really drives diplomats mad because Trump will use one issue to kind of attack another.

You know, he kind of mixes these buckets of issues. If these tariffs were actually to go into effect, though, this would have serious economic consequences. I mean, we heard over and over again throughout the campaign how unhappy people were with the high price of groceries. Well, prices in the produce section of the supermarket would soar if you had to put a 25% tax on all the fresh produce coming from Mexico.

What's more, the North American auto industry, which is very integrated among all three countries, would be seriously handicapped. That would affect U.S. manufacturing jobs in the Midwest, people who supported Donald Trump. So if this threat were actually to be carried out, it would have serious economic consequences. But, Franco, to that end, the political contradiction here is if this policy was enacted, one of the most clear impacts on everyday people is grocery store bills would go up. And how many times did we hear from voters in this past election that they were voting

for Donald Trump because they wanted to see those grocery prices go down? Absolutely. And I think that is the reason why so many Trump supporters, you know, have really kind of questioned how serious this is. I mean, I think the phrasing that many people use is to take Trump seriously, but not take him literally. All right. Let's take a quick break and we'll talk more about this when we get back.

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And thank you. And we're back. And this is a policy. If Donald Trump chooses to do it, he can pretty much do all on his own. Yeah. I mean, it is complicated, but the U.S. Constitution does give Congress the authority to issue tariffs. That said, they also have the authority to delegate it to presidents, and that's what they have been doing for decades. And that's why Trump was able to basically freely issue tariffs quite a bit in his first administration. It's also one of those ways in which Donald Trump is economically changing the Republican

Party because the Republican Party has been opposed to the idea of tariffs. And here we are where the leader of the party is now arguably the loudest advocate in the world for that. In so many ways, Trump has expanded the presidential powers for those exact reasons. Scott, is there any, I mean, as you noted in the beginning of the conversation, that there is broad consensus among economists that this would impart higher costs on consumers

or businesses. Is there an economic argument that the Donald Trump worldview is relying on to say that this could actually be good policy? If you put these kinds of economic consequences in play for the sake of a bargaining chip, it creates a lot of uncertainty. It makes it hard for businesses to know what's coming down the pike. And we know that businesses don't like uncertainty. Businesses like to know what are the rules of the road?

How can we comply with those rules of the road? And we want to know that they're going to be the same tomorrow and next week and next year that they were yesterday. So just rattling this tariff saber in this way I think creates uncertainty and discourages people from wanting to do business under these circumstances. Frank, do you have any sense of how the effective countries are responding or might respond? I mean they're responding pretty aggressively as well. Mexico

issued a statement just a little while ago saying that for every tariff that the United States imposes that there will be a response in kind. They went so far as essentially pointing out that General Motors, Stellantis, and Ford Motor Company have plants in Mexico and that those would be impacted. They have been in this situation before, Mexico that is. I think if any country knows kind of the tactics of president-elect Trump better, it is Mexico. So it will be interesting to see how they respond.

I will add though, while the response does kind of seem muted in some ways because it does seem like this is a negotiating tactic, but it is having some real world impacts in these countries. I mean, the headlines that we're seeing here are headlines that you're seeing in Mexico as well. You have experts and pundits. They're saying, this is terrible. This is the worst thing that can happen.

And they are putting political pressure on their leaders to respond. So I do think this is part of Trump's strategy to kind of create this culture of fear to affect change. And for him and his team and his allies, they would certainly argue that if they can use that fear to disrupt and create change, then that could be good. I will say too, there's, there's a growing bipartisan consensus in this country that if there they can use that fear to disrupt and create change, then that could be good. I will say too, there's, there's a growing

bipartisan consensus in this country that if there is one major rival for the United States, both economically and strategically, it is China. And you know, in the campaign, Trump talked about imposing 60% tariffs on China and 10 or 20% tariffs on other countries. Well here he's doing the opposite. He's imposing two and a half times the tariff rate on Mexico and Canada, our next-door neighbors, as he is on China. And every time you

levy a big tax on a country other than China, what you're really doing is handing an advantage to China. China is already the number one exporter in the world. And if you make it harder for Canada, harder for Mexico to compete, then you're basically just serving up a favor to the Chinese government. I mean, I think you're absolutely right. I just question whether Trump is looking at it that way.

I mean, obviously Trump looks at these things very much through a political lens in the lens of his own interests and his supporters, they are going to see this as an example of how Trump kind of uses America's strength to create change that can benefit them. I mean, the political support for this kind of activity is real. I mean, even among Democrats. I mean, there's a reason why Biden kept tariffs in place because the political support is there.

And the concern is if you don't do that or you take that away, you could lose support. My son is currently going through a hitting phase where he will, for no reason at all, hit my daughter really hard and she will just look at me and yell, I was just sitting here, I wasn't even doing anything and in this metaphor that's Canada to me Like I understand the Mexico part of this policy

Especially because of illegal immigration and drugs coming across the border China as Scotch is well articulated as seen as the largest global rival to the US I'm not sure I fully understand the Canada part of this broad sweeping tariff punishment Well, I mean there is a connection with immigration here as well. I mean, the Biden administration has increased enforcement on the southern border and there has been an increase from Canada. People are flying to Canada or getting to Canada and coming through the northern border. So there is a immigration component here that Trump is seeking to address, but

there's also a personal relationship that he has had with Trudeau and it has been pretty rocky for a long time. You got to wonder if that is also part of this. All right. That is it for us today. Scott Horsley, thank you as always. Good to be with you all. I'm Susan Davis. I cover politics. And I'm Frank Ordonez. I cover the White House. And thanks for listening to the NPR Politics Podcast. Take a moment to unwind and give thanks this week with NPR's all songs considered as listeners

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