Upstream - Trade Wars and Tariffs w/ Richard Wolff

Episode Date: February 11, 2025

If you know anything about the way the world works—and even more so if you’re someone who’s an expert in economics, political economy, etc.—then you’ll know that the narratives and rhetoric coming out of the White House on a whole variety of topics is, well, with the kindest interpretation, confused. Some harsher critics might say these narratives do a violence to reality. And it’s no different with the current discussion around tariffs: it’s all bluster, bloviation, and, ultimately, theater.  What are tariffs, how are they being deployed and weaponized, and why? If these are questions you’ve considered over the past few weeks, you’re in the right place and today’s guest will walk you through all of the answers you wish you didn’t have to ask about what’s happening with the trade wars being concocted by the US against China, Mexico, and Canada.  Richard Wolff is an economist, Professor Emeritus of Economics at the University of Massachusetts Amherst, currently a Visiting Professor in the Graduate Program in International Affairs of the New School in New York, host of the Economic Update podcast, and founder of Democracy at Work.  In this episode, we explore what tariffs are, how they work, and how and why the Trump administration is weaponizing them against China, Mexico, and Canada. We explore the impending decline of the U.S. as the leading global imperial power, why politicians in this country are in denial about the trajectory of the country’s economy, and much more.  Further Resources Democracy at Work Related Episodes: The Recession isn't Over, but is Capitalism? with Richard Wolff The Sickness is the System with Richard Wolff Inflation with Richard Wolff & Dean Baker Intermission music: "The System Works for Them” by Aus Rotten Upstream is a labor of love—we couldn't keep this project going without the generosity of our listeners and fans. Subscribe to our Patreon at patreon.com/upstreampodcast or please consider chipping in a one-time or recurring donation at www.upstreampodcast.org/support If your organization wants to sponsor one of our upcoming documentaries, we have a number of sponsorship packages available. Find out more at  upstreampodcast.org/sponsorship For more from Upstream, visit www.upstreampodcast.org and follow us on Twitter, Instagram, Facebook, and Bluesky. You can also subscribe to us on Apple Podcasts, Spotify, or wherever you listen to your favorite podcasts.

Ah The leaders of Mexico made crystal clear, you can build a wall, we won't pay a nickel toward it. And they never did. And Mr. Trump can't talk about the wall very much because it was never paid for by Mexico. Well, it's the same issue here. You may talk a lot about tariffs, you may threaten people with tariffs, but those other countries don't pay the tariff, never did, aren't now, and won't. That has to be understood. But it's still, as a performance, as a headline grabber, it's very dramatic to announce,

I'm doing this to punish China. You're listening to Upstream. Upstream. Upstream. Upstream. A show about political economy and society that invites you to unlearn everything you thought you knew about the world around you. I'm Della Duncan. show about political economy and society that invites you to unlearn everything you thought you knew about the world around you. I'm Della Duncan. And I'm Robert Raymond. If you know

anything about the way the world works, and even more so if you're someone who's an expert in economics, political economy, etc., then you'll know that the narratives and rhetoric coming out of the White House on a whole variety of topics is, well, with the kindest of interpretation, confused. Some harsher critics might say these narratives do a violence to reality. And it's no different with the current discussion around tariffs. It's all bluster, bloviation, and ultimately, theater. What are tariffs? How are they being deployed and weaponized and why?

If these are questions you've considered over the past weeks, you're in the right place. And today's guest will walk you through all the answers you wish you didn't have to ask about what's happening with the trade wars being concocted by the US against China, Mexico, and Canada. Richard Wolff is an economist, professor emeritus of economics at the University of Massachusetts Amherst, currently a visiting professor in the graduate program in the International Affairs of the New School in New York, host of the Economic Update podcast, and founder of Democracy at Work. In this episode, we explore what tariffs are, how they work, and how and why the Trump administration

is weaponizing them against China, Mexico, and Canada. We explore the impending decline of the U.S. as the leading global imperial power, why politicians in this country are in denial about the trajectory of the country's economy, and much more. And before we get started, Upstream is almost entirely listener-funded. We couldn't keep this project going without your support. There are a number of ways that you can support us financially. You can sign up to be a Patreon subscriber, which will give you access to bi-weekly episodes, ranging from conversations to readings and more. Signing up for Patreon is a great way to make Upstream a weekly show,

and it will also give you access to our entire back catalogue of Patreon episodes, along with stickers and bumper stickers at certain subscription tiers. Sign up and find out more at patreon.com forward slash upstream podcast. And if Patreon's not your thing, you can also make a tax deductible, recurring, or one-time donation on our website, upstreampodcast.org forward slash support. Through this support, you'll be helping keep upstream sustainable and helping us to keep this project going. Socialist political education podcasts are not easy to fund, so thank you in advance

for the crucial support. And now, here's Robert in conversation with Richard Wolff. All right, Professor Wolff, it is wonderful to have you back on the show. Well, I'm very glad to be here and to resume our conversation. And just in case there are any listeners out there who aren't familiar with you even though you have been on the show several times at this point, I'm wondering if you can introduce yourself and talk a bit about the work that you do. Okay, I was for most of my adult life a professor of economics at Yale University, at the City University of New York, the longest stint at the University of Massachusetts in

Amherst, and currently at the New School University in New York City. I've always been politically active. I am a product of the elite universities of the United States, Harvard, Stanford, and Yale. I spent 10 years of my life there. The very nice people there tried their best to persuade me that capitalism was the best thing since sliced bread. They did their best, but it didn't work. They didn't persuade me. And my life since graduating from the 10 years of the Ivy League has only made me more persuaded than I was before that the human race can do much better than capitalism and should have done so long ago. When I retired in 2008, the worst crisis of capitalism since the Great Depression of the 1930s exploded. And long story short, I went from being an academic to being the producer of radio and television interviews, videos, and I've been doing that since 2008, dealing with the unfolding crisis

crisis of capitalism, particularly of American capitalism, because this is a very difficult time. The American Empire built up by that capitalism is now in decline. The deterioration of American capitalism itself is both a cause and a consequence of a declining empire. In other words, the empire and the system are now reinforcing one another's problems, plunging the country into divisiveness, division, bitterness, and increasingly desperate acts, which is perhaps what we're going to be talking about today. But it is in any case what my commentary written and verbal and video nowadays focuses on. Yeah, and thank you so much. And we're going to link to and share in our introduction, of course, all about your excellent show economic update and your video updates and all of the stuff that you do.

It's really, really helpful information for people who want to learn more about everything that you just talked about and made in a very accessible way to people such as myself who might not be experts in economics necessarily. So speaking of being an expert in economics, before we get into sort of talking about the current events in terms of the trade war, we are talking about tariffs today, but I think it might be helpful to just sort of start with a general 101 around the topic of tariffs.

I think there's a lot of confusion around how they work. You know, it's easy to get lost in the various cul-de-sacs of analysis when it comes to tariffs. And so maybe just to start, you could tell us, like, what are tariffs? How do they work? And most importantly, maybe for the sake of this conversation, who ends up paying for them? Okay, good. Tariffs are, let's start, absolutely nothing new. Tariffs are a kind of tax. You know, we have different kinds of taxes. If you go into a store in much of the United States and you buy a shirt, you will pay an

amount of money that equals the price of the shirt being charged by the store plus something that's called a sales tax. So what that means is there's a sum of money required that you pay sum of money required that you pay when you buy an object such as that shirt. And the tax is usually a percentage, 5%, 6%, of the value of the item you're buying. So that, let's say the shirt cost $10 and we had a 5% sales tax, you would be charged $10.50. $10 reimburses the store for giving you the shirt and 50 cents is what the store is legally required to collect from you as a tax, and then that store is legally required to send that money to whoever the taxing authority happens to be. If it's a federal tax, that 50 cents goes to Washington. If it's a state tax, it goes to the state tax department, and in those American cities, and there are quite

a bunch of them, where it's the city that charges the tax, then that money is sent to the city office, and these are revenues used by local, state, and federal governments to pay for many of the things that they do. We used to call something an import duty or an import tax when, very simply, an object produced in another country was purchased inside the United States. In other words, any item that crosses the border into the United States would have the same situation. You could buy it at your local store. Again, let's assume it's a $10 bottle of wine from France. You'd have to give the store owner $10 to get that $10 bottle of wine. And then, let's assume that the import duty was 5%, you would have to charge the person an additional 50 cents, which would go to the federal government, because only the federal government is allowed in our country under the law—this could be changed,

but that's what the law is now—only theiff. So just understand that tariff is a tax. It's a particular tax because it only applies to an article coming in from outside. Now, a government that chooses to tax its own people can impose whatever taxes it wants. So here in the United States, let's just take the federal government. They have a tax on our income. We all have to pay an income tax, then the government also taxes certain particular items, motor fuel, cigarettes, and so on. Pay a special tax. You may not know it, but most of what you pay for a gallon of gas into your car isn't the cost of the gas. That's relatively low. But there are lots of taxes. The federal government taxes motor fuel. States typically tax motor fuel. Everybody piles

on and the price you pay at the pump is the cost of the gasoline plus any and all taxes. And then the government can decide on top of it to tax imported items, anything as I said that comes in from the rest of the world. But by now you should be clear that a tariff is a tax levied by the United States upon United States businesses and individuals. If you hear a politician, I'll pick one, Donald Trump, talk about I'm going to use the tariff to really stick it to the Canadians or the Mexicans or the Russians or the Chinese. This is either Mr. Trump not understanding what a tariff is or more deliberately trying to suggest that he's doing something that damages foreigners rather than that costs Americans. Whatever, I can't know his inner mind, obviously, so I can't be sure what his motivation is.

But I can tell you what a tariff does. A tariff is not something charged to the foreigners who produce the object that we import, not to the producer, not to their government. The American government can tax only Americans. They can't tax other people. They wouldn't allow it any more than we would allow other governments to tax us. Other governments may impose tariffs, of course, just like we do as a nation, and then their citizens have to pay their government whatever the tariff is they impose. tariff is they impose. Lastly, you can impose a general tariff. That means, for example, five percent on anything and everything that comes into the United States. It's a kind of a general blanket tariff. Or you can impose a tariff on a particular country. And then you would say only if an object comes from that country into the United States is the buyer here in the United States, a business or

an individual, required to send Uncle Sam the tariff. Other countries don't have that. For example, we the United States have tariffs on goods from China. It does not have those tariffs on the other countries in Asia other than China. It has decided to use the tariff in that way as a weapon, an economic weapon, against a particular target, China. Another way a tariff can be particular is it can be particular on a particular object. So, for example, the general tariff on Chinese goods these days is probably somewhere in the neighborhood of 30 or 40%. It changes so often I haven't kept up with it. But here's a particular item from China on which the tariff is 100%. So here you have a tariff that's particular in terms of the country it's imposed on and is also particular in the product. Electric cars and vehicles produced in China coming into the States right now would have to pay a hundred percent. Mr. Trump in his first

time as president hit the Chinese electric vehicles with what I recall as 27.5% tariff. Mr. Biden as president subsequently raised the tariff to 100%. He went, Mr. Trump, one better or one worse depending on your point of view. So here's how it works for an electric car. The Chinese now produce, right now as we're speaking, the best electric vehicles at the lowest price. The corporation that has achieved that and thereby out competed everyone else, including Tesla, is called the BYD Corporation. If you've never heard of it, I'm about to explain to you why you haven't. B is in boy, Y is in yellow, D is in dog, the BYD corporation. If you were to import that into the United States, either as an individual who simply wants to own the car or as a company that wants to

use for example electric trucks instead of fossil fuel burning trucks because that transition that way is going on across industry. You would have to pay the price of the truck charged by the BYD company. And then when the truck arrived here in New York and you went down to the docks to pick it up or from a dealer to pick it up, the docks or the dealer would say to you, you've got to give me let's say $30,000 if that's what they charge for the truck because I've got to pay that to the BYD folks in China. But then you've got to give me 100% of that, in other words, another $30,000 because that's the tariff I have to

send to Uncle Sam. If I don't collect the tariff and sell you the truck, I will be committing a crime for which I could be fined and arrested and jailed or all of them. So I'm not going to do that. Therefore, you have to give me $60,000. Half to buy the car and half to pay the tariff. The reason you don't know about BYD is no American is going to do that, which was the purpose of the tariff. It is an act of economic warfare launched by the United States against China because it means that the Chinese cannot sell their top-of-the-line electric vehicles, cars or trucks to Americans. Why not? Well, American companies, for that matter European companies, are also making electric cars and trucks. They're not as good as the BYD,

and they're not as cheap. Let's say they cost, just for sake of argument, $55,000. just for the sake of argument, $55,000. They would be priced at that price here in America because these companies know that an American would have to pay whatever they charge for an electric vehicle because going to get the Chinese competitor will cost them more. They're not going to do it. They're not going to pay 60,000 for that Chinese car if they can pay only 55,000 here. So the net effect is that Americans will not, as long as this lasts, they will not see BYD cars on the road here in the United States. However, if you go to Asia, Africa, Latin America, and Europe, you will see BYD cars and trucks

because they have not applied tariffs in those parts of the world against the Chinese. Only the United States, I believe at this point, has done that. There may be a few other countries, but not many and maybe not any. Is that part clear as to how the basics work? Absolutely, yeah. Thank you so much for that. And actually, I felt for a minute like I was listening to an episode of your show. And I forgot I have to come in and ask you another question. I think a quick note to just on the spelling of the word tariff. I literally spell it wrong every single time. There's just a part of my brain that really wants to spell it with two R's and one F. But okay, so just to summarize very

quickly what you said, a tariff is a tax on an import coming from outside the country, and it's passed on to consumers of whatever product it is and just like a tax, an internal regular tax, like a federal tax or a state tax or a local municipal tax. WOLFF Let me correct you just one little detail. There's no law requiring the importer to pass it on, if it's a business, to pass it on to the consumer. The government doesn't care who pays that tariff. Somebody's got to. If that business that buys the thing and then resells it in its store, if they want to pick up a portion of that tariff themselves, for example, offer it to the public at $50, then they would have to make up the missing 10. By the way, there are people who do that

because it's worth it to them. They make such a big profit when they handle imported goods handle imported goods that it's worth it for them to lower the price, pick up the part of the tariff themselves, because they're gonna make so much money when the buyer buys it, that in effect it's worth it for them. No, got it. Yeah, that's a really important point. Yeah, because what businesses love to do, of course, is to pass it on to the consumer. They don't want to pay it. They would like to pass it on to the consumer. And one of the ways you fool consumers into accepting that is to think that somehow this tax coming from the government is your responsibility. It is not. It is the requirement. By the way, the person who has to pay it is the importer. So if you're buying a bottle of wine at your

local liquor store, it's the store or the wholesaler from whom the store got it who is required to pay the tariff. You're not. The price you pay is what you negotiate with the seller. You are not obliged to pay the tariff. Whoever the importer is, that's the person who's required to. And you may have already made this point, but just to clarify and for my own curiosity, is that the case as well with sales tax or is that required to be passed on to the consumer? That's a good question I don't know what the law says. I don't know who's

my guess is that it's the store because it's the store that that Transmits the sales taxes if you look closely You'll see that the cash register at the store where you buy a shirt or an appliance or whatever, that the little slip you get, the receipt, separates the price of the item that was sold to you from the sales tax. And at the end of each day the store is required to compute all the money they took in and send it to the government. Now it's true, you could ask me the same question. Could they take the sum total of what they got in sales taxes and send only half of it

to the government they could do that but then they have to find some other way to get the other half to the government in short it's the store that pays it and you know that it hurts them because they are trying every which way not not to have sales taxes So let's talk about what's currently happening. You talked a little bit about the situation with China. So there was an increase in the rate of the tariffs just recently with the new Trump administration. There's also been tariffs placed on imports coming from Mexico and Canada, although I think that those have began to sort of fizzle out, at least

temporarily. So maybe could you just sketch us a picture of what the Trump administration and the capital behind it are doing and what they think that they're going to be accomplishing with this. I know you can't get into their heads, but you know what what is the point of this? Sure. Let's start with why suddenly we're hearing all this noise about tariffs when we really haven't for a while, except perhaps for the first Trump presidency, the first four years 2016 to 2020. The reason you're hearing about it is because Mr. Trump is excited about, devoted to, eager to deploy this particular economic weapon. And here's why. Some years ago, the Congress, at a time when nobody was talking tariffs and nobody was particularly using tariffs, but at that time the Congress, in its wisdom, if that's what you

think it is, gave the president a remarkable amount of independent authority to impose tariffs. When Mr. Trump became president, and I don't think much before because he didn't talk about tariffs much before, it is a bit of a complicated issue and how shall I say this, those kinds of issues are not Mr. Trump's forte. He discovered shortly into his presidency that he had real power here. He didn't have to go to Congress, he didn't have to get authority, he could just wield this weapon and he could do so all by himself wield this weapon and he could do so all by himself so he could position himself in the public Consciousness as the wielder of a powerful weapon and he didn't have that many other ways to do that

So he could hit the Russians With a tariff He could hit the Chinese. He could smite his enemies wherever he found them around the world. And by saying or implying that the tariff was paid by the other, it seemed a wonderful way to say, look, I'm protecting America and it's costing the enemy. It was the same logic that led him to say, I'm going to build a wall across the southern border of the United States and I'm going to make Mexico pay for it. There's your analogy. I'm going to wield a tariff and I'm going to make the bad Chinese or the bad fill in the blank pay for it. Most people understood and the leaders of Mexico made crystal clear, you can build a wall we won't pay a nickel toward it. And they never did. And Mr. Trump can't talk about

the wall very much because it was never paid for by Mexico. Well, it's the same issue here. You may talk a lot about tariffs. You may threaten people with tariffs. But those other countries don't pay the tariff, never did, aren't now, and won't. That has to be understood. But it's still, as a performance, as a headline grabber, it's very dramatic to announce, I'm doing this to punish China. I don't know, for Taiwan or for something else. The biggest thing that is said about China is quote unquote that they are aggressive. They are becoming a richer country and they want to throw their weight around phrases like that.

They are aggressive. They are eating into the United States's sphere of influence. Let me take a moment for your audience so it can understand why these kinds of statements that Americans make, like Trump, serve to make the rest of the world think the United States is dangerous and crazy. Here's the reasons. I'm not asking you to agree or disagree. Just know how differently many Americans grasp these issues from how the rest of the world does. The rest of the world knows that around the world, on every continent, the United States continues to maintain between seven and eight hundred military bases. China has next to none. Depending on how you quite define it, you may say they have three or four. That's it. Who is aggressive here and who isn't strikes the rest of the world differently from the

way Americans seem to see it. The United States has a very powerful naval force known as the Seventh Fleet. It now regularly sits in and patrols the ocean off the coast of China, just a few miles off the coast, and in particular a body of water known as the South China Sea. There is no comparable Chinese naval force sitting off the coast of the United States. Who's aggressive? Who isn't? Back in the 1950s, there was a war on the border of China.

We called it the Korean War. An enormous amount of American soldiers, planes, ships, bombers fought a war there, a war that eventually involved Chinese soldiers. But the war wasn't on our border, the war was on their border. In other words, this use of the notion we are punishing China with tariffs because they are aggressive is, I'll be very polite now. Odd. Here's another argument. We are punishing China—and you'll see the relevance of these arguments because they're not so different from the arguments often made in the case of tariffs by whoever is imposing them. So the argument is made we're punishing China because in their society the government subsidizes production. So their companies can charge lower prices because they don't have to make the price they

charge cover their costs and their profits because the government gives them money. By the way, it is quite true that in many ways the government supports the production of goods and services in China. The problem with the argument is all governments do, and all governments do that in all kinds of direct and indirect ways. The Chinese, I don't know of any scholar who would argue that the Chinese are unique in doing this, and it would be very hard to sustain the argument without an enormous amount of study that hasn't been done, that they do so more than say the United States does with its industries. There is a difference in that half of the Chinese economy is government-owned and operated enterprises, whereas in the United States, the government's role is much, much smaller. That's a structural difference. The United States the government's role is much much smaller. That's a structural

difference. The United States, if it wanted to compete and believe that this was the advantage the Chinese have, well they are free to develop their own state-owned and operated enterprises. They have chosen not to do so, which is fine, but it's got nothing to do with the Chinese, who made a different decision about how to organize their own industries. Now let's come to what Mr. Trump did. Right out of the bat, literally days after he was inaugurated, Right out of the bat, literally days after he was inaugurated, he said he was going to hit Mexico and Canada with 25% across-the-board tariffs. In other words, anything made in Canada that arrives in the United States, the price of it would go up all at once by 25% because whatever we bought from them we'd have to pay them plus 25% that we

Americans would pay to Uncle Sam, either we as importers who are businesses or as importers who are individuals. And the same for Mexico. What can we say about this? Well, it is a remarkable act. First of all, it is a direct violation of a treaty that has been in effect since the 1990s, a treaty between the United States, Mexico and Canada, in which all three presidents of those countries signing and all three of their parliaments approving that essentially a free zone comprises the three countries. And the key aspect of this is any good that crosses a border from Mexico to Canada, from Canada to the US, from US to Mexico. No tariffs. Each of the three countries agrees not to impose a tariff on the products of any of them. And they also allow for the movement of people. Mr. Trump unilaterally violated the treaty. It gets better. This was

originally called, when it was first passed, NAFTA, North American Free Trade Agreement, NAFTA. During Mr. Trump's first presidency, that treaty lapsed. I believe it lapsed. It may have been that Mr. Trump wanted to revise it. Anyway, they revised the treaty and they all signed it again, and they kept the no tariff provision. And the signatory of the new bill, which is in effect now, And the signatory of the new bill, which is in effect now, was none other than Donald Trump. So, the man who violated the treaty turns out to be the same man who signed the treaty on behalf of the United States during his first administration. So if you're going to assess what this all means, one of the first things you'll have to grasp is that it is a screaming, loud message to

the rest of the world that when you deal with the United States, or maybe when you deal with the United States or maybe when you deal just with Mr. Trump, if you think signed treaties will be observed, will be abided by, and let's remember that's why treaties are written, you are sadly mistaken. The United States doesn't care. And they threatened to hit Mexico and Canada with 25%. That means that both of those countries, for whom the United States is the single most important export market. That the goods that Mexico exports will now cost in the United States 25% more than they cost last week. Because every buyer, as I explained, will have to pay for the good from Mexico, pay what the producer charges,

plus 25% of that going to Uncle Sam from the American. And what the Canadians knew, as would anybody, is that this hurts their economy mightily. Large numbers of Americans are not going to buy the Mexican good, suddenly costing them 25% more. Just to give you an example, Just to give you an example, over recent years many automobile companies, including the United States' GM, Ford, Stellantis, and so on, have built factories at great expense in Mexico, near its border with the United States to take advantage of the much lower wages

they have to pay Mexican workers compared to what they would have to pay American workers. So they closed their factories in the United States and moved them to Mexico because then they would pay less for work and eventually sell those cars at the nice high American price and that would give them more profits which is why they do what they do because profits is what they seek. All of this would have given jobs to Mexicans. All of this would have cost the Mexican government to build roads or build bigger roads, better roads, railroads, all the facilities that support a car manufacturing center. But now with this tariff, every one of those cars,

tariff, every one of those cars, if you bring it into the United States, is suddenly, overnight, going to cost 25% more. Think of it. A $40,000 car is now going to cost $50,000. You know what? You know what? Americans are going to buy many fewer of those Mexican cars. They'll switch to cars made here in the United States because their prize wouldn't have gone up at all. Or maybe cars made in Europe. Or maybe cars made in Asia or Africa. This is a terrible threat to Mexico. And much the same applies to Canada, whose biggest single customer, you guessed it, is the United States. So Mr. Trump is saying, I will break the treaty and threaten you with economic disaster. You in Mexico, you in Canada. The Mexicans and the Canadians reacted, I think it's fair to say, with stunned disbelief. disbelief. These are neighboring countries. These are countries that we have no major conflict with and haven't for a long time. These are countries, by the way, that buy a good deal of American exports, both of them. Both of them. So what's going on here?

According to the President, what bothered him was the flow of drugs into the United on the one hand, and he didn't define what he meant, national security concerns. And then he made remarkable jokes. The most remarkable, he believes that Canada would be better off by becoming the 51st state of the United States. And if you saw the clip, this is not a joke. He didn't mean it as a joke. He didn't say it as a joke. He said it straightforwardly the way he did a few days later with his suggestion that the United States would take over the Gaza Strip and use it to make luxury beachfront hotels. The Riviera of the Middle East, right? Exactly.

So the leaders of Mexico, Mrs. Scheinbaum, and the leader of Canada, Justin Turow. There's an election going on there, so it's not clear exactly who the leader will be. But both of them reacted by saying, our country is not for sale, our country cannot be treated this way. If you want to discuss drug traffic, border security, anything else, we're happy to sit down with you. We're happy to work out as best we can a solution to the problem. This treaty breaking, threatening us with economic catastrophe, no, it's not a proper way to function. So while Mr. Trump may look the big strong bully in the neighborhood to the

American people, and he obviously thinks that will win him support or votes, to votes to the Canadians on our north and the Mexicans to our south. This was nothing short than an outrageous return to the colonialism that was once practiced over both the Mexican and the Canadian territories, which all of them rejected, which even the United States, let's remember, rejected, having somebody else tell us what to do. This is a setback for the United States, which unfortunately it doesn't seem to register. So Mrs. Scheinbaum was able to say to him, okay, we're going to send an extra bunch of soldiers to the border to help block the flow of drugs. She had earlier said to Mr. Trump, there are two things that your behavior suggests. One is that I would remind you that the flow of drugs is in one direction, through Mexico to the United States. If your people didn't buy all of those drugs, we wouldn't have a problem at the border. You might want to deal with that part of the problem before you come threatening us. And number two,

We also are a major buyer of your products and especially if you treat us this way, there will be domestic pressures that I can't hold back to retaliate, to respond to the tariffs you threaten us with, with comparable tariffs that we will threaten you with. And basically Canada said the same. Because apparently Mr. Trump hadn't thought this through, or his advisors hadn't, he immediately responded to both of those leaders for making, what were gestures for them, the troops on the border and so on, he responded by suspending the imposition of the tariffs for one month. So they're not in effect now and they won't go into effect until the 1st of March. They had been intended to go into effect the 1st of February. So it's Mr. Trump doing huge damage to the relationships between the two neighbors and not even collecting any tariffs as

a result and getting minor gestures. But for his base he is revving up the notion that his bullying threats have gotten huge concessions from these countries, who he, by the way, criticized for abusing the United States, taking advantage of the United States. He says the same thing about Europe as a whole. So he's portraying the United States as a victim and he who has finally got the strength to stand up and do something about it. You're listening to an Upstream Conversation with Richard Wolff. We'll be right back. My God! My God! My God! My God! My God!

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My God! My God! My God! My God! My God! My God! My God! My God! I'll be worth it and you know it son Psycho! Hand this court to the killers Please fuck him up Psycho! Fuck rocks, your name is Michelle And I'm gonna fuck the gringes Fuck the audience, fuck the guys Reckless, you can't say

I shit you fucking hater My shit you have to create Living proof that the system works That the system works for them Spend your hard-earned money Not to pay their debt Living broke, that system works That system works for them

Spend your hard-earned money Not to pay their debt Stop! Stop! Individual effort is where our struggle may die Set up a fight with those who left them on this shot Companies, this shit, fuck, media, bullshit All the time conflict is just a turn of the rock Then starts the criticism with a cross of limping eyes Selling out the word and drops a billion different words

Power that you give them is how we keep the drugs rolled Thumbs work, the bedding works, time to take away school Fuck the system, fuck the youth, it's the people that you use Power and authority, the thought of society People never see the lips of their own favorite lies System We live in proof that the system works That the system works for them.

Spend your hard-earned money, not support their debt. We live in proof that system works, that system works for them. Spend your hard-earned money, not support their debt. That was The System Works for Them by Aus Rotten. Now back to our conversation with Richard Wolff. I wanted to touch on a specific point. I want to talk a little bit more about the situation with the tariffs in Mexico and then again another question about China. So I think one of the narratives that we hear about tariffs is that they can actually be

positives, right? Like this idea that they will spur domestic production and they will cause us to start theoretically producing more in the United States, buying local, all of that kind of stuff. I'm sure you know the president of UAW, the United Auto Workers, Sean Fain, who I think has been kind of lionized a little bit by certain parts of the left in this country, he came out recently with a statement that actually approved of the tariffs as a way to do exactly this, to spur manufacturing and to protect American jobs. And I'm wondering, are there any scenarios in which these tariffs might be a good thing?

And what about the idea of, you know, we're socialists here, right? So what about the idea of internationalism? And because there's definitely a right-wing, but also I think a left wing America Firstism that we can and do tend to sometimes fall into here in the US. And I think that only serves to divide the working class and strengthen the power of capital ultimately. Is there any way to ensure that workers in the US do benefit from better jobs and higher wages that doesn't throw the international proletariat, particularly the Mexican proletariat in this case, under the bus? No, it's much worse than that. And let me explain. Let's

assume, just for the sake of argument, that the claim is correct. I will take the example of the automobile industry so we can cover the story about China and Sean Fain and all of it that you raised. The tariff against automobiles, if it were made generally or even if it weren't, will likely protect, which is its purpose, the market, the market for American cars. In other words, if the American car costs a lot and the foreign car is cheaper, then the foreign car will be the competitive purchase that a smart American makes to get as much for the money as you can. And so by putting a tariff, you kind of change the calculation. The cost of the foreign imported car is now jacked up by the tariff in the way we've discussed. And so fewer Americans are likely to abandon the American-made car to buy the better or cheaper foreign car because it's now less cheaper because of the tariff. So yes, it

is going to protect the market for cars. But the market for cars is not the same thing as the jobs for auto workers. Let me explain. General Motors has an unqualified interest in these tariffs. So does Ford. So does Stellantis. Because it changes their competitive situation in relationship to imported cars. The imported cars are put at a competitive disadvantage by having to pay a tariff or having a tariff be raised on them. No question. The American car company will sell more cars. However, and Sean Fain knows this, However, and Sean Fain knows this, however many cars General Motors sells, more or less the same, they are always looking to save on labor costs.

That's why they went to Mexico, as they did. That's why they went to Canada, as they did. That's why General Motors produces more cars in China now than it does here, and so on. What determines the jobs in the United States is not the tariff. It is the decisions made by the 20 people on the board of directors of the three companies that make cars in this country that are domestic. Ford, GM, and Stellantis. Well, Stellantis isn't really American anymore. So Ford and GM. Stellantis isn't really American anymore. So Ford and GM. It depends also, auto jobs, on what the boards of directors of Toyota and BMW and all the other car companies make. So don't say the tariff protects the jobs because the tariff is one thing and jobs is another.

So for example, if there's a great new invention, a new technology, a new kind of robot, a new kind of computer assisted production, a new kind of artificial intelligence, you can be damn sure that the auto companies are gonna snatch it, install it, and thereby fire 30,000 more workers. They've been doing this kind of thing every year for the last 50. So you could easily have a tariff that allows the company to sell more goods here because you disadvantaged their foreign competitors. But if that company at the same time installs a new technology they would not only be able to sell more cars, which is profitable, but lay off a bunch of workers, because that's profitable, since they can replace them with the artificial intelligence or the robotics or whatever. The effect on jobs arrives from the automation opportunities the car companies face and from immigrants,

if they can hire them more cheaply, and from moving abroad, which they might still do. Because remember, what attracted them to Mexico in the first place were the cheap wages. If they can't bring those cheap wage-produced cars back into the United States because of a tariff, here's an option. Go to neighboring Guatemala. Go to neighboring Honduras. Go to Nicaragua. Go to Colombia. Go to neighboring Honduras. Go to Nicaragua. Go to Colombia. Go to Guyana. I mean, there's an endless number of countries where the United States has, at least as of yet, not imposed a tariff.

Well, look at that. They might end up saying, not only are we happy that we have this tariff, because now we can sell more cars in the United States at a higher price, because we're not going to be outcompeted because of the tariff the others have to pay, but we're going to go and focus on other things, spend more money on new technology, laying off even more workers. It is a mistake to see them as a one-on-one necessary relationship. There is no such thing. But there's a bigger issue that also gives the lie to all of this. that also gives the lie to all of this. Let me explain it to you this way. Let's assume we have the tariff on the automobiles. Now foreign automobiles will cost much more because they all have to be happy. Sean Fain is going

to be happy. And let's give them that the jobs they have will be protected because General Motors is going to be selling more cars, not less, since they've disadvantaged General Motors. Let's give them all of that. But now is going to be selling more cars, not less, since they've disadvantaged general motors competitors. Let's give them all of that. But now let's follow through. Once they're protected, and the literature of tariffs is unambiguous here, once they are protected from the cheaper competition from abroad, because all of those folks have to pay tariffs, one of the first things the protected industries do is raise their prices. Because the tariffs are in effect a wall against foreign competitors and they can now take the step of raising their prices without worrying that their customers will go to the cheaper imports because

they aren't cheaper anymore since they have to pay the tariff. So the cost of American trucks So, the cost of American trucks and cars will go up as the companies take advantage of the tariffs. That's one of the reasons why they push for the tariff. That's one of the reasons why the chairman of Ford and GM called Sean Fain and asked him, I'm sure of it, I don't know this for a fact, but I bet my home on it, asked him to support this so it looks like a demand from corporate America and a demand from the working class. That's indeed part of why you asked the question. All right, now let's look. If Ford and General Motors raise their prices, which invariably they do when they get these

tariff walls, protecting them, it means that every American company that needs to buy cars or trucks to carry their inputs into their place of work, to carry the outputs from the production line to wherever they get sold. All kinds of companies need cars or trucks as inputs. Those cars or trucks are now going to cost them more because the tariff enabled GM and Ford to raise their prices.

That means every other producer in America of everything from ice cream cones to shirts to toasters to you name it, is going to see their costs rise because that tariff enabled Ford and GM to raise the prices of these automobiles. So all of these companies are either going to see their profits drop or they're going to try to pass on the higher cost of vehicles by charging more for the ice cream cones or the whatever they produce. And you know what that means? American companies going through this will be less competitive than their non-American counterparts because they live in Europe or Asia or Africa which is not going through the tariff imposition exercise that Mr. Trump is. In short, all American companies are going to be squeezed and they're going to lay off workers when that squeeze makes the size or even the very existence

of their enterprise no longer profitable. Question then, compared to how many jobs are saved for the auto workers, how many jobs will be lost by all of the people affected by the rising cost of cars if you save those jobs for GM and Ford? And the answer is no one knows. So don't accept what is effectively bullshit that a tariff protects jobs in general. You can say it probably, you can't even be certain, but it probably will protect some jobs in the affected industries. But it will also lose jobs through the mechanism I just described. Let me give you an example that's very sharp and go back to the earlier one that we already went through. The best,

cheapest, electric trucks come from China, from BYD. Americans would have to pay $60,000 for the $30,000 truck. That's all the Chinese ask for these trucks. So Americans can't get them. Americans can't get the best, cheapest electric vehicle. But for Americans who can't afford it, who have to settle for a less good electric truck for which they have to pay much more will thereby be at a competitive disadvantage with the European or Asian or African or Latin American or Canadian or Mexican company that can and is buying BYD trucks at the 30 grand because they didn't put a 100% tariff. Will Americans lose jobs

because the competitors of American enterprise have a cheaper, better vehicle than Americans can get? The answer is absolutely. How many? I don't know. That depends on the economics of each enterprise, indeed of each industry, that uses electric vehicles, which is most of them. So I would say to you, is a 100% tariff on electric vehicles tariff on electric vehicles? Good or protective for jobs in the American electric truck industry? Probably. Is it good for the US economy as a whole? Absolutely not. There's no basis for affirming or assuming that, and there never was. But that doesn't matter in our political system. Mr. Trump wants and will get more donations from the auto companies and votes from the auto workers by having the president do what he's doing.

And that's what the president cares about. It will take a few years for those other things I talked about to play out and he will be at the end of his four-year term by that time. So for him it's unambiguous, he will do it. And the only thing we should understand, we the left, is that the rationales he offers for what he's doing is straight outlawing. So we only have a few minutes left so I was going to just ask you sort of the final question that I had for you, which is actually a pretty huge question. So I'm sorry to do that to you. But you know, the question really is it's bringing us back to this sort of warmongering

and the competition between China and the US. And I'd like to get your take on that. So what is your sort of perspective on this? It's by no means an original question. Now everybody's talking about this, that the ending of US imperialism, the decline of the United States is like the major global hegemon.

We're sort of entering a multipolar situation here. I'm wondering like there's no right or wrong answer to this I think it's very much speculation so just should say that upfront but like is there a way out that doesn't end in neo-fascism you know? Is there a way out of the decline of the U.S US imperialist system that doesn't end in devastation both domestically and you know potentially some kind of like nuclear holocaust and and what could that look like? Sure, there are alternatives. There always are and there's an alternative now but If you are afflicted as we are as a nation

by the historical reality we find ourselves in, and that is that the Empire is declining and the economic system we're living in has a frightening accumulation of problems. Let's leave it at that. In my judgment, and I'm far from the only one, we have a declining empire and a declining capitalism and each of those reinforces the other. And that's a downward period. But here's we can take some comfort. Every empire in the history of the world has had its period of going up. That would be the United States in the second half of the 19th century

and most of the 20th. But every empire has also gone down. That usually follows the up and reminds us that what goes up comes down. And we kind of always knew that anyway. So we're in the down. It is very difficult to be in the up. Much easier to accommodate frictions, problems, conflicts of interest, whatever you want to call them, if you're a growing economy. One of the reasons economics focuses on growth, how much did the GDP grow, is because capitalist countries have discovered much easier to give to people you have exploited. If you're growing, it's much easier to take what we

grew to help the unfortunates among us than to have to give them by taking from those who are more fortunate. The people who are more fortunate are very eager not to have it taken from them. Meanwhile, those who are left behind are very eager to get more. Growth allows you to help those who need more without taking from those who already have. So growth is the popular thing because you're terrified about, well then you're terrified when your empire and your system are declining because it means they aren't growing. That the resource with which to solve your social problems, one of the key resources, your wealth isn't growing while your problems are.

Now here then are the statistics you have to keep in mind. For the last 30 years, 30, that's a long time, a generation, the Chinese economic system has grown about six to nine percent, somewhere in there, per year. Over the same period, the US economy has grown two to three percent per year, on average. per year on average. On that level then, there is no contest. There's a loser and there's a winner. And we all know which is which. The International Monetary Fund gives us the numbers for 2024, a difficult year for both the United States and China. The GDP of the United States in this year just passed grew, according to the IMF, a very pro-capitalist, pro-Western institution throughout its history. United States GDP grew between 2.7 and 2.8 percent. The GDP of the

People's Republic of China grew 5 percent, and that of India, China's partner in the BRICS, 7 percent. Again, this is not a contest. There's a winner or two of them and a loser. We have to understand they figured out how to grow faster than we figured it is. There is an economic system governed by the Chinese Communist Party which is dominant within the state, which is the supervisor of an economy that's half private capitalist enterprises and half government-owned and operated enterprises. And that is very different from the United States, which has a tiny Communist Party which controls nothing and which has a

state which is subordinate. When Mr. Trump was inaugurated, seated behind him as if to drive the point home was a collection not of Supreme Court justices or governors or great athletes or brilliant thinker. It was a set of billionaires. They sat there because they have a lot of money. Okay that's one way to organize your society. China organized it differently from us. So the game is over about who's growing.

The United States has for some years now tried to stop, to slow, won't give them chips. We won't give them chip money. we'll hit them with a tariff, not let their wonderful cars come here. Everything we can to hem them in. And you know what that is? That's a policy failure, and it brings closer military conflict, as does the US Navy in the South China Sea, the endless bickering about Taiwan, and so on. Could it end up in a horror show? Absolutely. Both countries have nuclear weapons. Both countries are allied with other countries that have nuclear weapons. allied with other countries that have nuclear weapons. So that option isn't really serious, is it? Well then what's the other one? Well let me end with this. I'm going to take an example from the American history. When the United States'

people decided they didn't want to be part of the British Empire anymore. Back in the 1760s, 1770s, they went to war, finally, to break away. A bad war, a dangerous war, a costly war. To the surprise of everybody, the fledgling country won and the powerful British Empire lost. A very few years later, 1812, they tried again the British and they were defeated again. and they were defeated again. After that the British and the Americans decided this isn't working real well. We don't want these wars. The British didn't want to lose again. The Americans didn't want to have to fight again. Could we work out? And they did. I'll be crude for a moment. The British got all of the world except the Western Hemisphere. The United States took the Western Hemisphere. We call pro-doctrine, 1823, not that many years after 1812.

And on the basis of you kind of, you focus on Latin America, we'll focus on the Indian Empire, Asia, Africa, which is where the British then focused. And they didn't do much in the Western Hemisphere. And the United States did. I don't like the colonial game. I'm not advocating that. But here's what I think is the clue. They sat down these two adversaries. The one, a declining British Empire, whose decline had been underscored by losing the war of this little crummy colony in North America. A declining empire and that the more the 19th century continued, the more they realized that America was not only the colony that

could break away but that the car it would be the new Empire it would replace and displace the British Empire so that the declining Empire and the rising Empire sat down reached an agreement and they never went to war ever again. All right, how about this? Xi Jinping, Donald Trump, or whoever the leaders of the two countries might be, sit down, admit this situation, admit that one empire is declining and that they have some compassion. It's hard. Look at the British, if you want lessons in how hard it is. Some of those poor people over there still think they have an empire. Look at how they coronated the king of nothing. It's amazing. There's a pathos in it. But we want, we could want to sit down, face our different interests, the different places

we are, they're coming up, although they talk a lot about multi-Latin national rather than another empire. Let's help them with that. That'd be better for us because we'd be a big fish in a multinational arrangement. We could find a place there. The Chinese don't want war. It's as risky for them as it is for us, maybe more so. So let's have some leaders who admit the situation.

We don't have that now. We just had an election in which the two candidates, let's call them three, Trump, Biden, Harris, none of them said a word about a declining empire. None of them said a word about a declining capitalism. They don't use words like that. They are in complete denial. Well, you know, there's a disease called alcoholism, and there are lots of ways and treatments that have been developed. But almost all of them start the way you have to in AA. You've got to stand up

in AA. You got to stand up and admit you have a problem and then with supports, solve it. But you can't solve it, the assumption is, if you don't admit it. We are a country that doesn't admit it yet. And that's why we're becoming crazy, because we don't admit the problem we have. crazy because we don't admit the problem we have. Republicans get furious at Democrats, you know, ugly parts of our past white supremacy resurgent in our midst. We're all aware that something fundamental is going wrong. We all are. But we're not allowed to say what it actually is, our economic system, our empire. So we come up with passionate commitments to prevent trans people from using certain bathrooms. What? What? We are not a stupid people. And we're not narrow-minded. We really aren't. What are we doing? I believe Mr. Trump yesterday or today banished trans people from

women's sports. Something, by the way, he can't do. It's still more grandstanding. But it gives you an idea of what passes. Our problems are not about DEI. Whatever you're stroking with this, you know, beating up on DEI, has nothing to do with our fundamental problems. And the sad thing is, while nothing is being admitted and nothing done, the underlying problems, unattended, get worse. That's what elected Trump, that's what created Trump. Everybody knows it has to change.

But we don't know as an nation what to do, where to go, partly because we are ideologically frozen in an inability to see. We lost the war in Vietnam. We lost the war in Afghanistan. Vietnam has ever since been ruled by the Communist Party there. That was the enemy. Afghanistan is ruled by the Taliban. That was the enemy. Afghanistan is ruled by the Taliban. That was the enemy. We lost in Iraq. We are losing in Ukraine. We can't admit any of this. That's called a declining empire. The Bricks Nations, an economic bloc created to be more independent from the United States Empire now represents 55 to 60 percent of the world's people.

The United States represents four and a half of the world's people. That's not a sustainable arrangement. And it should give pause and yet most Americans have no idea what the bricks are, let alone what they mean. I think our first task, which discussions like this are part of, is to open up the conversation and debate in this country so it becomes a vehicle for finding a solution than a mechanism for denying that we have a problem. You've been listening to an upstream conversation with Richard Wolff, economist, professor emeritus of economics at the University of

Massachusetts Amherst, currently a visiting professor in the graduate program in international affairs of the New School in New York, host of the Economic Update podcast, and founder of Democracy at Work. Please check the show notes for links to any of the resources mentioned in this episode. Thank you to Aus Rotten for the intermission music, and to Carolyn Rader for the cover art. Upstream theme music was composed by Robert. Upstream is almost entirely listener-funded.

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