00:00Well, joining me now is Professor Kimberley Clausing, a non-resident senior fellow at the Peterson Institute for International Economics.
00:07Professor Clausing, thank you very much for joining me.
00:10From your point of view, has President Trump achieved his goals today?
00:15I think it's very hard to say that he's achieved anything useful for the U.S. economy.
00:20In terms of his goals, they're a little hard to parse, but for one thing, he's raising a lot of revenue with tariffs,
00:27which you might think of as a good thing, but that's a big tax increase for U.S. consumers.
00:32It's clear that prices are rising due to these tariffs and that consumers and U.S. taxpayers are really going to be the ones bearing the burden of that tax.
00:42It's very unclear he's going to be improving the current account deficit.
00:45His tax and budget policies move in the other direction from that because the U.S. is borrowing more and more.
00:51And his emphasis on encouraging more foreign investment would also work against that goal.
00:56But what is clear is U.S. manufacturing jobs are getting hurt, which is unsurprising because the majority of U.S. imports are intermediate goods.
01:05So it actually makes things harder to produce in the United States when you're putting tariffs on all these imported intermediate goods.
01:12And you see this in the economic data with a slowdown in economic growth as well as higher prices.
01:17So this is a classic supply shock.
01:19But what's unusual about this supply shock is it's really a self-induced economic harm.
01:24You were talking there about the fact that he has raised revenues, but at the same time, the global stock market has fallen and U.S. futures are down too.
01:35This is far from plain sailing, isn't it?
01:38At what cost do you think this victory is coming?
01:41I think the costs are really substantial here.
01:45And it's not just costs to U.S. taxpayers and U.S. businesses that are really suffering from supply chain disruption, retaliation and uncertainty.
01:55But it's also a cost to the system itself.
01:58We're undermining faith in the United States as a negotiating partner.
02:03If you look at some of the countries that have been targeted for these high tariffs, countries like Canada and Mexico and Korea, all three of those countries are countries where the United States has a free trade agreement.
02:15If we're not going to honor our agreements and we're still going to levy really high tariffs on such close partners and allies, it does make you wonder whether the United States can be trusted in any of these negotiations, which have a very transactional and, you know, bargaining feel, but aren't ultimately doing anything other than reducing the gains from trade in both directions and destroying what would otherwise be a very beneficial relationship.
02:43And, of course, this has dominated U.S. foreign policy, hasn't it?
02:46Almost since the day he was inaugurated, we've been talking about these tariffs.
02:51Is this the new normal, do you think?
02:53Is this what we can expect going forward?
02:55What's next for him?
02:58Yes, from the United States perspective, I think this is exactly going to be normal as long as Trump is president.
03:04I think for the rest of the world, the challenge will be to not embrace this as the new normal writ large,
03:11to sort of bracket dealing with the Trump administration and set that to the side and continue to pursue a rules-based orderly trading system with the rest of the trading partners.
03:23So the rest of the world has a big advantage relative to the United States.
03:26We're engaged in a trade war with every country of the world simultaneously.
03:31The rest of the world still has each other, so they can work to expand trade in a rules-based fashion
03:37and sort of bracket this disruption from the United States off to the side.
03:42But I think it remains to be seen how well other countries will manage the situation.
03:46So the rest of the world is going to be seen in a trade war with every country of the United States.
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