00:00Senior economist with the Competitive Enterprise Institute, Ryan Young.
00:03Thanks very much for joining us on the program.
00:05What effect do you think these tariffs worldwide will have?
00:11It's not going to be good for the U.S.
00:13These are the highest tariffs we've had since the Great Depression in the 1930s,
00:18almost 100 years ago.
00:20And those tariffs cut world trade by about two thirds.
00:24They deepened a global depression.
00:26And while I don't think these will be quite that bad,
00:30they're going to not only harm America's economy, our allies' economies,
00:35they're also going to harm diplomacy and America's foreign policy interests.
00:41There's no need to alienate Europe or Canada or Mexico,
00:44especially when China poses genuine security threats to the rest of the world.
00:48So it's an economic hit and it's a foreign policy hit that's going to affect the entire world.
00:54You mentioned some countries there.
00:55I mean, which countries do you think are likely to be worst hit?
01:00The U.S. because, well, we started it.
01:04And when a country raises tariffs, the first victim is always itself.
01:08And we're already seeing higher inflation, slower growth.
01:12The jobs market is starting to take a hit.
01:14And it's going to flow over to our trading partners and our allies as well.
01:18Donald Trump, though, hasn't held it, hasn't it, as billions of dollars flowing into the U.S.
01:24Slightly longer term, though, I suppose that the fear is that that is really going to bite into the pockets,
01:30if you like, of American consumers.
01:32Do you agree with that?
01:32Well, it is raising revenue, but not nearly enough to cover America's budget deficits.
01:40And in the meantime, consumers will be paying higher prices, and in some cases already are.
01:45If an American wants to buy a new car, that's a minimum of $3,000 out of their pockets.
01:51And that is a big hit to a family's budget.
01:54So maybe they'll hold off on buying new things, and that trickles over to Ford and GM or any other carmaker
02:00that's going to hit their sales, and that in turn hits their employees and their shareholders
02:05and people's retirement accounts.
02:06It's going to affect everyone, and not in a good way.
02:10I mean, it does beg the obvious question.
02:12So why is Donald Trump doing it, then?
02:15He just likes tariffs.
02:18His team is talking about trade deficits or raising revenue, different foreign policy objectives.
02:26They're rationalizing after the fact.
02:28The president just likes tariffs, and he's been very consistent about this for 40 years.
02:34And he's not going to change his mind unless courts, Congress, or voters change his mind.
02:40I was going to say, might he change his mind if some of those figures and fears that you've mentioned there
02:46come to fruition, if you like?
02:48I don't think so.
02:51At first, he thought it would just be an unalloyed economic benefit.
02:55That has turned out not to be the case.
02:57So he said, well, we'll have some pain now, but it will be worth it later.
03:01That's turning out not to be the case.
03:03So last week, when America got a jobs report that was not very good,
03:08he fired the head of that agency that collects the data.
03:11So he's not going to change his mind.
03:14Someone has to force his hand.
03:15And there's a court case right now that might do that.
03:18We'll find out in the next few months about that.
03:21There's been a lot of criticism here in Europe, in France as well, of the European deal announced
03:27just over a week ago.
03:28I mean, how do you see the deal with Europe?
03:30A lot of people said that Europe caved in to Donald Trump.
03:33It does look lopsided, but I also think Europe is playing a waiting game here,
03:41because there is a good chance that the Supreme Court in a few months will declare
03:45President Trump's Liberation Day tariffs and also the trade agreements,
03:49like with the Europe and UK and other allies, as unconstitutional.
03:54So there's a pretty good chance that a deal that looks lopsided against Europe
03:59is simply going to mollify the president and buy Europe some time until those tariffs get struck down.
04:06And then the president will turn to other slower ways to raise tariffs.
04:10But at least it'll buy Europe some time and hopefully come to some sort of more satisfactory agreement
04:15that is less destructive.
04:18We'll see how it develops.
04:19Ryan Young, thanks very much for being with us on the programme there.
04:21Ryan Young, senior economist with the Competitive Enterprise Institute.
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