Trump's Trade War: A Debate

Title: Trump's Trade War: A Debate

[music - Brian Lehrer show theme song]

Brian Lehrer: It's The Brian Lehrer Show on WNYC. Good morning, everyone. You know, if you haven't been monitoring the news like minute by minute in the last 24 hours, you may not realize what a day it's been in the new Trump trade war. They may study March 11th and 12th, 2025 in Economics History books generations from now, who knows. It might depend how it all turns out. We'll go over some of it in a minute. Take out your scorecards because there's a lot. Besides the facts, we'll get two contrasting views in this segment on how to understand the tariffs chaos that is now generating all these moves by the US and multiple countries who we buy and sell things with, and causing perhaps most of the dramatic stock market decline that's been taking place, which has intensified in the last week. Well, here are more skeptical and more supportive view of the tariffs. But let's play a few clips first to set this up. On the campaign trail, Trump made many claims like this about what would happen with the economy beginning on day one.

President Trump: When I win, I will immediately bring prices down starting on day one.

Brian Lehrer: But after the election, his tune started to change almost immediately. Here he is in December speaking at the New York Stock Exchange, of all places, as stock prices were booming at that time, and maybe the traders weren't listening carefully enough when he said it would take some time for prices to come down, he said it would happen eventually because of his policies on this.

President Trump: Oil and gas, there is no country in the world that has more. We're number one. I brought it to number one during my first term in terms of production, we're going to be number one. Plus we'll do numbers that nobody will really see before, and when that happens, prices are going to start coming down because people can't afford their groceries, and they're going to be affording their groceries very soon.

Brian Lehrer: When that happens, prices will start coming down. But that was in December. Flash forward to last week. Now, instead of just promising that all the good stuff will kick in after a while, Trump is acknowledging that a recession may be on the way in his appearance on Fox News.

President Trump: I hate to predict things like that. There is a period of transition because what we're doing is very big. We're bringing wealth back to America. That's a big thing, and there are always periods of, it takes a little time. It takes a little time, but I think it should be great for us.

Brian Lehrer: Down went the stock market after that on almost every day since. But that wasn't all, Trump's Treasury Secretary, Scott Bessent, said on CNBC there would be a detox period, as he put it, and he said this.

Scott Bessent: Could we be seeing this economy that we inherited starting to roll a bit? Sure. Look, there's going to be a natural adjustment as we move away from public spending to private spending. The market and the economy have just become hooked, and we've become addicted to this government spending, and there's going to be a detox period.

Brian Lehrer: So, there's the detox period clip. If you've ever been in detox, you know how much fun that is. But here's another really interesting and even big philosophical thing that Treasury Secretary Bessent said that also is scrambling some people's brains.

Scott Bessent: Access to cheap goods is not the essence of the American dream. The American dream is rooted in the concept that any citizen can achieve prosperity, upward mobility, and economic security. For too long the designers of multilateral trade deals have lost sight of this.

Brian Lehrer: Access to cheap goods is not the essence of the American dream. Almost saying, "Don't worry about bringing down prices, that's not actually the goal." But is that really what he meant? We'll hear more clips as we go. We haven't even gotten to Commerce Secretary, Howard Lutnick yet, who, according to Politico, is now at risk of taking the fall for however much people don't like what's happening. But let's bring in our guests. Mark Zandi, chief economist for Moody's Analytics, which does economic research for its clients and for public consumption.

He also founded the website, economy.com, and and host the podcast Inside Economics. He also wrote two books about lessons from the mortgage crisis and the Great Recession. He is generally skeptical of tariffs, and Mark DiPlacido, a policy advisor at the think tank American Compass, which describes itself as working from genuine conservative principles to address the real problems facing the nation and its citizens. Mark DiPlacido is generally supportive of tariffs. Mark Zandi, welcome back. Mark DiPlacido, welcome to WNYC.

Mark Zandi: Hey, Brian, good to be back. Thanks for having me.

Mark DiPlacido: Oh, thanks, Brian.

Brian Lehrer: Mark Zandi, I'll start with you. For the listeners who haven't been keeping score at home in the last day, can we first just go over some of what has happened? Let me walk through a few of these developments, and you can kind of fact check me or tell me what I'm missing. Mark DiPlacido, I'll give you a chance to do that too. Trump said a 25% steel and aluminum tariff would take effect globally today. There was a quick retaliation from Ontario, Canada to add a 25% surcharge on some energy exports to Michigan, Minnesota and New York specifically.

Trump then said, "Oh, yeah? Then we'll add another 25% making it 50% on steel and aluminum from Canada." Then they negotiated, and those reciprocal 25% add-ons got cancelled. But the 25% steel and aluminum tariff basic did take effect. Then just this morning, the European Union retaliated. The Washington Post says, "Starting April 1st, the bloc will reimpose tariffs dating to Trump's first term, including on products such as Harley Davidson motorcycles and bourbon. It will then place extra measures on more than $19 billion in products in mid April after consulting with EU member states.

That from The Washington Post, and Politico reports on a list of US exports, the European Commission says could be hit with retaliatory tariffs. It says, "The 99-page list is dominated by meat, poultry, fruit and vegetables and alcoholic beverages, and includes chewing gum, communion wafers, nicotine vapes and patches, and women's negligees. Other items," it continues, "Read like an attack on the American way of life, including outdoor wear, tents, workshop tools and household appliances. Then there are heavy-duty items like plant machinery, snowplows and motorcycles," all that from Politico.

Because all that isn't enough, the monthly inflation report from February came out this morning from the Bureau of Labor Statistics. The annual inflation rate last month was down to 2.8%. That's a good thing. But as ABC News puts it, prices for goods and services moved up less than expected in February as consumers and businesses worry about the impact that tariffs might have on inflation. Mark Zandi, before we even get into each of your opinions, is that about right for the events of the last day, or is there anything you would like to add or correct?

Mark Zandi: Wow, that's quite a list there. I didn't know all the products that had been tariffed by the Europeans. Yeah, that sounds about right.

Brian Lehrer: Well, that they're saying could be tariff to be accurate, and all of that justice coming out this morning. Every time I wrote a line in this prep I had to revise it, but go ahead.

Mark Zandi: Yeah, that goes to a really important point, and that is, just think about the uncertainty this blizzard of changes is causing for consumers and for business people. I mean, which countries, which products, which companies, what period of time, on again and off again. You know, speaking to you as a business person, that is so mind numbing and so debilitating that I don't know that I would respond by cutting, that would be recession that may be in our future. But it certainly would argue for sitting on your hands waiting to see how this all plays out before you make any big decisions about where to invest, how to hire.

By the way, Brian, the Federal Reserve is in the same spot. They're looking at all this and they're going they can't make hide nor hair out of it, and therefore they don't know what to do.

Brian Lehrer: If there's inflation, you raise interest rates. If there's a recession, you lower interest rates to stimulate growth. So they have to figure this stuff out too. Mark DiPlacido, same question just on the events of the last day. Mark Zandi did start to get into his take on it. So you can do that too.

Mark DiPlacido: Sure. I think you covered quite a list there. I think I would add comments were due from outside commentators on the reciprocal tariff proposal yesterday. Those are slated to go into effect at the end of the month, or at least the plan will be announced hopefully by the end of the month.

Brian Lehrer: Which means the president said whatever another country charges us in tariffs, we're going to reciprocally place the same tariffs on their imports to us. Right?

Mark DiPlacido: Correct. Which I think is a framework we're already seeing with some of the threats to respond to Canada's tariffs on energy exports, as you mentioned.

Brian Lehrer: Good. Mark DiPlacido, I'll stay with you as the more supportive guest on tariffs policies. How much do you think this is all a good thing for the American people, what we might now call a trade war, if you accept that terminology with what the US and Europe are each doing so far at least?

Mark DiPlacido: Sure. I think as much as I can speak to the administration's perspective and people who are generally supportive of the changes that the president is making, the United States has had basically a trillion dollar deficit for the last five years that's grown from about $30 billion in the early '90s before the US and other nations founded the World Trade Organization. We basically look at that as completely unsustainable, and not something that's building the wealth of the country. It's something that's undermining our industrial base, middle class jobs, and ultimately our economic security.

I think one of those clips the treasury secretary was talking about wealth, and when you look at that trade deficit, what it basically means is that we're consuming a trillion dollars more every year than we're producing. In order to pay for those goods, we basically have to transfer our assets to foreign countries, whether it's in the form of our bonds, our stocks, real estate, intellectual property, other dollar-denominated assets. We're essentially feeding our wealth, and all of the accumulation and appreciation that those assets would give to Americans, we're sending abroad.

We've been rowing in the wrong direction for 30 or 40 years on trade policy and industrial policy. There's obviously going to be some disruption as we turn the ship around. But the bottom line is those disruptions are not an excuse to do nothing. We have to address this problem now. The President has run on this three times, won a majority in the fall. I think American people understand that globalization has not worked out well for our country, and we need to start to turn the ship around.

Brian Lehrer: Mark Zandi, your turn. As the bigger skeptic of tariffs, how much do you agree or disagree with anything Mark DiPlacido just said?

Mark Zandi: Let me say that I see a place for what I would call strategic tariffs, specific products, specific countries, to make a point, to try to change behavior if the trading partner is not playing by the rules or playing fair. China would be a good case in point. But I'm not a fan of broad-based tariffs, and that would be reciprocal tariffs. That means that tariffs are going to go up, I think, on a lot of different countries, a lot of different products. That's a tax on American consumers in the form of higher prices. The evidence is clear that from the tariffs that were put in place under President Trump's first term, that that results in higher prices, all else being equal, and that's a tax.

But it's a very regressive tax, meaning it hurts lower middle income households much, much more because they spend a much higher share of their budget on imported product. It raises costs for businesses. Many businesses use imported goods, machinery, electronics, all kinds of different lumber, industrial materials to produce whatever they're producing. So it raises their costs, and undermines their profitability, and ultimately raises prices for consumers. It invites retaliation. You know, other countries aren't going to stand still. Certainly the Chinese aren't, and you can see by what the Europeans did today, that they're not going to either, or the Canadians.

That costs American jobs because that means our manufacturers and farmers are going to not be able to send as much product overseas in the form of exports, and it wipes out wealth. You can see it in the stock market. I haven't looked today. I don't know what's going on in the stock market, but it's down about 10% from where it was just a couple, three weeks ago as it sunk in to investors that President Trump is going to follow through on broad-based tariffs and engage in a trade war. By the way, that's $6 trillion in wealth that was just wiped out because of this, and to what end?

It will not improve the trade deficit. It will have no impact on the trade deficit, and I don't know that the trade deficit is a problem. I mean, as a share of GDP, as a share of the size of our economy, it's no higher today than it was 10, 15 years ago. So it's not a problem. So I don't even see to what end we're engaged in all of this. The other thing is tariffs, and then I'll stop, Brian, have very pernicious long term economic consequences. There was a really good study that just came out from the Federal Reserve that showed that the tariffs that were imposed for the steel and aluminum industries back in the President's first term, they actually resulted in productivity in the steel and aluminum industry falling by about 15%.

Why that happened is because these industries were protected. They didn't have to compete with competition from the rest of the world, and they didn't innovate, they didn't keep up, and so they're less productive than they were before the tariffs were imposed.

Brian Lehrer: Let me ask you one follow up question, and then we'll bring Mark DiPlacido back in for a response. Because both of you mentioned the trade deficit, and I think that gets a little deeper into the weeds for the average listener than talking about inflation or more manufacturing jobs. The trade deficit I guess would mean that we import more from a particular country than we export to them. Mark Zandi, you're saying that's not necessarily a bad thing. You want to make that case a little bit more?

Mark Zandi: Yeah, I mean, if it were increasing rapidly in terms of our economy, I'd perhaps say something different. If it were costing jobs, I'd say something different. But it's not, it's been stable as a size. It goes up and down all around depending on the business cycle. But cutting through the vagaries of the business cycle, it really has gone nowhere. It's neither here nor there in terms of our economic growth, our growth prospects, or jobs. At the end of the day, just take a step back and think about this for a second. What a Trade deficit means is we're consuming more than we're producing. Is that a problem? It's not costing jobs.

I take that all day long. Now, I'm not saying we don't have our issues and problems, but it's not the trade deficit. If we really wanted to address the trade deficit, we'd be focused on, and this really is getting in the weeds, Brian, but I'll just state it, and we can discuss it if you like, is our fiscal situation. The nation runs a large budget deficit, and I agree that that's not sustainable and we do need to address it. We can talk about how to do that. There's good ways to do that and bad ways to do that. But if we address that, the trade deficit would go to zero. So, there are ways to address the trade deficit. It's not through tariffs and trade wars.

Brian Lehrer: Not by borrowing so much. All right, Mark DiPlacido, I know that was a lot from Mark Zandi, but what would you like to respond to?

Mark DiPlacido: Sure. I would say in general that I think our trade policy has also been regressive. He talks about prices increasing from tariffs affecting the working class. I think it's important to look at the lower end of the income spectrum not just as consumers but also as producers, and what kind of jobs our economy has been creating, and what kind of stability our economy has been offering the middle and working class. American Compass, my group has done a study, and if you look at the basic purchases that a family of four has to afford to thrive, they were able to afford to raise a solid middle class family in 1985 on 40 hours of work. That number has now risen to 62 weeks, which is obviously more than a year.

Families cannot afford to have a single income earner anymore. I think the quality of jobs that have replaced some of the manufacturing, there's been a lot of studies about the China shock has eliminated at least four million jobs from our economy. The jobs in those communities that replace those manufacturing jobs have not been of the same quality, do not offer the same flexibility, the same benefits, the same income levels that can support a family. So, when we talk about the trade deficit and the general composition of our economy, it's always important to keep the quality of jobs in mind and the overall income levels in mind. Not just that a person punches a ticket every morning.

Brian Lehrer: Right. [crosstalk] Go ahead.

Mark DiPlacido: No, that's okay, go ahead.

Brian Lehrer: A follow up then. With all the clips that we played at the beginning from the president and others who work for him now trying to dampen expectations about how quickly any of this will improve, the number of well-paying manufacturing jobs, the rate at which inflation comes down, how will you measure success or failure, or how do you think the American people should, over what period of time?

Mark DiPlacido: Sure. I think what we should look for is the increase in quality jobs, and not just stock market prices, but what are the opportunities that are being created in the economy for the middle and the working class? How broadly those those opportunities are being spread throughout our economy, not just being concentrated on the coast and at major corporations, and also, what types of industries are receiving growth. I think a big piece of it is also looking at investment, which a lot of the time we conflate just swapping assets, or looking at stock prices as an indicator of investment. What I think we want to see in the economy is investment in new productivity, factory growth, expanded production, and the ability to manufacture more in the United States.

Brian Lehrer: Those are big things and worthy goals. How quickly do you think we'll see any of it? In a year from now, will we still be hearing from the administration that people have to be patient because this all takes time?

Mark DiPlacido: I think the president has already been lauding a lot of pledged investments for major companies in the United States. I think that is something we can see as businesses start to look over the next four years at what to expect-- [crosstalk]

Brian Lehrer: Pledge investments, meaning saying we're going to invest? Is that a pledge investment?

Mark DiPlacido: Yes. I think we've seen that across a number of industries, people already planning to make more investments here in the United States.

Brian Lehrer: Listeners, we welcome you to join this conversation, this debate. 212-433-WNYC, 212-433-9692. Are you being personally affected by the new tariffs policies and new tariff threats already for better or for worse? 212-433-WNYC. Are you more optimistic or pessimistic about your personal finances or the future of your business, if you own a business if we continue down this path, or anything else you want to say or ask our guests, Mark Zandi from Moody's analytics or Mark DiPlacido from American Compass, 212-433-WNYC, 212-433-9692.

Mark Zandi, where do prices come into this? Do you both agree that tariffs will raise prices on many things for many Americans in the short run at least, or maybe longer? The opposite of the bring down prices starting on day one campaign promise, which was central to Trump's campaign messaging. Mark Zandi, where do prices come into this? We did see the inflation rate go down to 2.8% in February from that number that came out from the Bureau of Labor Statistics just this morning.

Mark Zandi: Brian, I'll answer that question, but let me just respond to Mark's point, because, I share his goals. I do think we do need to be focused on jobs, and the incomes, and standard of living of Americans, particularly lower middle income Americans who are hard pressed. I just don't think a trade war or tariffs like we're talking about here will achieve that. I think just the opposite will occur. Just to give you a statistic to drive that point home, the steel and aluminum industry nationwide employees, and I'm making these numbers up, Brian, so if you can ChatGPT them to correct me if I'm not right, but 300K, 300,000, Walmart employs 1.5 million people in America.

That's the context. Protecting the steel and aluminum industry, protecting these industries with tariffs is not going to help the people that both Mark and I are interested in helping. Now, to your question, tariffs trade war will result in some combination of higher inflation, higher interest rates, and weaker economic growth. So, pick your poison. It's going to be one or the other. I think initially when the tariffs, as they're being imposed, will result in higher prices. The one thing that makes me more nervous about that in the current period compared to President Trump's first term when he imposed tariffs is that inflation is in a very different place today than it was back then.

Back then, it's hard to remember back, but back then the problem was inflation was too low. The Fed was working really hard to get inflation back up. Inflation expectations were on the floor. Today, inflation's a real problem. People are on high alert because of the higher prices they're paying for everything, and inflation expectations are already rising very rapidly, so that raises the risk here. I think the initial effect will be inflation.

But ultimately, Brian, I think it will mean weaker growth, and the more aggressive the President is in pursuing the tariffs, the longer he keeps them in place, the more damage it will do, and if he actually follows through on all the reciprocal tariffs that he's been talking about and all the other tariffs he's been talking about and maintains them through the end of the year, I feel that it's very likely the US Economy will suffer a recession, which means a loss of millions of jobs for the very people that Mark and I are striving to help.

Brian Lehrer: When we come back from the break, staying on prices, I'll bring in that clip that we played, or I'll ask you to comment on that clip that we played, both of you, from the Treasury Secretary when he said access to cheap goods is not the essence of the American dream. We'll start to bring in some of our callers and texters as we continue with our two views on the tariffs chaos and what it could mean for Americans financial lives in the short and long terms with our guests, Mark Zandi from Moody's Analytics, and Mark DiPlacido from American Compass, and you at 212-433-WNYC.

[music - Brian Lehrer show theme song]

Brian Lehrer: Brian Lehrer on WNYC, as we continue with our tariffs update and debate, how do you each feel about the quote from Treasury Secretary, Scott Bessent? Mark Zandi, I'll go to you first, when he said, and we played the clip earlier, access to cheap goods is not the essence of the American dream, and went on to say, basically, the dream is focused on mobility and self actualization.

Mark, didn't this used to be a critique from labor and the left that with globalization, the no tariffs, free trade experiment of the last 30 or 40 years, we were creating a low wage, low prices economy, cheap goods from China and elsewhere, but wages in this country went down, that was actually not good for the American worker or the American middle class, and that we should prioritize higher wages for an actual better quality of life. Do you know that critique that I feel like I used to hear from the left?

Mark Zandi: Yeah. Let me say with regard to Secretary Bessent's comment, I agree with him that a significant part of the American dream is the ability to achieve success through hard work, doing the right thing and opportunity. I agree with all of that. But I also think the American dream is about a good standard of living, and part of that is being able to buy things that are affordable, and why are we making it more difficult for low middle income Americans to buy things affordably through this very regressive tax called a tariff?

Now, let me say, Brian, to your point about kind of the liberal critique of globalization, I agree with it. I think we did make a mistake, not so much in allowing China, and this all goes back to really Japan and China coming onto the world scene in previous decades. I think that did lower prices, and did raise the standard of living for Americans broadly. But I don't think policymakers carefully consider what it meant in terms of the jobs that would be lost in manufacturing, in particular in many parts of the Midwest, rural south and western parts of the country. It did hollow out those economies and left those people in a very difficult spot.

I do think that goes a long way to explaining the fraying of our social fabric, and kind of the political fracturing that's occurred right now, and the problems we're having to coming to any kind of consensus politically in Washington, D.C. I agree with all that. We made a mistake. But here we are, and we got to think about what's the right thing here going forward for the people that did get left behind. I assure you it's not broad-based tariffs, and it's not a global trade war that's just going to cost even more jobs. That's not the path forward here.

Brian Lehrer: Mark DiPlacido, for you on this, a lot of the media, I think, are interpreting Secretary Bessent's comment or at least raising the question around it when he says access to cheap goods is not the essence of the American dream, that he's kind of signaling, "Look, a lot of you voted for Trump specifically to bring down prices, but that's not going to happen. That's not even our goal." How do you hear it? Can we hear it differently than that?

Mark DiPlacido: Sure. I think what he's referring to is, it's not, again, just about the consumption side of the economy, it's about production. I think when a lot of people think of America and what they're proud of about this country, it's all of the industries that we built, and it's those industries that allowed us to win World War II, to come out of the Cold War on top. We've invented or developed or expanded the industry of automobiles, of planes, we invented the semiconductor, PVs, space exploration. America has always been the lead innovator, and Americans have always taken great pride in that.

What we've seen over the last 20 or 30 years is a lot of those industries go overseas to the extent that we're not able to make those things anymore. You look at advanced manufacturing, and this is something that advocates of globalism and free trade promised would stay in America, and we would only lose our low value industries. Well, last year our advanced manufacturing also had a trade deficit of $300 billion. So we can't just allow our industries to go overseas. The high quality jobs, research, innovation, engineering, that comes with those as well.

We have to remember that we don't exist in a vacuum either, that China's economic policies with our market exposure to them affect us as well, and when only 38% of their GDP is made up by consumption, and 68% of ours is, that's going to create distortions, and it's going to bring down the quality of life for our working and middle class to the same level of the equivalent in China and the markets that we compete with. The American people have had a visceral reaction to that in electing President Trump for the second time, and clearly don't feel that the economy today is working for them.

Like I said, there's going to be disruptions. There's going to be some period of pain here that I'm glad the president and his cabinet are helping prepare people for. But the bottom line is the economy is not working for the middle and working class. We have to turn this ship around.

Mark Zandi: Can I just [crosstalk] there for just a second?

Brian Lehrer: Real quick, Mark, I want to get some callers in in our remaining time.

Mark Zandi: I don't think tariffs and trade war are going to bring investment back into the United States. Think about a producer, looking at what's going on here, and thinking about these tariffs, these tariffs can be put in place and taken off by stroke of a pen. They're not going to make an investment decision that requires a commitment for years, even decades if they think that the tariffs can be changed with the stroke of a pen. So this on again, off again, on again, off again, which products, which countries is not going to work.

Brian Lehrer: But Trump said yesterday-- [crosstalk] Okay.

Mark DiPlacido: I [unintelligible 00:33:26] they should just stay on, and they need to be permanent.

Brian Lehrer: Yeah. If they were permanent, Mark Zandi, very briefly, I mean Trump said yesterday, I had this quote, let's see if I can pull it back up.

Mark Zandi: How can it, Brian? These are done by executive order. It's not some legislative process that we're going through.

Brian Lehrer: So, companies should not take anything done by executive order as reliable?

Mark Zandi: Would you? I mean you can see exactly what's going on.

Mark DiPlacido: I mean, the president put the first round of tariffs on in his first term, and they were kept on during the Biden administration because both parties have now realized there's a mandate for these types of policies to change our trade regime.

Mark Zandi: That was on $300 billion worth of product with China. Now we're talking about $3 trillion worth of product with Canada, with France, with Brazil, with every country on the planet. You think that's gonna last? No, it's not gonna last. Here's the other thing. There are carve-outs and exemptions. This is so opaque. No one knows who's gonna get the benefits of the tariffs taken off for them and imposed on somebody else. It's crony capitalism at its worst. It's gonna make it so uncertain that no one is gonna want it. Then who would trust anything that's said because the rules of the road are being changed so violently and frequently here. To think that this is going to bring investment back in the United States I think is just a fallacy.

Brian Lehrer: Thank you both for that exchange. Now we're going to go to Jacqueline in Jersey City. Jacqueline, you're on WNYC. Thank you for your patience.

Jacqueline: Hey, guys, thank you so much for having me. I just had a few quick comments. One, obviously, the international tariffs are going to have far-reaching impacts for now and the future. But I'm 38 years old, I live in Jersey City. We have probably one of the most expensive places to live in the United States. I would say I'm probably in the top 10% of earners in my age category, and I think what I'm most concerned about is the cost of living, and how these tariffs and other costs are going to impact not only my generation now, but for the future.

We can't afford to buy a home. We can't afford to even move out of our current rental apartments that are like, you know, close to almost $5,000 a month for a two bedroom. How do you see these tariffs impacting our future for millennials and Gen Z far-reaching in the next 5 to 10 years, how will this impact us?

Brian Lehrer: Mark D. Placido, that sounds like a challenge for you.

Mark DiPlacido: Sure. I think mentioning housing prices is a good benchmark there. I think things like housing, which are, sure, building materials are certainly traded, but they're assets that remain. Most houses currently exist already, and we certainly need to build capacity. But where we've seen the greatest inflation in our economy over the past 20 or 30 years are in things like education and healthcare. These are services, and this is the other side of the economy when we don't produce, more demand is placed on services, and we see this in government spending as well.

I think short term, there's going to be increases, on the other positive side, the United States, only 25% of our GDP is made up in trade, which is significantly low compared to the rest of the world. The world average is about 53%. So given that only a quarter of our economy is driven by trade, we're going to have some buffer against wider price increases across the economy.

Brian Lehrer: Bennett in Maplewood, you're on WNYC. Go ahead, Mark, you get a shot at that, Mark Zandi. Go ahead.

Mark Zandi: Because I know Jersey City, because I have a daughter in Hoboken, and the rent, I know the rent. I know what you're paying, and that's because there's a shortage of housing across the country. Think about what the tariffs are going to do to the cost of housing. It's going to jack up the cost of lumber coming to the country from Canada. It's going to jack up the cost of building materials, everything from nails to electrical wire coming from Mexico. It's going to jack up the cost of appliances, washing machines that are coming from China.

The cost of building is already very high. That's why we can't build enough homes for people to afford them in places like Jersey City, and this is just going to make it even worse. Just talk to the home builders and see what they're saying about this. This is going to be a very significant hardship on many Americans, and that's a great example. The cost of housing in Jersey City, the rent you're paying is going to be a lot higher because of all of this.

Brian Lehrer: You know, Mark Zandi, we almost had Shawn Fain, I shouldn't say almost had. We invited Shawn Fain, the head of the United Auto Workers union to be a guest in this segment, because even though he campaigned with Kamala Harris last year, he seems to be supportive of these tariffs. If it's so bad for the American worker, how do you explain that?

Mark Zandi: I don't know. I don't know Sean Faint's position on this, Brian. In my humble opinion, that for the working American, the person who is a unionized worker, broad-based tariffs like the ones we're considering here, talking about here, if imposed, will cost those jobs for unionized workers and American manufacturers. I don't know what his position is, but that's my view.

Brian Lehrer: I'll try to get you the quote, but here is probably our last caller. Bennett in Maplewood, you're on WNYC. Hello, Bennett.

Bennett: Hello. Thank you very much for taking my call. I've been a labor lawyer in New Jersey since 1979, and my clients at the start of my career included the International Ladies Garments Workers. We were always looking for these sorts of protective policies, and they would have saved a lot of jobs, but those jobs are gone. The unions are really gone now too that represented those industries. Textiles and clothing were the first ones hurt. Now, I would agree with what you're saying about the need to raise the median income for Americans. What's happened continually throughout the United States since Ronald Reagan is there's been an attack on workers, there's been an attack on unions so that they're weaker than they've ever been, and they aren't focusing.

I see basic underlying hypocrisy in what the administration is doing. On this count they say, "Oh, we're the friend of the workers," but their overall policy is not going to change the fact that since the 1980s, the share of wealth going to the top 1%, to the top 1/10 of a percent has just tremendously increased while the share going to everyone else continues to go down. Median wages have never gone up, but the incomes of the rich and capital continue to go up. There's all the focus on profit.

Brian Lehrer: You want to just for time, forgive me, Bennett, you told our screener you wanted to say something about immigration policy under Trump in relation to this.

Bennett: No, not immigration policy, but I wanted to say that they should be supporting the PRO Act instead of having Elon Musk, one of the biggest union busters who says that the National Labor Relations Board should be put out of business because it's unconstitutional running their policy, they should be promoting an increase in the minimum wage, and they should be promoting Medicare for all.

Brian Lehrer: Bennett, I'm going to leave it there because we're almost out of time in the segment. But Mark DiPlacido, I'll throw that to you. First I'll read this that I just pulled up from Forbes, and an article about why UAW President, Shawn Fain, who campaigned with Kamala Harris, supports Trump's tariffs. It says on ABC Fain was asked why he supports Trump's tariffs. He said, "We're in a crisis mode in this country. There is no single issue in the country that has affected our economy and working class people and their jobs more than NAFTA, the USMCA, which came after NAFTA, and our trade laws, our broken trade system.

We're in a triage situation. Tariffs are in an attempt to stop the bleeding from the hemorrhaging of jobs in America for the last 33 years. But, Mark DiPlacido, this will be the last question to respond to Bennett in Maplewood. He says, "If Trump and company are really for the American worker, they'll also support the PRO Act, which Republicans have opposed as it has tried to get through Congress, which gives workers more of a right to unionize. Do you support the PRO Act? Then we're out of time.

Mark DiPlacido: Sure. My organization has done a lot of work to try to reach out to the labor community, and it sounds like from the caller's point of view, we would agree on a lot of issues. You actually just saw Senator Hawley and Senator Marino introduce a bill that comprised a few different parts of the PRO Act, and I know there's bipartisan efforts now in Congress to look into labor law.

Brian Lehrer: 15-second response, Mark Zandi.

Mark Zandi: No, I really don't, Brian. I think all four, and very supportive of the idea that we need to help working class Americans. I do think the caller's point about wealth and income skewing to the high income and well to do is dead on. I just don't think a broad-based tariff increase in a global trade war is the answer. I think it's just the opposite.

Brian Lehrer: Mark Zandi from Moody's Analytics, Mark DiPlacido from American Compass. We appreciate both of you engaging with each other and with our listeners. Thank you very much for coming on for this.

Mark Zandi: Yeah, thanks very much. Thanks, Mark.

Mark DiPlacido: All right. Thank you, Brian. Yep.

 

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