4-3-25 - 9am - Bringing Production Back to America

Episode Transcript

Speaker 1 (00:00):
Regarding opinions on effects of tariffs, and paraphrasing Senator John Kennedy,
for every economist in DC, there is an equal and
opposite economist. Well said, good sir, We're just going to
have to wait and see goober out.

Speaker 2 (00:16):
And I hundred percent agree with that. This could be
one of the greatest resets in American economic history. It
could throw us into a recession. It's part of his
vision of I'm going to negotiate this stuff, and I'm

(00:37):
gonna start way over here because I know I really
wanted to end up here, and so I wanted to
move on to a different story. But maybe it's worth
some time going through some of this because, for example,
I think it was Tuesday, Israel had already announced it

(01:00):
was dropping all tariffs on US imports, and in particular
with regard to that tree nuts, soybean oil, apples, they
all had terraffs of ten to twenty percent in Israel.
So that move's going to save American exporters millions of dollars,

(01:20):
and it will boost US producers of those products who
will now have better market opportunities in Israel. Reciprocal tariffs
could have hit Israeli products, hard diamonds, pharmaceuticals, integrated circuits,
impacting the sale of things like jewelry, medications, and electronics

(01:41):
here in this country. So it's just an example, I mean,
and every country is going to react differently. Israel, obviously
a staunch ally of US and vice versa, was like, Okay, yeah,
we know where you're going. Boom, we're gonna drop everything.

(02:01):
You'll drop everything. So the history of tariffs goes all
the way back to the Tariff Act of seventeen eighty nine,
one of the first laws passed by the new Congress,
and the purpose was, and this gets to my as
of yet fully developed theory that and oh my god,

(02:25):
would I love for it to be true.

Speaker 3 (02:28):
The reason that.

Speaker 2 (02:29):
Congress passed the Tariff Act of seventeen eighty nine was
twofold one. They wanted to protect American industry, but they
also needed to raise revenue to operate the federal government.
So for almost the entirety of the nineteenth century, tariffs
were the primary source of federal income. And of course

(02:53):
during that time period we had all sorts of debates
about free trade versus protectionism, But let me repeat that
tariffs were the primary source of federal income because we
did not have an income tax. Could it just possibly
be that this is one of several steps to eliminate

(03:19):
the federal income tax. Now I do, I sincerely believe
that in the back of Trump's mind that's one of
his objectives. Now, don't get excited about that, because there's
a thousand hurdles to cross to get to that point.
But can you imagine the difference in this economy. I

(03:41):
had a story that the Foundation for Economic Education. I
still got the story up. The headline enough tells you
if the headline alone tells you enough about this whole
debate that's going to occur Over to tariffs, the headline
is this, this is published on uh this is probably

(04:06):
two weeks or almost two weeks old. Now there'll be
two weeks old tomorrow. Tariffs are awful, but the income
tax may be worse. And navigating the choice between two
bad policies, which is exactly what I would expect the
Foundation for Economic Education to take a libertarian point of
view that both tariffs and the income tax are bad.

(04:29):
But historically, we know that this country survived on tariffs
alone prior to the sixteenth Amendment. And I've always been
an advocate of getting rid of the income tax because
I have no choice in it. It is forced. They
forcibly take a piece of my physical labor. Now, I know,

(04:52):
I don't exert a lot of physical labor in this
doing this program, not like somebody that's driving an eighteen
wheeler or this out working in the trades. But nonetheless,
it is my labor, and so you are forcibly, you're
in an essence forcing me to work.

Speaker 3 (05:10):
Whatever.

Speaker 2 (05:11):
You know, every tax organization in the country says that
you know such and such date as tax income Tax
Freedom Day, meaning that everything you've done up to that point,
from January one to whatever the date is, you've been
working to pay the federal government and they forcibly, Oh,
I know it's a voluntary system, but they forcibly take

(05:32):
the money from you withholding one of the most evil
acts ever perpetrated on the American people.

Speaker 3 (05:40):
Forcibly, I mean a slave labor.

Speaker 2 (05:43):
I'm a slave to the federal government in Colorado, to
the state government forcibly making me. Well, they're not making
me work, but if I work, forcing me to turn
over some of the fruits of my labor to them.
Whereas if we had a national sales tax. Then I
get to choose. I choose whether or not to drive

(06:06):
an older car or a new car. I choose whether
or not to buy a new pair of sneakers or
keep wearing the old pair of sneakers. I choose whether
or not to buy a new piece of furniture or
keep sitting on the old futon. I get to make
those choices. I choose how much tax I pay. Income
tax doesn't give me that choice. So you're going to

(06:27):
hear thousands of different takes on tariffs, which is why
I think some of the history is important. The Smoot
Holly Tariff Act of nineteen thirty raise tariffs to record levels,
and a lot of economists, not all, and a lot
of historians but not all, blame the Smoot Holly Act

(06:51):
of nineteen thirty for making the Great Depression worse by
stifling global trade. I think there are a lot of
other actors, and I don't fully buy into that. Have
you ever thought about just what a tariff is? Can you?

Speaker 4 (07:08):
Can?

Speaker 5 (07:08):
You?

Speaker 2 (07:08):
Can you tell me what a tariff is. It's a
government imposed charge on an imported good. It's collected at
the border as the product enters the country, and you
will hear because the cabal is full of reporters and
talking heads that are going to voice all sorts of

(07:32):
opinions and analyzes on Trump's plans. But one thing I
do know for certain that I don't think anybody can
argue about, is that a lot of Americans not willing
to say most, but I think a lot of Americans
getting pretty close to at least fifty percent, don't understand
and cannot actually describe what a tariff is. So here's

(07:55):
Trump's pitching a nutshell. It's going to be a game
changer for the economy. He argues that it will protect
American jobs, He'll boost domestic manufacturing, he'll encourage consumers to
buy US made products, and it will save taxpayers money,
he says, tear us first and foremost, incentivized companies to

(08:20):
bring their production back to the United States, bringing in
obviously those benefits jobs in the revenues. I've always argued
that what we should be doing is not increasing income
if we're going to have an income tax, which I
still adamly am opposed to, but if we're going to
raise taxes, let's don't raise taxes. Let's create more taxpayers.

(08:46):
That's the way you increase revenue by growing economy, and
you grow an economy by getting rid of all the
burdensome regulations that stifle the economy. And if you don't
think that regulations stifle the economy, then you can either
go talk to some of the fortune one hundred CEOs,

(09:08):
or you can go talk to the mom and pop
that runs a sole proprietorship in your neighborhood and ask
them about federal, state, and local regulations and how much time, energy,
and resources money that they spend complying with regulations that
does what takes off their bottom line. So you're going

(09:30):
to hear every gamut about taroffs, But go back to
his art to Trump's argument about bringing production back to
this country, well, we already have some examples of that.
Several companies have announced plans to shift production to this country.

(09:52):
Nissan is expecting to move some of its manufacturing from
Mexico back to the United States. Pack It's a Canadian
manufacturing company that makes furniture. They decided to relocate their
production to North Carolina, which always found interesting because North
Carolina at one time was pretty much the hub of

(10:13):
American made furniture and American made textiles. That's kind of
been a this rated. The White House says their projections
are that a twenty five percent tariff on foreign autos,
effective yesterday or today, I guess, could generate one hundred

(10:34):
billion dollars in new revenue. What can we do with
one hundred billion dollars in new revenue, Well, we could
reduce the deficit, or more importantly, in my opinion, we
could pay for those so called tax cuts, which I

(10:55):
hate using that phrase, but that's what they're going to argue.
On the other side, we got to pay for the
tax cuts, completely ignoring the idea that, oh, you reduce taxes,
you actually increase revenue because there's more incenty for people
to work harder, longer, more hours, whatever. There's more incenty
for people to invest, which gives more capital available to

(11:17):
other entrepreneurs to grow, so you create more taxpayers. The
idea that we had to pay for tax cuts is
a bunch of bull crap. If they would stop they
being Congress, If Congress would stop spending the additional revenue
that comes in and then spending beyond that additional revenue,

(11:40):
we wouldn't be in the position we're in today, but
they're addicted. They've got a serious addiction problem. It's not
going to stop. Now. If you make imported goods more expensive,
then that's going to, I think inevitably force consumer preferences

(12:01):
toward American made products. Now, I know it's going to
be hard to find some American made products. I try
to buy American as often as I can. Sometimes there's
just simply things that I need that guess what, I
can't find an American American made product. Now, maybe if
I spent maybe if I had all the time in
the world, and I could go to every different grocery

(12:24):
store or every different you know mall, or every different
you know retail outlet, I might find whatever that particular
good is, I might find one of it somewhere that's
American made. You know, oftentimes, if you if you're on
facebag for example, oftentimes you get you know, in your
news feed, you get all of these products for sale. Well,

(12:47):
if you look closely, it's kind of interesting because a
lot of those are actually American made products. Not always,
but I'm just saying more often than not, I'm always
surprised that if I if I wanted to buy a
new pair of gene or a new belt or something.
Oh that's an American may product, holy made in this country.

(13:07):
So it can be done. It just actually takes a
lot of effort to do that. Now, Democrats, you're going
to hear about Democrats screaming about tariffs and how awful
they are, which I find deliciously ironic, because there's a
guy that you should recognize the voice. Let me pull

(13:27):
it up. Where did it go? Maybe it's on my
timeline of a guy that you should know. You hear
from him quite often, who actually thinks the idea of
tariffs at least in twenty eighteen. Oh, that was a
good idea.

Speaker 4 (13:43):
Look, I think the president's doing the right thing. China
has been taking advantage of us for two decades. They're
stealing our intellectual property, which means stealing our good paying jobs.
And I frankly am closer on this issue, not on
many but on this issue with President Trump than I
was with President's Bush or Obama, because they did nothing

(14:05):
to tell China off. Now, China, of course will respond,
but if they know we're strong and we're not going
to back off, they will back off.

Speaker 3 (14:12):
They have far more to lose than we do.

Speaker 4 (14:14):
They have a three hundred billion dollar trade surplus with US.

Speaker 3 (14:17):
So I'm looking out number one for jobs.

Speaker 4 (14:20):
You know, if General Electric moves jobs to China, they're
not unhappy. But my New York workers in Schenectady are unhappy.
And so you can't let the international business companies who
don't give a hoot about where their factories are govern this.

Speaker 3 (14:34):
You have to do what's good for the American worker. Look,
I think.

Speaker 2 (14:37):
That's April twenty eighteen, seven years ago, Chuck Schumer makes
the case for these tarofts to bring jobs back. Could
you find that kind of interesting because, like, like a
lot of Democrats, what do you think he's saying today,

(15:00):
He'll go on MSNBC or CNN, and what do you
think he'll say. Nobody doesn't say that. But he's right
when we're engaged in a trade war, that we refuse
to acknowledge that we're engaged in a trade war. And
go back to what I said in the last hour,
Comparative advantage as an economic principle no longer exists, and

(15:24):
it doesn't exist anymore because of industrial policy, because a
government subsidies China, being a communist country, doesn't care about
their workforce, doesn't care about the environment, doesn't care about
rules or regulations. Accept the Chinese Communist Party rules. You

(15:44):
as a manufacturer, are going to do what the Communist
Party tells you to do. And oh, they'll give you
Like here, we want you to make these evs. You
can't sell them more than say, twenty thousand dollars a piece.
We know it costs you to five thousand dollars apiece.
Here's an extra five ten thousand dollars to subsidize those costs.

(16:06):
And of course that helps them sell those cars, which
they think comes back and helps their economy. But they
never sit and do the the internal audit. We're paying
X for subsidies, we're only getting why back in return?
I wonder why our economy sucks so badly. Communists don't

(16:29):
think like that. They don't think like that at all,
because for them, it's not just economics. It's about domination.
And as somebody said on the text line, how quickly
we've forgotten about the whole pharmaceutical issue back during COVID
all in our pursuit of as consumers, which we are.

(16:51):
We're a consumer economy chasing the cheap goods well, yeah,
and so some goods may be more expensive in the
short term. But if you create more tax payers and
more jobs and your industrial and manufacturing output increases, oh,

(17:13):
you don't have quite as huge of a budget deficit.

Speaker 3 (17:17):
And in the long run you may able.

Speaker 2 (17:19):
To be able to actually get rid of the income
tax and go to an alternative like a national sales tax. Now,
I think in Trump's dream world he sees tariffs because
he keeps talking about the external revenue service. I think
he thinks that we can get back to seventeen ninety
two and have just tariffs pay for everything. I don't

(17:41):
think it's realistic, but I like the concept.

Speaker 3 (17:50):
Hey, I just want to say to the liberals, welcome
to the party.

Speaker 1 (17:54):
We've known that the economy has been terrible for the
last four years.

Speaker 3 (17:58):
Where have you been, Oh, I know where the liberals
have been importing twelve to twenty four.

Speaker 1 (18:05):
Million illegal aliens, paying for the housing and putting them
on government assistants.

Speaker 3 (18:11):
I didn't hear you crying about that expense.

Speaker 2 (18:17):
And I was just reading in part of today's Wall
Street Journal. Let me just very quickly, Trump's tariffs aim
to create a new world economic order. The US is

(18:40):
moving to blow up the global trading order it built,
ushering in an uncertain new era. President Trump's highly anticipated
announcement Wednesday represents a high stake scambal to transform a
global economic relationship that Trump for decades has said ripped
off the US. Even as the American economy had emerged
from the pandemic as the ending as the envy of

(19:03):
its rich world peers, The President's moves raised the specter
of a state inflationary shock that increases prices while putting
more economies, including the US, at risk of a recession.
Trump's done marcus by announcing a suite of tariff hikes
on major trading partners, including twenty percent for the U,
thirty four percent on China, the tax on import of goods,

(19:26):
which also includes at least a ten percent across the
board increase in all countries, which raised overall weighted average
tariffs to twenty three percent, the highest and more than
one hundred years, from ten percent before the announcement and
two and a half percent last year. According to JP
Morgan Chase, Let's see it would mark the biggest attempt

(19:46):
to fundamentally reshape the tax trade structure in the United
States since Nixon took us off the gold standard in
the early nineteen seventies. Someone at Morgan Stanley. He says
that his bank has been advising clients that markets were
too complacent about the risk excuse me a bigger and

(20:07):
broader teriff. But Wednesday's announcement was more expansive than we
ever thought. What I find fascinating about that is they
walk right up to the line about the idea of
resetting the world economic order and then fall right back
onto Oh, but all these price hikes are going to occur,

(20:30):
in fact, not as it just the Wall Street Journal.
Let's go back once again to Chuck Schumer. Now, remember
this is exactly seven years ago.

Speaker 3 (20:40):
The President's doing the right thing.

Speaker 4 (20:42):
China has been taking advantage of us for two decades.
They're stealing our intellectual property, which means stealing our good
paying jobs. And I, frankly am closer on this issue,
not on many but on this issue with President Trump
than I was with President's Bush or Obama, because they
did nothing to tell China off. Now China, of course

(21:04):
will respond, but if they know we're strong and we're
not going to back off, they will back off.

Speaker 3 (21:09):
They have far more to lose than we do.

Speaker 4 (21:11):
They have a three hundred billion dollar trade surplus with US,
So I'm looking out number one for jobs. You know,
if General Electric moves jobs to China, they're not unhappy.
But my New York workers in Schenectady are unhappy. And
so you can't let the international business companies who don't
give a hoot about where their factories are govern this.

(21:31):
You have to do what's good for the American worker.

Speaker 2 (21:34):
April twenty eighteen. Now let's just go to yesterday, Schumer
again seven years later.

Speaker 4 (21:48):
Okay, excuse me, Good afternoon, everybody. And I want to
thank Senators Kane and Welch and also Brooks for joining
us here today as we fight against and Trump's trade war.

Speaker 3 (22:03):
As you see right here, this map has how much
He's safe.

Speaker 4 (22:08):
To pay for this absurd, crazy Chai trade war.

Speaker 3 (22:14):
But the worst thing.

Speaker 4 (22:15):
About it is that it so hurts American families. It
is estimated that the average American family will pay more
than five thousand dollars out of their pocket to pay.

Speaker 3 (22:29):
For these tariffs.

Speaker 4 (22:30):
That these tariffs will cost them five thousand dollars as
the prices of everything goes up, whether it's groceries, or cars,
or wood, or you name.

Speaker 3 (22:41):
It across the board. Why would Trump do this? Why
would Trump do this? One reason?

Speaker 4 (22:51):
He wants to take the money that he gains from
tariffs to give tax cuts to billionaires. And when told
that American families would have a great would pay a
whole lot more out of their pockets, you know what
he said, I don't care. What kind of bubble is
this man and his billionaire cohorts in that they don't

(23:12):
understand that when the average American family is told that
you're gonna have to pay five thousand dollars more for
the things you buy, that it pains them so well.
Can't buy that new car, can't take that vacation we've
been planning.

Speaker 3 (23:30):
For a whole year with the kids. Can't go visit Grandma.

Speaker 4 (23:35):
Got to cut back on even the medicines I buy.

Speaker 3 (23:41):
What kind of bubble do they live in? So we
have documented in this.

Speaker 4 (23:46):
Chart how much each state okay.

Speaker 3 (23:52):
From Trump's trade.

Speaker 4 (23:54):
Look, I think it's devastating. I think the President's doing
the right thing. China has been taking advantage of us
for two decades. They're stealing our intellectual property, which means
stealing our good paying jobs. And I frankly am closer
on this issue, not on many but on this issue
with President Trump than I was with President's Bush or Obama,

(24:17):
because they did nothing to tell China off. Now China,
of course will respond, but if they know we're strong
and we're not going to back off, they will back off.
They have far more to lose than we do. They
have a three hundred billion dollar trade surplus with US.
So I'm looking out number one for jobs. You know,
if General Electric moves jobs to China, they're not unhappy,

(24:38):
But my New York workers in Schenectady are unhappy. And
so you can't let the international business companies, So don't
give a hoot about where their factories are govern this.
You have to do what's good for the American worker.

Speaker 2 (24:53):
Which Schumer is the real Schumer? Which one is it?
What's changed from April of twenty eighteen to April of
twenty twenty five. Hmm, And then let's take the humor
of yesterday. It's going to cost the average American or
the average household, five thousand dollars more a year because

(25:16):
of these tariffs. Okay, then decrease our taxes by five
thousand dollars a household. You keep saying that he's doing
Trump's doing this for the millionaires in the billionaire class, Well,
then why don't you step in and do it for
the middle class and those of us who actually pay
the taxes. Lower the income tax. Maybe that's Trump's game.

(25:42):
Maybe Trump's gain is game is not only do you
keep my twenty seventeen tax brackets in place, but let's
lower them even further to offset the short term pain
from these tariffs. If you know, think about how he

(26:06):
did tariffs to get the remain in Mexico policy back.
If all three point three trillion dollars three point three
trillion dollars of US imports faced a twenty percent tariff,
one think tank estimates that that would raise about six
hundred and sixty billion dollars in revenue. Well, that is

(26:31):
enough to supercharge domestic production and create a ripple effect
of economic growth.

Speaker 3 (26:39):
And then Trump also.

Speaker 2 (26:40):
Positions tariffs, as obviously he's seen do as a negotiation tool,
and which Chuck Schumer said to China seven years ago,
don't retaliate because we're stronger than you are economically. We
have a larger gross domestic product than you do. And
we're not going to back down. You're the ones that
need back down. So, yes, Trump sees tariffs as a

(27:04):
negotiation tool to secure better trade deals. And Israel is
a great example of that, who dropped all their tariffs,
all tariffs on US goods on Tuesday. Well, I think
that's probably proof that Trump's hardline stands stance probably could
pressure allies into favorable agreements. And what would that do?

(27:25):
That would open up new markets for American exporters. So
if we go to the idea that a tariff is
a tax imposed by a government on goods imported from
another country, and that's designed to protect domestic industries or
on the alternatively, designed to pressure foreign nations on issues
like trade imbalances or border security. Unlike a general tax,

(27:48):
which might apply to incomer sales taxes, a tariff specifically
targets imported products, raising those costs in order to encourage
people to acting their own economic interest and to buy
a local or penalize other countries' trade practices. Now, what

(28:10):
Trump's doing here, he's referring to as reciprocal trades reciprocal tariffs,
and he means that we match the tariff rates that
other countries impose on our goods going to them. So
if another country has already been charging in ten percent
tariff on US exports, then we would slab a ten
percent tariff on that country's imports to US. Trump's simply

(28:33):
equalizing in an unequal economic situation that has existed for decades,
allowing foreign countries to take advantage of US at the
expense of American businesses, American workers, and American taxpayers. There's
a study from the Tax Foundation claims that Trump's tariffs

(28:56):
on Canada and Mexico would reduce our gb by about
two tents of a percent, cut about two hundred and
twenty job two hundred and twenty thousand jobs, with after
tax incomes dropping by about zero point sixty six tens
of percent. But real world example examples avocados. Mexico supplies

(29:21):
over a quarter of the fresh fruit and vegetables in
this country, most avocados. Trump and posted twenty five percent
teriff from most Mexican goods starting March four. He did
exempt some before the tariff. A typical avocado might cost
say a buck fifty at the grocery store. After the tariff,

(29:42):
the American importer pays the twenty five percent tariff, adding
thirty eight cents per avocado to cover that, the importer
might raise its prices, and the final grocery store could
charge a buck eighty eight versus a dollar fifty, assuming
you pass on the full cost. So Glaucama like to
get pricer. Consumers might field to pinch on other products

(30:03):
like tomatoes or berries. But the CEO of Mission Produce,
which imports most of that into this country, said instead
that the company would now focus on sourcing from Peru
and California in order to mitigate the impact, proving Trump's

(30:23):
point about encouraging purchase of non tariff US products. See
I think right now today everybody's in a thither about this,
and what we need to do is just take a
deep breath because it'll either massively succeed or massively fail.

(30:47):
Oh my god, the terriffs are crushing the stock market.
Wait a minute, These terrorifts aren't going to make any
effect whatsoever for a reason pre or four months, so
twice is the stockwork.

Speaker 3 (31:03):
Oh that's right.

Speaker 4 (31:04):
Panic, everybody's got panic.

Speaker 2 (31:09):
Thank you could have said it better myself. Let's go
to the White House. They released a luxury yesterday about
the tariffs.

Speaker 5 (31:17):
Can you talk about the president's historical view on global
trade and the tool of tarists or the use of
tariffs that he envisions not just through Liberation Day today,
but how he's used it over the years.

Speaker 6 (31:33):
Yes, Well, the announcement today is the most significant action
on global trade policy that has taken place in our lifetime.

Speaker 7 (31:44):
So that's not even a close call. I mean, this
is this is probably the biggest event that's happened on
global trade since the very ill fated decision that we
are now reversing of knocking down all of a Marriause
trade teriffs and revenue policies that led to the offshoring

(32:05):
and outsourcing of all for industry. So this is a
great reversal of that. Great portrayal is how we look
at it. So in the twentieth century, successive American presidents
knock down all of the policies that we had to
protect the American industry, and they did insane things like
letting China into the World Trade Organization as an example,
and we watched all of our factories go overseas.

Speaker 3 (32:26):
This is the complete reversal of that.

Speaker 7 (32:28):
This is the great onshoring, the great reshoring of American
jobs and wealth. So if you look at America today,
we're totally dependent on foreign countries for the supplies to
make this country run. For all of the essential goods, materials,
manufactured products that make it possible for us to live
our lives. Our cars are electronics, all the materials that

(32:51):
go into our homes, our buildings, our medical supplies, our
entire supply chains are completely embedded than foreign countries. So
if there's a national emergency of any kind in a
country shuts off an import or a foreign power embargoes
a sea lane, we are then left defenseless, helpless because

(33:13):
of the decisions that prior leaders made that President Trump
is now reversing to let all of these industries leave
our country. And so what he's doing today is, for
the first time ever, he's saying that if you have
stolen our jobs and therefore threatens our national security, we
will apply a reciprocal tariff based on the degree of

(33:33):
your misconduct. So for countries like China, for example, they
will see a very high teriffry because they engage in
the most egregious conduct threaten as our national security.

Speaker 3 (33:43):
For countries that.

Speaker 7 (33:44):
Have severe but not as severe misconduct, they'll see a
moderate but not as high tiff.

Speaker 3 (33:51):
Right.

Speaker 7 (33:52):
The effect, though, of those global tariffs will be that
companies will have to move their production back into the
United States. So factories will leave, whether it be Mexico
or Canada, or Vietnam or Cambodia or China or the
European Union, they will come back to the United States
to produce their products, to make their goods, and in

(34:12):
so doing, Yes, it will create jobs, Yes it will
increase revenues. But most importantly, it will restore our national
security so that we will not be dependent on anyone
else to survive and thrive as a nation.

Speaker 2 (34:25):
That pretty much sums it up. Now. Is it going
to happen overnight. No, but it is a reversal of
a decade's old policy that offshort everything. Let's just bring
some of it back.