A Conversation With the Architect of Trump's New Trade War

from The New York Times I'm Rachel. Abrams this is the. daily president Trump says he's going to. announce so-called reciprocal tariffs on. every country with duties placed on the. US with less than a month in office back. we're just hours into a new trade. conflict president Trump has pursued. more trade actions against adversaries. and allies than all the trade measures. he took in his entire first term tariffs. ordered by President Trump one and two.

effect at midnight Canada and Mexico. will be among the hardest hit by these. tariffs these tariffs more than triple. what was Dawn during the first term and. there's one man guiding it all. president-elect Trump choosing Peter. Navaro for a top economic position in. his next Administration Trump today my. colleague Anna Swanson on how Peter. Navaro Rose to become one of Trump's key. advisers and why he thinks tariffs will. usher in a new era of American. prosperity. [Music].

it's Tuesday February. [Music]. 18th hi Anna hey how are you good thank. you for being here I wanted to talk to. you because you covered president Trump. in his first term and you focused a ton. on International Trade so I figured you. would be the right person to talk to and. help me understand this key advisor.

Peter Navaro who's been advising Trump. on all of these tariff policies that. we've been hearing about recently right. so I met Peter Navaro when I was. covering trade policy in Trump's first. term and he's an interesting person. because he had a very unusual Journey to. the White House and he had views about. trade in China that were considered. pretty unconventional and unpopular but. over time these views have become one of. the driving forces of Trump's trade. policy so I'm pleased to see you after. four long years of yeah.

Exile so recently I went to see him. again with two colleagues from the daily. that I actually listen to The Daily I. have it on my podcast we met him at the. Eisenhower executive office building. which is just west of the white house. we're going to turn it right. here all right here we go and we sat. down with him in his office to. understand how he came to have these. ideas about trade and tariffs okay so. you want us here yeah yeah okay and now.

that he's in the role that he's in what. his ideas could mean for the country so. um Dr Navaro you are synonymous with. Donald Trump and his agenda but not all. that long ago you were a Democrat so. tell us that story where does that story. start um the. um it went from being uh kind of a a. Democrat to being a trump Republican and. the reality is that there's not much.

difference between that the traditional. democratic party was a lot like Maga in. that it was the party of the working. class American manufacturing blue collar. workers the the goal of that party at. least what it said it was was to. increase the real wages and prosperity. of blueco collar workers and um I was. very comfortable that I was uh I grew up.

in a single family household with my mom. we had a hard life and I identify to. this day with the working class so when. you started talking what did you learn. so he talked about being raised by a. single mom how he was a latch key kid he. also loves school and he did well and he. goes on to T's. University and after he graduated in the. 1970s he's thinking he wants to see what. the world is like and travel a little. bit I became really intrigued by.

Thailand and one day as I was thinking. that maybe I should go there and then. one day kind of randomly he's walking. around the Berkeley campus and this guy. asks him hey want to go to Thailand and. like I looked over and it was the Peace. Corp table and that guy happened to be. recruiting for the Peace Corp of course. I had to say yes because of the uh. synchronicity of the whole thing felt. sort I don't want to get to California.

on you but but that was an interesting. moment and so Navaro decides to go Peace. Corp I feel like that's a really unusual. stop along your way to becoming tariffs. are yeah he says he wanted to learn. about different cultures and got to. travel a lot around Asia I mean the. whole ability to. um see see the world from outside the. United States it makes you very humble. and um when I came back it motivated me. to go.

into policy and when he came back he. ended up at Harvard studying government. and economics in the 80s he finished his. PhD he moves out to Southern California. and he starts teaching economics and. public policy at UC Irvine and then he. decides to run for mayor of San Diego my. only goal is is is mirror was. to address the problems of traffic. ingestions over crowded schools uh the.

awful sewage system I mean it was a. populist campaign just at the local. level on a different set of issues I. mean I sometimes joke I was like like. mini Trump before Trump because he loses. that election and over the next several. years a couple of huge Economic Policy. shifts happen that really shape his. thinking first in 1994 comes NAFTA the. North American Free Trade Agreement and. this is a really important moment for.

the US economy because this was the. first time that the US was engaging in a. free trade agreement with a developing. country Mexico and then in 2001 China. enters the World Trade Organization this. other big moment in trade that really. shifts the politics of trade in America. so it sounds like you have these two big. moments where America is really becoming. much more globalized in its. manufacturing processes you've got NAFTA.

where it's signing agreements with. places like Mexico and opening itself up. to other countries and then you've got. this moment when China joins the World. Trade Organization which really brings. China onto the world main stage in a way. that it hadn't been before that's right. and it's after these big policy shifts. when Navaro starts to see something. happening with his students that bothers. him I was um the macroeconomist teaching. business students of how to forecast the. economy.

and uh in about 2002 and three I began. to notice that the business students who. were in the fully employed program was. losing their jobs and it was like what's. going on here he's trying to figure out. what's going on and he lands on. something that he calls the China price. called the China price and what's that. so he's observing this strange ability. for Chinese firms to offer prices that. are so much lower than other competitors.

50% lower prices and everything and he's. saying that is starting to put us. manufacturers out of business so he does. a study to try to understand just how. they're getting their prices so low it. wasn't simply low wages that so one way. companies could get their prices low is. by paying their workers lower wages but. Navaro finds that China is doing a lot. more than that stuff like currency. manipulation like counter fitting of.

piracy the use of pollution Havens and. things like that and he's so troubled by. this that he ends up writing three books. on China the first was called the coming. China Wars it just got skewered in the. financial times that book get panned do. you remember anything from the skewering. any oh it's just you know it's just just. radical crazy guy you know this kind of. thing right and I thought look these. people don't get it except.

among all of the corporations and unions. and plain old folk that were getting. just hammered by that it's like okay. let's keep going on this and I'm. thinking you know what. people read books but not a lot of them. anymore so let's do the movie and then. he also creates a documentary which is. narrated by Martin Sheen. and it was the same kind of reaction. Hollywood and the it's like oh you're.

exaggerating stuff and like Anna how. would you characterize Navarro's view of. all of this is his assessment of what. China is doing. Fair he's right that a lot of people. agree now that the Chinese government. was not playing by International Trade. rules but even if they were I think the. entry of basically a billion people into. the global economy would have been a. huge shock either way and it ends up. being kind of complicated in terms of. who benefit fed and who.

lost okay so let's talk about that tell. me what some of the benefits are. first so the first benefit is that you. do have a lot of Chinese people lifted. out of poverty so hundreds of millions. of Chinese people who are moving out of. poverty into the middle class and then. you have basically the American standard. of living today created you know how. many people do you know that who love. Costco who love to buy um an expens of. things off of Amazon a lot of that is.

made possible by this China price by. Chinese factories making cheap Goods but. there were definitely a lot of downsides. as well so you have a lot of us. factories going out of business because. they can no longer compete with the. cheap prices that Chinese firms are. offering and you have millions of us. manufacturing jobs that were destroyed. in that process economists have found. and I don't think they anticipated just.

how hard the people on the losing end. would be hit there was this assumption. that people who lost their jobs to to. trade could be helped to move to find. other jobs or go through retraining. programs that would give them you know. even better jobs in this new economy and. they didn't anticipate I think that this. transition was a lot more disruptive and. painful and the pain was really. localized and Vivid and sharp.

particularly in the industrial Northeast. and Midwest where people now are really. hurting because they don't have Factory. employment anymore and economists have. found that then other problems follow. like drug addiction and these are all. things that Peter Navaro was focused on. too actually when I did my death by. China movie I went to. Dayton I saw the people who otherwise be. in factories walking around with.

shopping carts stealing copper out of. homes and buildings whatever they could. and then going and using the money to. get high it really does sound like Peter. Navaro is ringing the alarm Bell on. China kind of well before a lot of other. people are how does he actually get. attached to Donald Trump though so Trump. at this point has been complaining about. China and its Trade Practices for a. really long time president Trump uh the. way we intersected was through a.

interview interestingly enough that he. did for the Los Angeles Times in 2011 at. one point Trump is asked by the LA Times. what are some of your favorite books on. China and he proceeded to do something. I'm not sure I could even do he he he. listed his top 10 books by title and. author and I was number six the coming. China Wars and he mentions one of Peter. Nar. books so they start corresponding and.

one thing led to another and ultimately. then candidate Trump decides to bring. Navaro onto his campaign what I try to. do is see problems and solve them and. the problem I saw Crystal Clear is the. unfair trade that was driving up these. large trade. deficits and shutting down our factories.

and creating just all sorts of misery. for blueco collar workers one of the. Trump wins the presidency and Navaro has. given a job in the administration. working on trade policy but he's still. kind of an outsider there are a lot of. other more influential advisers in the. administration at that point who are. opposed to the idea of imposing broad. tariffs on foreign products and so you. come to a point where you know. most of the other advisers are saying to.

president Trump we can't do that you. know we shouldn't impose tariffs it was. always the same like minuchin and con. and then cudow and all these people they. just didn't buy in and the defining. moment for me in terms of when I finally. was able to um begin doing what the. president wanted me to do was about four. months in and he he made the famous. where's my peter call it's like he's.

sitting around with these guys four. months in nothing's happening at. all and he goes where's my peter I go. over there and and I have this like. battle with con and whatever and and. then some months later I was I I'm able. with With Wilbert Ross to get the steel. and alumin tariffs in and con leaves. like a crying little baby in a huff I. and Navaro prevails and he helps to. draft tariffs on China and on steel and.

aluminum from countries around the world. so when Trump and Navaro leave office in. 2021 what exactly had they accomplished. in terms of the trade relationship with. China so they had really changed the. American terms of trade with the rest of. the world they had imposed a lot of. tariffs on things like metals and. washing machines and over $300 billion. dollar of products coming in from China. and they had also signed a trade deal.

with China and reworked the North. American Free Trade Agreement into a new. deal but then there's an interesting. wrinkle to the story so Trump's orbit. has changed a lot through the whole. first term new advisers have come in. they get fired um you know people are in. and out very quickly but Peter Navaro. even though he's sometimes sidelined is. there the whole time and when the. January 6th hearing comes Navaro is.

called to testify and he shows his. loyalty to Trump by refusing to hand. over his notes and then he is sent to. prison for four months for failing to. honor The subpoena so just to clarify uh. I went to. prison not because I didn't want to. cooperate with an investigation but. because it was my duty as a senior White. House official to refuse to here when.

issued an unlawful Congressional. subpoena that case is being litigated it. was unfortunate they put me in prison. until uh they should have waited until. my appeal ran its course but um I want. to be really clear about why I went to. prison I was defending the Constitution. now to your point U the and he gets out. of prison on the day of the Republican. National Convention and he flies. directly from prison to the RNC to give. a speech yes indeed this morning I did.

walk out of a federal. prison in. [Applause]. Miami Joe Biden and his Department of. Injustice put me there wow that is quite. an image and we know what happens next. Trump who is somebody who obviously. prizes loyalty very much wins the. election returns to office and he brings. Peter Navaro back with him. that's right and this time he is even.

more empowered to totally transform. America's trade. relationships we'll be right. back okay so from the review of my book. there's been. a steady evolution of thought amongst.

the public even on Wall Street about. what I've been saying what the president. has been saying what others in our camp. have been saying. and I guess I'm mainstream now that's. scary. [Music]. that so Anna now that we understand how. Peter Navaro formed his worldview about. trade with China let's talk about his. tools for bringing back manufacturing.

jobs to the US and those tools are. tariffs tell us about how Navaro makes. the case for. tariffs so Peter Navaro believes that. tariffs are a very important tool to. balance out America's trading. relationships that as we talked about. countries like China have been cheating. International Rules by making products. more cheaply than they should and.

stealing intellectual property and. basically they're putting out Goods that. American businesses just can't compete. with and so American businesses need. kind of a shield from those products and. that Shield is tariffs how exactly is it. a shield well a tariff is a charge on a. good when it comes over the border so if. companies are making their products. outside the United States and they want. to sell them inside the United States. States they pay that extra fee so the.

thinking is tariffs will incentivize. companies to make their products inside. the United States so they don't have to. pay that fee but what does Navaro say. about the criticisms that are often. cited of using tariffs like Trump. himself has acknowledged on social media. that tariffs could lead to higher prices. for example for consumers and in the US. just to point out we just went through a. period of super high inflation and that. was really really painful for people so.

I asked him about that and he was pretty. clear about his position tariffs do not. cause inflation when they're imposed by. the largest market in the world and that. has been demonstrated by the fact that. we aggressively imposed tariffs during. the first term we had zero inflation as. a result of either he said that tariffs. will not hurt consumers so I I I did. want to push back on some of the. economics of tariffs and also get your. response so you know first there were.

quite a few studies that showed that. American consumers did Bear the brunt of. the China tariffs that much of that cost. was passed through um but then secondly. even more basically I mean stay with. that okay let's do this okay so who are. the studies by you know a lot of very. prominent. economists uh new fed um but other. academic economists as well all the ones. that were wrong about Trump. you know like like the bigest that you.

don't believe in and that you kind of. but I think it's fair Anna for you to go. back and look at those analyses who said. it and then look what they said for. example when Trump came into office and. how they predicted there would be chaos. recession inflation stagnation that has. never happened I I think my point here. is that the academic Community can't be. trusted to critique Trump economics. and they have a credibility problem.

because they've been crying this wolf. they did it all through the first term. none of that. happened they're just wrong we're right. they're wrong in the story and you feel. that the American people are on your. side of that assessment that economists. don't know what they're talking about. it's the it's the American people who've. borne the brunt of this for going on. what 40 years. now how many times do you have to be. told by politicians and corporate flaks.

that this free trade stuff's good for. you and then you lose your job and your. community falls down around you for you. to stop believing them I mean it did you. know that's why Trump got elected in. 2016 setting economists and think tanks. aside I mean even sort of common sense. right so tariffs work by raising the. price of foreign goods and when the. price of foreign goods go up you know. that is what encourages people to buy.

domestic Goods I mean isn't that the way. the tariffs all right let's let's let's. walk through that okay there's a rhyme. to the reason why we did I asked him. this question a couple of times aren't. tariffs supposed to increase prices. because that's how tariffs work they. make the foreign good more expensive so. people buy American Goods instead but. Navaro didn't really give me a direct. answer here's the thing we are we are. the biggest Market Market in the.

world which gives us buying power okay. so particularly export dependent. economies the China is of this world who. heavily rely on Americans buying their. products. if that becomes more difficult to. do what's the first thing these. countries are going to do in response to. tariffs. what are they going to do we slap a.

tariff on what they what what are the. producers over there going to do what. are they going to do tell me what do you. with what they do you're a producer over. there and suddenly suddenly you know. tariffs are up and you got to compete. with American producer what are you. going to do so your assumption is that. they would lower their prices that's. exactly what they do it's not an. assumption that's just a fact instead he. talked about how Chinese companies would. absorb some of the cost of the tariffs. to keep prices your goal is to help us.

factories but you a lot of us Factories. do buy components and parts from abroad. um and you know I've talked to a lot of. Manufacturers who say that would raise. their costs um it would make them harder. you know harder for them to make things. does that kind of backfire on your. agenda so here's one of the iron laws of. manufacturing. if. manufacturing goes abroad the Supply. chains follow and vice versa okay so I.

also asked him about us manufacturers. who are buying parts from abroad and. whether tariffs would hurt their. business and he didn't seem all that. concerned with what I've been hearing. from some American. manufacturers he just kept coming back. to the idea that ultimately tariffs will. incentivize both American and foreign. companies to build factories in the US. you going have a domestic investment. come quickly when we did the steal which. he believes will then lead to higher.

wages for Americans you see wages go up. and that gives consumers more spending. power and offsets any rise in prices if. if real wages rise faster than any other. types of inflation people are still. better off and he said these tariffs. aren't happening in a vacuum when I was. a campaign adviser in 2016 I had a had a. mantra right it was tax cuts.

deregulation strategic energy dominance. fair trade those were the four. components the the tires on the car. towards economic Prosperity he argues. that if the Trump Administration is able. to get the price of oil down if Elon. Musk and his team are able to cut. government waste and red tape and if. Trump keeps taxes low all of these moves. together would reduce inflation and help.

the US economy because one of the most. important. things that we're trying to accomplish. that President Trump is trying to. accomplish is more stable and resilient. Supply chains which we have learned to. be an enormous problem in the wake of. the. pandemic so that's a major national. security and economic security risk so. but what Navaro said is the most. important part of all of this why he's. so focused on tariffs and bringing. manufacturing back to the United States. is that it all comes back to National.

Security we get screwed by everyone and. we could afford. it in the 1950s we can't afford it and. that's the thing the rest of the world. needs to understand it's like when they. want to come to Uncle Sam for support. for. democracy if we don't have a. Manufacturing in the defense industrial. base cuz it all got exported because.

people are cheating us on. trade we're not going to be there and. that's why in the first term when. President Trump said Economic Security. is National Security it was a very. important message and foundation for the. way we here in Trump land think about. things the sense I'm getting from. talking to you about your conversation. with Navaro is that we're talking about. these really aggressive audacious policy.

tools and in fact you know in some form. or fashion the US has been using them. for the past few years they obviously. started in the first Trump. Administration but what's coming through. is that it doesn't sound like Navaro is. actually grappling with what you're. describing as the potential negative. consequences of these. tariffs I don't think that he believes. in those negative consequences no he. doesn't believe in what most birs are. saying which is that all of these.

tariffs could end up really hurting. Americans it's not going to be painful. for Americans it's going to be a. beautiful thing president Donald John. Trump has proven that tariffs work for. the American people and they're going to. be even more much more important this. second term this is all set in motion. now Anna. so stay tuned so that. order you know he and the president are.

embarking on imposing tariffs at just a. a vastly bigger scale than we've seen in. this country in many decades and so it. is kind of like a a grand experiment. really to see if they're right about how. tariffs will play out for the American. economy well Anna thank you very much. thanks for having. [Music].

me we'll be right. [Music]. back here's what else you need to know. today four top New York City officials. are resigning after the justice. department moved to dismiss the. corruption case against mayor Eric Adams. the four officials oversee much of the.

city government and their departure. could further weaken Adams whose. resisting calls to resign Adams was. indicted on federal bribery and fraud. charges which the doj sought to dismiss. arguing that the prosecution was. politically motivated and was impeding. Adams's ability to cooperate with. President Trump's deportation. agenda and on Monday a Delta Airlines. flight carrying 80 people crashed. flipped over and injured at least 18. people on board while it was trying to.

land in Toronto the accident comes after. a series of plane crashes over the last. few weeks have stoked fears and. passengers and raised broader concerns. about Aviation. safety today's episode was produced by. Mary Wilson and Michael Simon Johnson it. was edited by Lisa chow and Lissa. Anderson fact checked by Susan Lee. contains original music by Pat mccusker. Diane Wong Marian Lozano and Dan Powell.

and was engineered by Chris Wood our. theme music is by Jim brunberg and Ben. lansburg of. [Music]. wonderly that's it for the daily I'm. Rachel Abrams see you tomorrow. [Music].