It’s Tariff Time, Again

from The New York Times I'm Michael Boro. this is the. [Music]. daily weeks before taking office Donald. Trump is doubling down on tariffs as the. way to bring back the millions of. American manufacturing jobs that have. been lost over the past 30 years today. trade reporter Anna Swanson brings us a. reality check on whether tariffs worked.

in Trump's first term and how they. compare with the alternative approach. used by President. [Music]. Biden it's Monday December. [Music]. 2nd so honor the world has spent the. past few days of absorbing Donald.

Trump's threat to impose enormous. tariffs on America's three biggest. trading partners 25% tariffs on Goods. coming in from Mexico and Canada 10%. tariffs on Goods coming in from China. and in doing so Trump said very loudly. and very clearly that his approach to. protecting American jobs and American. manufacturing is back yeah and these are. really large levels of tariffs so this. action is going to raise tariffs on some. of America's closest allies like Canada. and Mexico to levels that the country.

hasn't seen since the. 1950s Trump has tied this round of. tariffs to goals for stopping. immigration and drugs entering the. United States but typically he sees. tariffs as his primary tool for bringing. manufacturing jobs back to the United. States and helping the US economy right. and he has really extensive plans to. impose them around the world with our. trading partners in order to do that and. that is a sharp contrast with the.

current President Biden who really. thinks that the way you keep jobs in the. United States is by directly investing. in American industry right Trump tariffs. Biden direct investment and it seems. like an interesting moment to be having. this conversation with you because we. have an incoming president who is. articulating a plan for tariffs so. vividly and forcefully while the sitting. president is is still applying the.

approach you just described so that. really gives us a chance to kind of. evaluate them side by side how do you. think about them yeah it's a really. interesting moment in trade policy where. we're shifting from one tool to the. other Trump sort of having a big stick. Biden may be offering a carrot so Biden. is trying to incentivize companies to. manufacture in the United States and in. order to do that he's giving them money.

got it let's explore each of these. approaches one by one and I think. because he's about to become president. and because he's articulating these huge. tariff plans already we should start. with Trump and of course we have a. useful place to look to which is his. first term which was filled with tariffs. so take us back to that first term and. how that went and whether it worked yeah. yeah so I covered trade during President.

Trump's first term it was a very wild. time for trade policy he put tariffs on. all kinds of things he put them on solar. panels washing machines hundreds of. billions of dollars of goods from China. but I think a helpful example for us to. look at is his tariffs on steel so steel. was an industry that the United States. had been pretty dominant in until it was. gradually outsourced to cheaper places.

like. China and so China began flooding the. market with cheap steel it now makes. over half of the world's steel and Trump. thought that was. unfair steel is steel you don't have. steel you don't have a. country our Industries have been. targeted for years and years decades in. fact by unfair foreign Trade Practices. leading to the shuttered plants and. Mills he also thought this was an issue.

of National Security this is not merely. an economic disaster but it's a security. disaster we want to build our ships we. want to build our planes we want to. build our military equipment with steel. with aluminum from our country that the. United States needed to have its own. steel mills in the case of War to be. able to produce its own Metals mhm so in. 2018 today I'm defending America's. national security by by placing tariffs.

on Foreign imports of Steel and aluminum. he imposed tariffs of 25% on foreign. steel and 10% on aluminum and those. tariffs didn't just go on China or. American Rivals he put them on countries. globally so even allies like Mexico and. Canada and just explain the logic of. that in his mind yeah so it might be. helpful to remember what a tariff is.

here so it's a tax on a good when it. comes across the border and the goal of. that is to raise the price of foreign. goods and that means that consumers. domestically have less incentive to buy. that more expensive foreign good and. they have more incentive to buy the. americanmade good which can now compete. more easily right it's basically a. message to American consumers and. American corporations.

to use the domestically made thing which. makes sense because it's going to be. significantly cheaper once the tariffs. raise the price of the foreign good yeah. that's right and what is the reaction. from those countries when this Universal. set of tariffs are imposed so other. countries were not thrilled about this. they were quite angry they responded by. putting their own tariffs on American. products and they targeted some. quintessentially American Goods like. blue jeans Harley-Davidson motorcycles.

whiskey suddenly those products were. going to get much more expensive in. foreign markets because of those tariffs. and that would mean us exporters would. lose out and American Allies were also. really upset by the concept that you. know their exports of metals actually. threatened us National Security so. particularly countries like Canada which. supplies metal for the US military. thought it was pretty out to be labeled.

a national security threat to the United. States H so clearly there's an immediate. diplomatic as well as economic. frustration but when it comes to the. central goal of these tariffs which is. to strengthen the US domestic steel. business does that happen so it. definitely worked demand for us steel. and aluminum grew and US steel factories. started pumping out more metal and there. was a government study that showed that. by 2021 us steel production had.

increased by $1.5 billion a year wow so. this very much does do what it's. supposed to do this blunt force of a. trade tool it does make America's steel. production bigger and more profitable it. sounds like it did but it also had a. downside for other Industries because. there are a lot of Industries in the. United States that use steel and. aluminum to make other things like cars.

or food packaging so for those companies. they had to pay higher prices for the. steel that they were buying to make into. other products and that ended up hurting. them if you look at it from the. perspective of car manufacturers for. example you had the Ford CEO saying at. one point that the metal tariffs had. already cost the company a billion. dollars in profit so the same study.

showed that as a result of those higher. steel and aluminum tariffs companies. that use steel because they faced higher. prices their production actually went. down by more than the production of the. steel industry went up H which would. seem to make it hard to consider an. overall success if the goal is to. improve us manufacturing and US. manufacturing overall decreases because. of this then that sounds a bit more like.

a failure than a success depending on. your goals yeah so you could say you. know yes it accomplished its National. Security goals yes it helped the steel. industry but in terms of overall us. manufacturing the impact in the years. right after the Tariff was. negative. but as it turns out the tariffs were. politically popular H so one study. showed that people living in areas more. affected by Trump's tariffs were more. likely to vote for Trump in.

2020 and I think that stems from the. feeling that even if tariffs didn't. actually benefit these people they felt. that at least Trump was trying to do. something about us. manufacturing and so when Biden comes. into office in 20120 and has his chance. to create a trade policy he keeps some. of the Trump tariffs but also decides to. try something fundamentally. different we'll be right back.

[Music]. back okay so let's turn now to President. Biden's approach to protecting American. manufacturing jobs which Anna you have. called this more carrot-based. direct investment tactic so Biden does. choose to keep some of Trump's tariffs. but he has a different philosophy of the. best way to protect American jobs his. approach is all about industrial policy.

so using government dollars to help. nurture manufacturing Industries in the. United. States Biden got Congress to approve. hundreds of billions of dollars of. subsidies that could be given out in. direct investments in cash to American. companies and that's a level of direct. investment in corporations that we. haven't seen since the Eisenhower. Administration right and the. for that as I recall is the pandemic.

right Biden persuades Congress to do. this at a point in the pandemic when. Supply chains are clogged and disrupted. and fears about the state of the US. economy are growing yeah and then he. really directs this cash at targeted. Industries um industries that he sees as. the businesses that we want for the. future things like computer chips um. elect vehicles and solar panels so of.

those which industry seems worth zeroing. in on to see whether this Biden approach. actually worked so let's focus on. computer. chips chips are in every technological. thing that we use everything with an. onoff switch phones cars dishwashers. sophisticated military equipment all are. powered by chips and the supply chain. issues during the pandemic exposed a big. problem which is that. us companies design a lot of the world's.

chips but we don't actually manufacture. them right most of them are made as. we've said many times on the show in. Taiwan yeah Taiwan is a bit insecure. because Taiwan is so close to Mainland. China and Taiwan which China claims as. its own and has threatened to invade. right which means that suddenly China. could control most if not all of the. manufacturing of computer chips that are. pretty essential to American computers. and technology exactly these chips were.

invented in America let's get that. straight they were invented in America. and so in 2022 the Biden Administration. works with Congress to pass the chips. act we used to make 40% of the world's. chips in the last several decades we. lost our Edge we're down to only. producing. 10% and that secures about $50 billion. of funding to help increase the domestic. manufacturing of chips and to invest in.

things like research and development. we're going to make sure the supply. chain for America begins in America the. supply chain begins in. America essentially this over the longer. run transforms the government into kind. of this Venture Capital firm that is. looking at chip companies around the. United States and deciding which ones of.

them to invest in which ones of them. deserve more money to grow so the. government is putting itself in the. pretty unusual position of kind of. reaching through the free market system. and trying to reshape an industry by. choosing which companies get direct. subsidies of taxpayer money with the. goal of protecting and ultimately. increasing the manufacturing of computer. chips here in the United States exactly.

so the government is making a bunch of. investments in dozens of companies and. the single biggest recipient is a. company called Intel so Intel a lot of. people probably know of them but you. know there's been an issue with awarding. this money to Intel which is it's a. company that lately seems like it's just. a bit past its prime explain that so. Intel used to be this absolute. Powerhouse they were the primary chip. maker behind the personal computer boom.

and in the 80s and 90s they were a huge. and successful company but they've. gradually lost that perch for a couple. reasons they missed the boat on some. major Tech Innovations at one point they. turned down a deal with Apple that could. have given them a piece of the. smartphone market and they never really. got back into smartphones which are. obviously a huge use of computer chips. right and then they also miss the boat.

with the kind of chips now that power. artificial intelligence which are made. by companies like Nvidia and as they. lost that technological Edge they also. started to Outsource some of their own. manufacturing to factories in Taiwan H. so this is a complicated situation the. US government wants Intel to be its. National chip Champion Intel wants to. get back on top but the is still in.

rough shape and it's an open question. whether this government money can help. turn it around so we're at this moment. where the government really wants Intel. to be expanding its factories and hiring. new people but instead the company's had. to announce 15,000 layoffs wow and has. said it needed to delay the opening of a. big Factory in. Ohio and we heard this very telling. moment in our reporting where earlier.

this year at this Gathering of tech. Executives and billionaires in Sun. Valley Idaho Gina Rando who's the. Commerce Secretary was meeting with. Chief Executives from Microsoft and. Google and other firms and encouraging. them to order their chips from Intel's. us. factories and many of these companies. have said no they're not convinced that. Intel's technology is there yet which I. have to imagine gives the government. some real pause when it thinks about.

just how much to invest in Intel because. the whole point of this direct. investment is to pick winners and losers. and it's not sounding at the moment like. the rest of the tech World sees Intel as. a winner or as a place it even wants to. order computer chips from yeah so what. should be a mutually beneficial. partnership is proving to be quite. tricky for the government and the. Administration has tried to hedge its. bets if trying to give money to a lot of.

Chip makers and maybe surprisingly the. program's biggest success so far is. actually this new plant in Arizona from. a Taiwanese chip maker called tsmc huh. so one of the biggest beneficiaries of. this program so far is a company not. owned by an American corporation but by. a Taiwanese Corporation is the Biden. Administration okay with that that some. of these Investments may end up favoring. foreign owned compan ianes is the idea.

that a US manufacturing job is a US. manufacturing job even if the ownership. is overseas or is that a disappointment. to the Biden people so I think they. think it's a great thing that tsmc is. here this is the world's most advanced. chip maker and now the United States. will have cuttingedge chip manufacturing. within its borders it's still a little. bit tricky because some in the US. government say we still shouldn't trust. a foreign headquartered company to make.

the most sophisticated military chips so. you know that's why the US Government. after all of this is still very. interested in backing Intel as well got. it so back to our original question is. this approach working just as we asked. with Trump and tariffs what can we say. about whether or not this program and. plan for direct Investments to increase. us manufacturing under Biden has been. effective yeah so it's a very long-term.

project these chip plant are huge they. take many years to construct and to open. but stepping back we already see that. factory construction is up a lot um. under President Biden you see these chip. and electric vehicle battery factories. and other factories sprouting up around. the United States the Biden. Administration is also pointing to. 115,000 jobs created in the chip. industry a lot of these are construction. jobs but other high-paying manufacturing.

jobs should be on the way uh in the. coming years so slow moving but overall. it sounds like and please correct me if. this characterization is wrong a modest. success yeah it's got some momentum but. it's going to take a while before we. really feel its effects and you've seen. Trump also come out and criticize it as. wasteful saying you don't need to give. wealthy companies all this money you. just need to put a big tariff on them. and then they'll move their.

manufacturing back to the United States. H so just a step way back and compare. these two. approaches is it possible or even fair. because I know how complicated these. questions could be to ask which of these. is more effective at doing what it sets. out to do it seems just on paper based. on everything you're saying like the. Biden approach just numerically has the. edge here in. creating overall more manufacturing jobs.

admittedly at a pretty significant cost. to the taxpayer than the Trump program. is that right yeah I think that's right. Biden has spent a lot of money to start. quite a few new factories and that has. created a relatively small number of. jobs and Trump spent very little money. he used tariffs instead but that you. know economists think did not create a. lot of new jobs overall so it really.

depends on your willingness to spend. government money how much you're willing. to spend to get those new factories and. that manufacturing. work well it strikes me that we have. been talking about these as separate. strategies tariffs and direct investment. when it feels like both are going to. coexist side by side to a degree for. quite some time right I mean if the. Biden Administration is putting all this. money into these companies that's going. to probably come to fruition during.

president-elect Trump's presidency and. likewise Biden kept as you said some of. Trump's tariffs so aren't we going to. kind of see these buttressing each other. and interacting with each other yeah and. that's important so many of Trump's. tariffs have extended into the Biden. Administration many of Biden's. investments will outlive him into the. next Trump Administration Trump may be. the one going to the opening ceremonies. getting the credit potentially as these.

Investments come online so these. policies are definitely going to exist. side by side and I think one thing is. clear that they're both protectionist. they're both setting up more barriers. around the US economy to try to protect. factories inside the country so the. question is is that enough to counteract. these longer run forces that we've seen. that have been taking manufacturing jobs. away from the US economy right and we.

may not know the answer to that for. quite some time but what we clearly do. know is that for the last eight years. and the next four so 12 overall we're. going to be operating under some very. strong protectionist trade policies and. that it really does feel like the era of. unfettered free trade is over and it's. kind of hard to imagine how and when. we would ever go back yeah absolutely.

it's pretty remarkable that it was only. a few decades ago that US presidents. were welcoming China into the world. economy and everyone was proclaiming. that the world is flat and that free. trade you know should be the highest. goal and there's just been this big. paradigm. [Music]. shift and the only argument now is about. which approach tariffs or industrial. policy works better has bigger upsides. and fewer downsides so we don't know.

exactly yet what all this will mean for. the US economy will these policies lead. to this manufacturing Renaissance or. will we see more. inefficiencies higher prices inflation. can we go too far with this approach but. even before we have all those answers. there's no sign yet that this is turning. around we're clearly headed for even. more tariffs and more protectionism in.

the years to. [Music]. come well Anna thank you very much we. appreciate it thanks for having. [Music]. me on Friday night in a sign of just how. much America's trading partners fear. Trump's tariffs the prime minister of. Canada Justin Trudeau traveled tomorrow. logo there he sought to discourage Trump.

from following through with a 25% tariff. against Canadian Goods both Trump and. Trudeau described the conversation as. productive we'll be right. back here's what else you need to know. today in an extraordinary use of his. powers President Biden has issued a full.

and unconditional pardon of his son. Hunter Biden something that President. Biden has repeatedly pledged he would. not do the pardon cast aside years of. his son's legal troubles including a. federal conviction for illegally buying. a gun and a guilty plea for tax. evasion Biden said he issued the pardon. because in his telling the prosecutions. of his son had been politically. motivated and designed to hurt him.

politically in a statement Biden said. quote enough is. enough. and over the weekend Donald Trump said. he wants to replace the current leader. of the FBI with cash Patel a Hardline. critic of the bureau who has called for. shutting down the agency's entire. Washington headquarters and firing its. leadership Patel's radical views could.

make him a difficult pick to confirm in. the US Senate but Trump is intent on. replacing FBI director Christopher Ray. whom Trump himself appointed during his. first term Ray's 10-year term does not. expire until 2027 so for Trump to. replace him Ry would either have to. resign or be fired. today's episode was produced by Shannon.

Lynn Ricky nety and Michelle Banja it. was edited by Lisa chow and Maria burn. contains original music by Maran Lozano. and Sophia lman and was engineered by. Alysa Moxley our theme music is by Jim. runberg and Ben Lanser of. [Music]. wonderly that's it for the daily I'm. Michael babara see you tomorrow.

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