Bob Lighthizer: Everything You Need to Know About Trump's Tariffs and Fixing America’s Working Class

Thank you for coming on to explain. this. I mean, I my one frustration. I believe in what the White House is. doing. I don't think. Enough Americans understand it. So I don't think there's anyone. better at explaining it than you. You are the trade representative. What about our current system needs. to be changed? Why is it important. to do this, to. institute tariffs, to rethink trade?

So that's the fundamental question, Tucker, and thank you for having me. on. It's a pleasure to be here. I've been a fan for a long time. So I think you have to start with. a proposition, has the.

system failed? And to me, it's an emphatic yes. I think of it in sort of two. ways. One, if you think of the... the way trade is supposed to work. You're supposed to export in order. to import that. And then you get the benefit of. trade. You get actually, you do what. you do best, I do what I do best. Or I do what you do less best. Right. You export, we. import and we get the benefit. We both have higher standards of.

living. That's not really what it's. evolved to. It's evolved to now. where You have a few countries, the United States being the biggest, that have an open capital system. and an open trading system, and other countries have. an industrial policy that is. designed not to increase the. standard of living of their. citizens, but to. gain wealth. So what they're trying to do is. get wealth in order to get assets. in the United States, in order to.

get technology, in order to get all. these kinds of things that make. you wealthy. So I think of the. kind of failure points as being one, because this system doesn't work, we. have this giant transfer. of wealth from the United States. overseas. And that is in the. form of. trade deficits. And the way. the system is supposed to work, no. one should have large trade deficits. for long periods of time. Things can happen, you can do it. You could have trade deficits with.

one country, surplus with another. but the notion. of a country having hundreds of. billions of dollars of trade. deficits every year, is not. how it's supposed to work. We now are to the point where our. trade deficits, they calculate them at about. seven or 800 billion dollars. If you did it the way you or I would. do in a sensible way, you'd probably. be at a trillion or. a trillion and a quarter dollars. So that's a transfer of wealth. from Americans overseas.

in return for current consumption. And it has nothing to do with. economics. It's entirely the result. of industrial policy of. other people and our being. defenseless. So you ask yourself, what does that mean over a period of. time? Why should I worry about that? There's a data point called. the international investment. position of a country. And that is how much, for. us, all Americans own. throughout the entire world versus. how much everyone else owns here. That number is a.

negative $23.5. trillion. And if you said, what was. it 20 years ago, it was probably. a negative $3 trillion. So we have transferred. about $20. trillion worth of our national. wealth, and I would say. the future income of that. wealth overseas in. return for. Can you explain that. measurement one more time? It's what we. own here versus what others own.

here? It's no. So it's how much. Americans own overseas, all over the world, versus how much everybody else in. the world owns here. And it's a real calculation. It's not something I did, right? It's a real statistic. It's been around forever. And what would that include that. they own here? So they own. 23. and a half trillion dollars worth of. stuff. But if you said, what is. mostly is probably mostly.

Debt, a lot of it's debt, a lot of it is equity in our. companies, real estate. Those are the principal things that. they own. Those are the. big assets. Debt is a big one, but also. ownership and equity, a lot. of it, portfolio. Now some of it is foreign direct. investment where a company actually. comes in and buys piece of land. and creates jobs, but most of it. isn't that. Most of it is just they own.

U.S. equities. If you think about the. United States for most of our. history, particularly since the. Second World War, we. Americans were thought rich because. we own more overseas than. people owned in America. That's what makes you rich. Now we are poor to the extent. of 23.5. trillion dollars. Now, this point is. an interesting one. In 2003, Warren Buffett did an article on. this point, and.

he was worried about. the trade deficit because. it was leading to a negative. net international investment. position of Americans. And it was basically transferring. Well, it's the same thing I am. When he was worried about it in. 2003, the number was a negative. $2.3 trillion. So since he sort of raised. the red flag on this and said, we've got to get back to balanced. trade, the situation has gotten.

geometrically worse. So that's the first. condemnation of the current system. And we can talk at great length. about that if you like. The second is this. system has really slowed economic. growth in the United States. So let me give you a point here. If you think from. the 1960 to 1980, And then 1980 to 2000, and 2000 to the present, think in. those three increments. From 1960 to 1980,

we had 14 years of. plus 3% GDP. growth, reasonable GDP. growth. From 1980 to 2000, again, we had 14 years of. plus GDP growth. Since 2000 to now, we have. had three years. And one of those was COVID, which. doesn't really count. So the last time we had plus. 3% GDP growth was 18. or 19 years ago. And that coincides. with this period of. uber, some would say.

hyper globalization, hyper free trade that came on. largely in the 1990s. So we've seen the transfer. of wealth overseas, we're getting. poorer. We have seen. American capital economic growth. We've also seen a. deterioration of our technology. of our technological lead And. there's a number way to think about. this one. We've also seen like.

a lot of the world's population move. here, like the country's. completely changed from 2000. Well, but yeah, but the. demographics is an interesting. point, and I. agree with what. Vice President Mass talked about the. other day about how one. of the things about immigration is. it does get you dependent on low. wages, and when you depend on low. wages, it tends to stifle. innovation. But I make, so I agree with that, but I'm making a little different. point. if you think when you lose. manufacturing.

and you lose manufacturing jobs, you also slows down your innovation. There was this notion that, well, we'll innovate and others will. manufacture, but it doesn't work. that way. Most of the innovation is near the. point of manufacturing. So what are my data points to. suggest that we. are falling behind? First is we invented the personal. computer. Now we make almost none, and none without foreign parts. We invented the The semiconductor, we make now 8% of the global amount. We used to dominate it. We could say the same thing about.

rare earths we did in Vietnam, but. we used to dominate that. Solar panels, we could go through. all of these various things, nuclear. energy, all of these things where we. have lost, not only lost our. lead, have basically fallen out of. the competition, but very importantly, the Australian Strategic Policy. Institute, which is this a. wonderful institute that's supported. by the government of Australia, but. also private sector people. They track 64, what they. call critical technologies, 64.

The United States is behind China. in 57 of the 64. And these are things like AI and. robotics and the kind of things you. need. And if you said, well, where. were we 15 years ago? We were behind in three. So you've seen this deterioration. during this period of of. hyper-globalization or hyper-free. trade or huge trade deficits you've. seen us actually fall behind. technologically. But the fourth and by far. most important.

ramification. of this process is. we've seen a real. deterioration in. the quality of life of. our working class people. Right. Yes. So the United States. Two-thirds of American workers have. a high school education only. Two-thirds. So it's not like we're. talking about some fringe group on. the side. This is the heart of who. we are. We have seen these people lose their. jobs. We've seen their wages stagnant for. 25 years.

There was a bump in Trump. 1, but we're basically back where we. were. You've seen them actually have. shorter lives. Angus Deaton and Anne Case did a. book. you call it deaths of despair, that demonstrated that these. people now live, on average, about eight years. shorter lives because of. alcohol and drugs and suicide. To give you an idea, when I was. young, that differential was. probably about a year,

and now it's eight years. We've seen they are. poorer. We've seen despair. increase. We've seen devastation. You don't have to drive very far in. America. They see devastating. communities. All of this the result of this. failed attempt at globalization, this failed attempt at. free trade. And another aspect of it. is we have seen not only our workers. been treated very badly, but the distribution of wealth in. America has gone just like this. It's one of the great things about.

America. for me particularly growing up, but. I mean even you, you're younger, was this notion that we're all. middle class. Now we weren't always really, but we. thought of ourselves. We definitely pretended it. Yeah, the very, very rich. would, you know, they were them and. nobody cared about them. And then the very, very poor people, sorry for it. But most, you know, 80% of us. thought we're middle class. And I went to Catholic schools and. we had people with, and. nobody that was really rich, because. I actually built Ohio, but. there were people who were.

relatively well off, people who. weren't, and there wasn't any big. difference. But they all ate at Denny's. They all. went to the same clubs. They all played little league. together. They all thought of themselves. as having about the same chance of. success, which is an important. point. Now what we have for. the first time in American history, the top 1% has more. wealth than the middle. 60%. It's never happened before.

We find kind of combining. these thoughts and. we get this from. Angus Deaton, we find for the first. time, sorry, in 2000, when this explosion took place in. hyper-globalization, we find that. American children can no. longer expect to live longer than. and be richer than their parents. That was what we all thought. We're gonna be better off than our. parents and we're gonna live longer. That is no longer true. So, and I could go through one.

data point after another. If you look when I was in high. school... the top 1%. had about 30 times as much. wealth as the person in the middle. Now it's 72 times as much wealth. So this seems. That's like a recipe for social. instability and ultimately for. revolution. That's what happens in other. countries. absolutely no question. We have this sense that we're. immune. I don't agree with that. And these crises. that I've talked about, this. transfer of wealth, the technology, the slow economic growth, but mostly.

the effect on our working people, that is why Reagan. was elected, very beginning of. this, and we can talk about the history. of that, and it absolutely is why. Donald Trump was elected president. Reagan had these so-called. Reagan Democrats, that we all. remember that. That was the. beginning of those people, because. that was when we sort of reached the. peak. By the time we got to. the 2000s, these. people were a movement, this. populist movement, and they are. the reason that Donald.

Trump is where he is. And to his credit, Donald Trump talked about. this and worried about this issue. since he was 35 years old. This is not, this is the, in my opinion, the essence. of Donald Trump. Donald Trump's essence is he. says we're getting ripped off, our. workers are getting screwed. It's not because they're lazy or. stupid, it's because we have a bad. system that is hurting them and it's. destabilizing the country.

And all of these are data points. that kind of make that point. And once you realize that, you realize you have to do. something, right? The purpose of the economy, first of. all, obviously is national security, but after that... It's to distribute. resources and wealth. so that most Americans live the. best lives they can live. And we have lost that. We have just plain lost it. It hasn't been an accident. It doesn't feel necessarily like.

we've evolved into this. It feels like we've been guided into. this, that this. is a result of calculations and. an ideology that still exists. most prominently in the pages of. the Wall Street Journal, which let. me just say is a disgusting, dishonest newspaper, but even if you. like the Wall Street Journal, they. have a very clear. ideology, which they've. promoted along with almost everybody. in Washington. that free trade is the path to. prosperity. And then in fact, it's. like a moral imperative. Like if there's something dirty.

about abandoning free trade, what. is that? Obviously, you know a lot. about this since you've lived in. Washington a long time. So I would say, first of all, that I say the Wall. Street Journal, they have. editorialized against me by. name more than 30 times. I know, I know, I know, I know, I know, I know, I know, I know, I know, I know. Yeah. So, so while we have that in common. too. I say they have the diversity, the editorial page has the diversity. of opinion protocol of.

somewhere between propped and the. people's daily. Yeah. It is their view and they. keep it. So, so, you. know, why did we get. to this stage? To some extent it. was kind of misguided, to. some extent it was wealthy people. pushing it because it was good for. them. I'm not one who subscribes to the. view that it was people trying to. hurt America. I think it was, they just. didn't care one way or another. whether it hurt. They didn't care,

for example, who owned America. They didn't care what. percentage of our global. wealth ended up in the hands of our. working people. Those were not. metrics. What they cared about was. price optimization and how much we. could consume. And that's the opposite of. what people like you and I believe. in. Conservatives and. a lot of labor democrats. believe we have to. worry about values and. preserving what's great in America.

We're not interested in sort. of the materialism of maximizing, optimizing prices and maximizing. consumption. And that's more or less. where that's. There's a combination of that. There's a combination of this. financialization of America taking. profit out right away so that a few. people get very rich, regardless. of the effect on others. If you think of the evolution, Tucker, and we. could talk from the beginning of. time about. trade and how it evolved.

But for our purposes, you would think of it basically As. America... really from the early. 1800s, basically became. wealthier and wealthier, largely. behind the American. system and Alexander Hamilton. kind of an idea of tariffs. and subsidies, subsidies in the. nature of canals and roads and the. like, but tariffs were a key part. By 1870,

we had started to turn. surpluses. By 1890, we're the richest country. in the world, all right? And it kind of progresses like that. Now we can talk about that back. and forth. And those were almost all Republican. presidents during that entire. period, only two Democrats during. that entire period between Lincoln. and Franklin Roosevelt. And basically, tariffs were a key. tool and there were ups and downs in. that. And we can talk about that if. people are interested. But we got to. the Second World War.

And then we had a. different challenge. We had to. rebuild Europe. We wanted to rebuild. Japan for stability. We wanted to fight communism in. the Soviet Union. These were our. motivations. And so at that point, we needed a new system and they. developed this new trading system. And the trading system was sort of. based on the notion of we'll all. reduce barriers, we'll all do better. over a period of time. And I would say that at.

times it was a successful idea, at. times it wasn't a successful idea. But by the time we got. several decades into it, we started. seeing people being more and more. industrial policy. And by the late. 1970s, we started to see our. situation get worse. We started having trade deficits. You'll recall that Dixon. in 1971 put tariffs on. the whole world in order to decouple. from gold, and we can talk about. that if people are interested,

but there were a lot of things that. were sort of signals, and that was. kind of the peak. By the time we got to Ronald Reagan, as I say, there was already a. loss of a lot of jobs. There was an unsettling among our. working class people, which as I. say, unlike a lot of. places, it is us. It's 70, 65, 70%. of it. It is us. And then you found. yourself, the Berlin. Wall fell. There was this notion of the end. of history that for. now on everything is gonna be.

better. We're all gonna be. democracies and we're all gonna have. open markets and there's all this. greatness. You can remember, you. know. Frank-Fu-Gi-A-Man. Other moron. Yeah. Yeah, they're right. So then you found yourself with. Clinton in the 90s, in the end of. Bush, it's not, because I don't want. to be totally partisan, in the end. of Bush 41, Herbert. Walker Bush, and then into Clinton, and we have what I call the. trifecta of stupid, all right? We do NAFTA, we do the.

WTO, the Uruguay Round, and. then the dumbest of them all, we give most favored nation. treatment to. China. And those things are done. more or less in the times of about. 10 years. So Clinton for the most favored. nation status, that was. something that Clinton set. it up but Bush signed it. Is that correct? Now, it passed. under Clinton. So this is an interesting fact. In 1997, I.

did an article for the New York. Times. And you'll recall during. the second. Clinton election, there was this. talk about Indonesian money came. into the Clinton. I remember very well. Yeah. Well I- Johnny something or other. Yeah, exactly. It was at the bit of the commerce. department. Yeah, yeah. I did an article, which the New York Times published, that sort of said, well, what's this. about? This is not Indonesian money, it's Chinese money. What does China want? They want most favorite nation. treatment and they want to get into.

the WTO. And if they do, there won't be an. American job that's safe. So this is in 1997. Fast forward, you have this vote, Clinton is pushing it. By the way, it passes with more. Republicans than the Democrats. The Republicans are worse on this at. that time. A lot of them have kind. of learned. And then we have these things pass. So we have this trifecta of stupid, as I call it. And then we have 5 million. manufacturing jobs lost. You just see jobs lost. Wages are basically not going up in.

real terms since then. The rich get richer and the poor get. poorer. And a lot of these. very bad outcomes for working. people, I would say for the country. generally. you can say came at that. time. Now, if you say, well, is the system. deteriorating before then, for sure. it was, but this was like somebody. just putting on steroids and. acted like, I mean, the only. thing that they missed about the. evolution of economics was human. nature, right? Other thing else they got right. They just missed human nature.

As always. Yeah, so. then you saw very. bad things happen over. a long period of time. You got to the point where you had. 2016, you'd have President Trump, as. I said, that put him in complaining. about this general notion. since he was 35, since he was a kid. And he kind of gets the populist. movement, he's elected. And then we have, you know, whatever. happened in 2020, a COVID thing that ends up infecting.

our. 1.0 or whatever that computer people. say, we changed the way people think. about these things. And they didn't really change back. much in Biden. To Biden's credit, I think some. of his people were very good, but. overall they didn't make a lot of. decisions to make better. what we did, but they didn't make it. worse. And now we're. in Trump or we're in a position to. actually make substantial.

changes. But the, and I know that's what you. want me on here to talk about, but. the most fundamental thing is. The system has failed. America generally, and it's failed our. working people dramatically. And that's been going on in. an acute state for at. least 25 years. We're always looking for cool. companies that make products that. make you feel better, and that's how. we ran into Bond Charge. Bond Charge offers a wide range.

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So go to bondcharge.com slash. Tucker. Use the coupon code TUCKER. to save 15%. When life expectancy in. an advanced country goes backward, I don't think there's any clearer. sign of an emergency. I mean, that's the one thing you. can't fake when people die. We are the only. G7 country that. has a life expectancy. of under 80 years. And supposedly we're the richest. country in the world. Supposedly.

It's, now there's a lot of. things contributing to that. Everyone sees it all their own way. and there's a lot of things. contributing to it. But- But it's an emergency. It's an absolute crisis. And I'm telling you, this divergence. between This. income inequality is. another real, real emergency. I couldn't agree more. It changes the kind of. country we live in. It's not the kind of country, I. don't care whether you're well off. or not, it's not the kind of. country you want your children. living in. It's not America.

And we have to do something about. it. And these are, this is, I believe, this is the motivation. for Donald Trump. This is the motivation for. the people in his administration who. are informed. on these issues. I obviously deal with other kinds of. issues. It's bad for everybody. It's actually bad for the rich as. well as the poor when you have a. stratified class. system like we're getting, which didn't exist. By the way, spend three weeks in. Australia, which is a country with a. lot of problems, but it's still a.

middle-class country and you can. feel it in the way people talk to. each other and their attitudes. We're all sort of in this together. You do not get that sense in a. pyramid-shaped social structure at. all. And that's the biggest change of my. lifetime, is the end of the middle. class as a majority and the end of. the egalitarian spirit to find. America, that Anglo-egalitarianism, which is not a feature of other. countries. No, I couldn't. agree more. It makes me hate the people in. charge for ignoring this stuff. So what do you do about it?

So the first thing you do is. you acknowledge you have a problem. Second thing you do is you put your. finger, what is the nature of the. problem? The problem is. industrial policies. of other people. Now, this is a really important. point, Tucker. The president and some others will. say the tariffs are different. They're ripping us off on tariffs. And for sure, that's true. But in terms of what is causing. the harm to the global economy,

I would say. But particularly to America, the most important thing is not. tariffs. Tariffs are the most visual thing, the easiest to see. But the real problem goes far deeper. than that. So that if you end up. with equal tariffs, you will still. have a catastrophe for America. It will not resolve the issue at. all. So what are the. things in industrial policy. that tilt the scale against. we would say open markets and.

free trade and fair competition, all right? They are everything from. the banking system. So in China, they have a banking. system. They tell you to put your. money in the bank. They make you have low interest. rates. They take the money. They can loan it to manufacturing. at what we would. consider to be a below market rate. And that encourages manufacturing. And they've done that. They've increased those. loans from $60 billion. a few years ago. This is according to the to the New. York Times to almost $700. billion in the last year or so,

but for a year. So it's the labor. system. If you have a system that. keeps labor from getting its fair. share of the pie, you're keeping wages down. because of the. statutory system. An example of that is this hukou. system in. China where you can't really move. around and be part of the system and. get wages, just kind of stay where. you were born. But there are lots of other ones, not allowing unions, not allowing.

organization, I mean, there's. a lot in the labor law. But it's subsidies, it's denying. market access, it's. fake non-scientific standards to. get products, it's value added tax, it's a. tax system. It's a tax system and explain that a. little more fake standard. So, it's one of the big things we. have, fake is a, see, that just shows you that I'm a Trump. person, right? So,

a person, a more sensible person. than me would say non-scientific. sort of standard. So, I mean, you could take a case. of, this is like a simple case, how long should a. tractor have to. break before it stops? And you could say, okay, fine, safety is, these are making. these numbers up, Safety is. 40 feet and maybe the. Europeans would say, well, it's. gotta be 10 feet. We have to be very. safe. And the net of that would be. to eliminate products coming in,

that kind of a standard. So it's, or health. and safety. For example, the. Europeans saying, chickens. shouldn't come in if you chlorinate. it. That is to say, when you're. done, you put chlorine on it to make. sure there's no microorganisms. They would say, well, that's unsafe. So it's sort of non-scientific. standards like that. There's a lot of them. which are in effect trade barriers. They're absolutely trade. Everything I'm talking about. either basically shifts. national wealth.

from consumers to manufacturers. to give them an edge. And the tax system, currency manipulation, there's all. these things. These things are, the point I'm trying to make is are. multiples in terms of importance. versus tariffs. If we have equal tariffs with. everyone in the world, at zero, for. example. We won't have a middle. class, we won't have manufacturing, because all these other factors will. give them this unfair, uneconomic advantage.

And we can go through, and the. president, to his credit, in his. truth, where he laid this out, he said, it's not just tariffs, it's. all these other things. And the James and Greta, the USTR, is looking at all these other. things. But when we. think of The kind of. migration for me, let me just. say, was like, okay, we need free. trade. And then you said, okay, we. need fair trade. The reality is you.

can't get fair trade because. there's too many ways to twist. it. What we really need, I've. evolved to, is balanced trade. We need a system that enforces. kind of trade balance, not. with countries, but globally. Countries shouldn't be able to be. huge surplus countries year after. year, like China, of course, being. the worst example, but also Germany, Ireland is evolving to that, and. there's a bunch of other countries. we can talk about. Countries shouldn't be able to do. that. And so you say, well, how do you.

achieve that? You really need to put in place, I would say, some kind of tariffs. to offset this fundamental. unfairness. You're not just. offsetting their tariffs. Europe's 10% on autos, we're 2.5%. If Europe went to zero, we still. wouldn't sell very many cars in. Europe. We just wouldn't. Our companies basically make small. trucks. They don't need them there. I mean, it's just there's a lot of. reasons why that wouldn't happen. But what you need is you can't have. countries have huge trade surpluses. over long periods of time.

You have to enforce and you have to. penalize countries that. have surpluses all. the time and let countries. that have deficits all the time get. back to balance. If you do that, you then get the. benefits of trade. So, so, so. how do you get the balance right? There's, there's, there's. Basically three ways you can get to. balance trade. One is the way that Warren. Buffett talked about. in this article, and it's a. wonderful article. I recommend. anyone to read it. I would just Google Warren Buffett's. Squanderville because he talked.

about Squanderville and Thriftville. And it's a short article. It's very. nice. 2003. Yeah, it was 2003. And he says what we should. do is have. export-import certificates. So in order to import, you need an export certificate. So you want to bring in t-shirts, you go to a steel mill and say, okay, fine, you export it, I want to. buy that. And that would get you to. balance. And I would certainly support that. Another way you could do it. is you could put, and this is a. little more complicated, you could.

put a tax on the money that. comes back. this 23 and a half trillion dollars, this trillion dollars that comes. back every year where they buy U.S. assets, you could tax that. So that really wasn't worth a. dollar. It was only worth 80 cents. In that case, there would be less. incentive for people to run up these. air busses. That's called a capital. access fee, and there are people. that'll propose that, and that also. would work. And then there's tariffs. So I prefer tariffs, one, because people. understand them.

Two, every country in the world has. a system set up to deal with tariffs. right now. They all have the legality, they all. have the process of how to. do it. Three, they're flexible, you know, you can move them around. based on need to. get to your objective of balance. But any three of those things would. work. And I just think, and obviously the president. thinks that tariffs are the. simplest, easiest, most understood. way to kind of do it. And the objective has to be.

to offset all unfairness. and to get moved towards over. a period of time, move towards. balance and ultimately have balanced. trade. If you had balanced trade, you'd have another trillion dollars. worth of domestic GDP, right? I mean, it would be a huge. boom and most of it would be, or a. lot of it would be in manufacturing. and things spun off by. manufacturing. And that's what the president is. trying to do. He's trying to get us. to use tariffs to move. towards balance. to get a better distribution. of wealth within our country.

so that working people end up with. a higher percentage of the wealth, and we have this economic boom. that's going to come by from. reducing that. huge perennial. trade deficit. I think a lot of people, some people. anyway, in Washington for sure. have given up on the idea that. America can be a manufacturing. power once again. So I think that's, you know, I think that's fundamentally wrong. So the first thing they would say is.

magnifying doesn't matter. People still say that. Oh, there there there are people. yeah, we're. Outside of AEI or. No, well, you'd have to, you're. in a pretty small group of people. that have everything in common. except sense. So this is. a view, we people who think like I do, and. I believe the president in this. category really think manufacturing. is essential. One,

the wages are better, the benefits. are better. people stand the jobs. better. for that group of. people that are. not going to be. brain surgeons and astronauts. Secondly, if you look at manufacturing, it employs about 80%. of American engineers. It accounts for about 90%. of private sector R&D. It disproportionately.

accounts for productivity. gains. So if you go right down the kind of. things you use to measure your. economy more and more, manufacturing. throws off about eight or. nine jobs for every job in. manufacturing, and these are good. jobs. So, and finally, you need manufacturing to have. innovation. You need manufacturing to. defend your country. without manufacturing.

And that doesn't just mean on. this national security issue, doesn't just mean being able to make. bombs and submarines, it means. being able to make steel and. automobiles and batteries and. solar panels. You have to make all those things to. have, and semi-conductor chips to. wage war or to deter. a war from happening, which is. probably really our objective. So these people who think we're. post, industrial are just fundamentally.

wrong. And once again, they don't really, it doesn't bother them who owns. America. It doesn't bother them, the. distributions in the country. And it doesn't bother them that. we're funneling behind. technologically. What they're thinking about is yes, but we're optimizing. consumption. If it doesn't bother. you who owns the country, if it. doesn't bother you what's happening. to the people who live in the. country, then I. think it's fair to assume you have. no love for the country. How did people who have no love for. the country end up running the. country?

Well, that's a good. question. One on which I think you. and I have a lot of agreement, but. on which I profess less expertise. than I do on other things. I think a lot of these people, well, some of them just don't like. the country because of our history. for various, they'll take a. data point in our history and say. that means we're bad. A lot of them take it for granted. Um, you know, uh, but, but, but I'm, once again, I'm. not an expert on that.

I, I, I certainly, let's only agree. with your conclusion. It's, it is, it is, it's troubling to me, people who are. globalists, not only economic. globalists, but sort of geopolitical. globalists. They don't realize that. there's a force that wants to take. over the world. Indeed, there are. lots of them and those forces, if they succeeded, would be very. bad for America. A lot of us who were sort of united. in. this Cold War, particularly in the.

early years, it kind of brought. the country together. We realized we were in a Cold War. Indeed, I think we're in a Cold War, a second Cold War now. But I think there's just more. fifth columnists than there used to. be. A lot more. A lot more. Um... How tiny a minority. of economists believe. what you believe? Like how out of step are you in. Washington right now? Well, I mean, so I. basically, you know, people say, why.

do I think the way I think? And some people say it's because. you're from Asheville, Ohio, which. was one of the places that was. decimated, one of a million. What did they build there in your. hometown? So, Ashtabula was a great. town. It was a little town. between Cleveland and Erie, Pennsylvania. It was a port town. They had steel, they didn't have steel mills, but. they had steel fabrication. They made a lot of auto parts. Indeed, at one point, the.

fiberglass body of the Corvette was. made in Ashtabula, one of the. famous things about us. They. brought in ore from the. Great Lakes and entrained it. down to Pittsburgh where they made. steel. Obviously, there was agriculture, a. lot of agriculture in the area, a lot of machine tools, those kinds of things. It was the sort of stuff that. was really, really hit. first with the Japanese.

wave that came on and. which wave. It was one of the other motivating. things in President Trump's. mind because that was. the first thing that we all. complained about was Japan. and Japanese. cars and the like, and then it was. all Japanese manufacturing. And once again, I just want to say, and I love Japan, I'm. not anti-Japanese at all, but that. had nothing to do with economics. either. They kept the currency. low, they had an industrial policy.

to subsidize all this, and then they. we've stat here. and they took our jobs. And now we're seeing that on. a far greater scale. But what's your hometown like now? Oh, you know, I cover. this in the book. It's, I have to be careful because I. love my hometown, but. you know, the poverty rates probably. 35 or 40%. Oh gosh. Yeah, the college. graduation rates probably 15 or 20%. And by the way, by.

the way, this is not. like we're some, the bottom of the pit. This is across the. country. The whole unit. It's everywhere you go. You see these kind of communities. These were wealthy people. I mean, they weren't wealthy people. They were people who were well off. A person could have a job, own a car, pay off. their house and support their. family. And now they can't do that. anymore. And there's this kind of notion.

that, well, the other. jobs have come back. And indeed, in many cases they're. having, there was just a study by. Gordon Hansen of Harvard and some. other people. Other jobs did come back, but they were jobs at. the lowest level of health care and. the like. In other words, did employment come back? Yeah. But the people went from. having the kind of job that I. described, one that you could. support your family and be proud of, to one, where. where you really couldn't.

So one of the first things that. prisons do to dehumanize the inmates. is take away their privacy. Their frequent and random cell. checks, body searches. They have their mail and phone calls. monitored. So if you take away someone's. privacy, you take away that person's. freedom. Here's the thing. You don't have any privacy when you. go online. Probably online most of. the day. And everything you do is. being monitored and sold by. data brokers recorded. That's like a random search behind. bars. All of this is done in an.

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stable nation if there's a huge. difference between making something. and being a mortgage broker I'm. sorry Sorry. Look, the. dignity of work is. what is the key. But useful work. Creative work. Useful, productive. work, useful. And what I always say, Tucker, is we need a country. where parents are. hopeful for their children, but. where children are proud of their. parents. And we're losing that. We need that. that we need families.

where people work and do. productive, good work, and they're. proud of the work, and they. feel better about themselves, and. they project that to their children. and to the community, to the little. league, to all these kinds of. things. These people who worked in these. factories in Asheville when I was. growing up, and some farmers, they were proud, hardworking people who, at the end. of the day, said, My dad is. this, you know what I mean, it was a.

proud. He-Healthy thing. What did your dad do? Yeah, my father was a doctor. Wow. Yeah, my father's an. interesting story. The Lighthizers, of course, there's. a lot of us that aren't Lighthizers, but the Lighthizer strain came over. to the United States in. 1748, and there was a guy named. George Lighthizer who came out. He was an illiterate from what is. now Germany. He fought in the Revolution. He was two years older. than George Washington, so he was an. old guy. He fought at Trenton, he was at.

Valley Forest, this guy, with, you. know. At Princeton, he was on. the line with two of his kids who. were quite young, all three. of them on the line together. He got out after three years, of course by this point, I don't. know what he would have been, maybe. 48, which was an old, old person. The kids stayed on and. fought all the way through New. Yorktown. So. fast-forward. multiple generations.

And it's a whole few generations. than you think, but I'll tell you, I'll mention that because it's sort. of a quirky thing unrelated to what. we're talking about, but sort of. interesting. But you find my father. and his brother after that. hundred and some years. of here were the first ones to go to. college. And both of them went to college and. ultimately to medical school. My father graduated from college. at 29, having worked in the steel mills. you know, before he went to college. and then finally ended up graduating.

from the University of West Virginia. and NYU Medical School. So it was like the. American dream. How did he wind up in the town? How did he end up in Ashtabula? Yeah. You know, he was, they were from Ohio. They were from the other side of. Ohio. I think he knew some people in. Ashtabula. This would have been, you. know, in the. mid-30s, right, 1930s. But in terms of this, this. is just a quirky thing.

So my grandfather's. grandfather, all right. No, I never knew my grandfather at. my father's side. My grandfather's grandfather fought. in the Battle of Baltimore. That's incredible. In 1814. So my grandfather's, if you think. of it, it's just like, you know what. it is, a bunch of older guys having. kids, like one after the. other. But it's like one of these. kind of weird, I tell people, they'll think, what, that can't. possibly be true, but it's in fact. true. My grandfather's grandfather,

and that guy who. fought, had half brothers. who fought. at, you know, in the American. Revolution. Amazing. It's just like a little, literally that, it's kind of a crazy. thought. Are there any light-hazards left? You know there are. in the town. No, there are none. There are none in the town. No, no, there's none in the town. Did you get a high school there? No, I didn't, I went away to. school outside of Cleveland. I went to a Catholic boys school. outside of Cleveland called Go. Orange.

The guys you grew up with, are any. of them still there in the town? Yeah, there are some, not a. lot, but there are some. It's a different world, you know? And as I say, if it was just Ash. Jabila, who would care? But it's not just Ash Jabila. about every. It's across the country. It's like this. You go to, you go. to Cleveland, you can't go to these. major cities. It's Chicago. It's, you know, it's Omaha. As you go to these cities and you. say, it shouldn't be like. this. And, and the kind of notion.

Tucker was that we were. sort of taught at a period, well, it's, you know, the people were lazy. or they were in unions and that was. bad or that, that the. managers were bad. And none of those were true. It was the result of and. economic policy. largely in other countries, and a. defenseless kind of foolish notion. of. benign neglect in America. And all of these bad outcomes. are the result of this,

and other things. I don't want to simplify it too. much, but it's. a sad thing. And we now. have a chance to turn. it around. And is that going to create. disruption? Of course it's going to. create disruption. There's never. been great change that didn't create. disruption. The price, which I don't think will. be great, will be. dwarfed by the benefit. if we have. people. working class, people in. the middle class again, and hopeful,

and dignified, and staying married, and innovating, and doing the kinds. of things that America needs. There's nothing I want more than. that for the country and. it you can hear the bitterness of. my voice Just as someone who spent. his life in DC but I just want to. say once again that all of these. changes were defended. and Explained by a. whole like field of academic study. and the propaganda that it supported. Coming from Washington the. free-market think tanks Kato.

AEI especially. tried to tell you for 40 years as. you watched your country die that. this was all good. And I do think they should be. publicly shamed for that, if not. held accountable and so on. In some cases, it's a combination, and then I want to get back to this. question about economists. At some point, it's a combination of. that and corporations. funding it. Oh, well, of course. Of course, they were just the. instruments, right? who literally benefit from.

it. And you're like, holy cow, why. won't they? And then you have to try to chase. that through the political system. And so you end up with the Chamber. of Commerce of the United States in. favor of these things that are. quite harmful to the people that I. care about and that the president. cares about. And they're not against. these things because they help those. people. That's just not a. function. They're against them. because the elites, the. powers that be, that are... benefiting from the system,

object to them. Now, on your question about. economists, there are. a growing number of economists who. see this problem. They don't necessarily agree with me. on the solution, right? But if you see. Angus Deaton as one, who would say, we have to re-evaluate. whether the costs of this. thing called free trade were worth. the benefits. And that's an important first step.

There's Paul Romer, another Nobel. laureate, has the same thing. So you can go through and you can. find various ones. There's a guy. named Michael Pettis, who's a Carnegie guy. who's thought these. things through. He wrote a book 10 years. ago called Trade. Wars or Class Wars, with a guy. named Matthew Klein, and it's sort. of, you know, so. there is some. some movement, but I don't want to. suggest that it's a light at the end. of the tunnel.

It's maybe a. prick, you know, a thousand. miles away. But I'm hopeful that economists, I've had several of. them tell me, well, you're wrong, but you at least realize. that, we at least agree. with you that things aren't good. So there's the beginning of people. I'm sorry to see it. I mean, the city had a collective. heart attack when you became United. States Trade Representative. I think that's a fair statement, the city and the business community.

Yeah, the business community. So you said there were, if you take a system that's been in. place for generations, which the. current one has been, even if it doesn't work well, even. if it hurts your country, changing it is still, or changing. anything that's been in place a long. time is still a. major lift and it has. turmoil that accompanies it. So can you... Just be more specific about what. sort of terminal you anticipate as.

this administration puts into place. this new system. First of all, I have complete. confidence that the president will. do what he said he's going to do. And unlike a. lot of politicians, he ran. on real substance. and big ideas, and this is probably the biggest. of the ideas that he ran on. And I think he's going to follow. through on his promises, because. that's the most important thing. The worst case would be that he. doesn't. Um, so, so...

what you have to do is put in. place tariffs, as I say, to offset, not just tariffs. That's a tiny thing. I just keep going back to this point. because it's so fundamental. The problem is not just foreign. tariffs. That's a tiny part of the. problem. But to offset this. unfairness. So he has to put those tariffs in. place. When you do that, I. do not believe you'll have. inflation, and we should talk about. that in a systemic, fundamental. way. But you. will have people who.

have supply chains that are going to. have to make adjustments, you've got. some things that may go up in price. for some period of time. And all these kinds of things. will have an impact. on people in. daily life. But I think it'll be short-termed, I call them disruptions, I think. it'll be short-termed. I don't think it'll lead to systemic. inflation. And I think that.

people. say, well, what should a businessman. do? And I say the. smarter businessmen and. businesswomen are going to figure it. out, right? And they get paid a lot of money to. do that, and they're going to say, here are the rules. Just on that point, I've had. businesspeople, really smart. businesspeople, when I. would explain this problem, and they. would say, Bob, it's the government's responsibility. to set up the rules. I'll figure out a way to make money. in the rules. That's my.

responsibility, but I shouldn't be. doing this social stuff. That's not my job. My job is to make. whatever widgets and to make them. profitable and employ my people. And I think that's kind of an. important point. It's President Trump's. responsibility now. He's the president to. set in place a system where. these good results for our people. will come out. And I think he will. So you're gonna have to have. tariffs to offset this. this basic unfairness,

that will lead to some disruption. Over a reasonably short period of. time, I think you're. gonna see this manufacturing. renaissance, these new jobs, wages go up, right? This notion that we're not. productive because our wages are. going up. I'm like, I had this. conversation with someone in the. White House early on, and this is in. the first term. And he was concerned about wage. inflation. And I said to him, I said, this is by the way, a person. Paying Americans too much. Yeah, this. Yeah, exactly. This is like a person.

that had his plane and on plane and. I'm sitting, I said... You can guess who it was. Yeah, I said, we haven't. had a raise in the middle class. in 15 years. and you're worried about wage. inflation. I'm... This is a man with a plane. I'm praying for wage inflation. This is what I want. You know, I want these people to. make more money and do better and. inspire their children and do all. the things you do in a community to. make the country great.

So anyway, there will. be changes. The whole notion at a micro scale, in my opinion, it's to take more resources from. the very wealthy and spread. them out among the people. So, so... A liberal will say, I diagnose the problem the way. Lighthizer does, let's tax the rich. people and give it to the other. people. My idea, that's insanity. What you need to do is devise a. structure where these people have. good jobs and make lots.

of money. And that's the way you transfer. resources and make the country. good. You don't do it by tax policy. or things like that. So what's the president done so far. and what do you anticipate he will. do going forward? So when you think about. tariffs, you have to kind of think. of them in two categories. There are, I think, like two. buckets. There are. national security. issues which you have to deal. with.

If the issue is of sufficient. importance to really merit national. attention, you should do everything. you can to solve that problem. If we were in a war, people would. say, of course, do whatever you have. to, right, take over, whatever. So he has some things, and in this case, primarily, some others, but. primarily, this fentanyl issue with. Canada and Mexico, mostly. a Mexican issue, and that's a. national security issue. In my opinion, it's not an economic. issue, and it should be separated. from it. Do you think fentanyl is a.

sufficiently important crisis. to merit doing everything you can. to solve it? I believe it is. So for me, doing. something in that state space makes. sense and the president threatened. that and I think we got good. results. That's national security. The bigger question is what, and you can use that tool in other. times, but and the debate is not. whether the tool's appropriate. The debate is whether the national. security issue is of sufficient. importance to pay that price. So then the other issue is.

tariffs generally to get us to, I would say balance, some people. would say fairness, some people. would say reciprocity, but. basically to get us to balance, to. offset all this unfair, not just tariffs, but unfair. practices. And I think what you're gonna see on. April 2nd is an attempt, you're seeing the. USTR. and the Secretary of Treasury USTR. doing the kind of day-to-day work. on Secretary of Treasury and.

Secretary of Commerce, recommending. to the President a. series of tariff increases. And now, the form that. takes, I don't think it's really been. determined yet. I think the direction is, the need is, but I think you're going. to have to have a system. that says, here are the issues. that are part of this industrial. policy that are creating this. unfairness.

And one of them is, as I say, taxes and value-added taxes, and if. people are interested, we could talk. about that in a second. And then the notion. that the president has is, well, we'll tariff people in. order to get them back to whatever. we think of as enough to offset. their unfairness. At some point... And he's right, of course. But at some point, you're gonna have. to simplify that because you can't. have 4,000 tariff codes. in 180 countries. And you know what I mean? You would need a supercomputer to.

decide what, you know? So at some point, it's gonna be some. synthesizing of it to. sort of say, okay, if you're in. these categories, if you have these. things, you get this rate and that. And the important thing for people. to understand, I tried to explain to. people. It isn't like he's. going to say, okay, here's April. 2nd, now going forward, everything is perfect. You're going. to have to have adjustments. We're always going to still be here. There'll be mistakes in the way it's. made, and you're going to have to.

take care of exclusions and. individual people and work it out. We did that and one of the reasons. that when we, when the. president imposed tariffs in such a. grand way, the. last time, it never happened before, the reason that it didn't blow up. really was. that we let the steam out of. the balloon when we had to. We did enough so that we took. care of. urgent problems that might have. collateral effects which were not.

good. And so you're going to see. modification, you're going to see. change. So there are a lot of fine motor. skills involved. It's not just. And you have to recognize that. You have to recognize it. And it's going to be mistakes are. going to be made. But the problem is here. We have to do this remedy. And we've got to get there as. quickly as we can. And another thing to remember is, you know, in the first administration, there weren't that many people who. agreed with us, right? As you say, there was the president. who everybody thought was crazy in. this area, and me who they.

thought is, you know, maybe crazier. But the overton window. of acceptability has moved. Yes. And so a lot more. people understand the crisis. a lot. And in fairness, the data has. helped us make our case. that you have to do this. So I think people are gonna be more. accepting of it, but. you're gonna have disruption. You're gonna have the people who are. benefiting now, benefiting less, and. they're not gonna like it. I think that's the best part.

You know, there. was this thing called concentrated. benefits and diffuse payments, this guy Buchanan, who was the. economist, and. he basically talked about the. political system. And he said that, you know, sort of things happen when. the person who gets the concentrated. benefit, he is more motivated. to get his way and. to push his way through than all. people with diffuse payments. And we've kind of had that system. My hope is that we can kind of.

reverse that and push. back on those people who have had. the conservative benefits. and give more of the benefits to the. people who until now at least have. been relatively. quiet and just accepting. of a pretty bad hand. dealt to them. Only three things are absolutely. certain in this life, and you know. two of them. First is death, second. is taxes, and the third, unfortunately, is getting ripped off. by your cell phone company. If you're a Verizon, AT&T, or T-Mobile customer, you know. exactly what we're talking about, but there is an option.

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potential effects of changing our. system to the one that you. described, it seems. to me that inflation is, certainly as a political matter, an. immediate matter, the scariest. First of all, it's really easy to. measure second it. where it's obvious, I know it's easy. to measure, it's very obvious to. people when the things they buy. regularly become more expensive. So, I mean, I just wanna linger. on this for a second, to what extent. are we going to see increased. inflation because of this? So, so, so Tucker, I think.

there's. going to be disruption and. disruption is going to have some. prices go up but some won't. So let's think about inflation. just the way we should think. about it. One, inflation is a. systemic thing. It's not like your shirt costs more. If your pants costs less, that's not. inflation. That's just a more. expensive shirt. So the question is whether it's. going to systemically raise prices. A lot of people would say... including Milton Friedman,

that's really a monetary phenomenon. It's basically monetary policy. that's gonna dictate whether. everything goes up or everything. goes down. And this is not gonna change. monetary policy necessarily. Now someone might say, oh, it's gonna slow down the. economy, thus we should lower. interest rates. Someone else will. say it's gonna have inflation, thus. we should raise interest rates. So it's kind of a conundrum for the. Fed. But set that aside, the notion is that. you will increase production.

in the United States, you will maintain consumption. at about the same, and that will not. be inflationary. If anything, it'll. be deflationary. So that's our idea. There's a model that some. economists use called the GTAP. model, which, by the. way, generally. assumes you cannot get economic. growth, that you're a full capacity, industrial capacity, in full. employment, so. If you have a model like that,

then that's going to show inflation. But I would suggest that the model. is not predictive. And indeed, the St. Louis Fed made. the statement a few years ago that. the predictive quality. of this model is 0.0%. So a lot of the economists are using. a model that's unhelpful. So the notion is you're going to. increase production. And that will happen. And that is not going to be. inflationary. The idea is that inflation is. systemic, not individual prices, so. you can't just stack stuff up.

The other thing is, in. the argument against inflation, is. that we did it last time in a. big way. All the same people said it would be. inflationary, and we had no. inflation. We had 1.3%. So we had no inflation. So they were proven wrong. And then the final thing I would. say, if the notion that. economists use, which Who is that? trade barriers create inflation, and. that's the basic notion that you're. talking about on their side.

Why is it that China has. deflation and not inflation? Why is it that the country with the. most trade barriers actually. has no inflation at all? And if you look like at Germany, they have some inflation, but it's. less than a lot of the rest of. Europe. So it would suggest that. there is not necessary relationship. between tariffs and inflation. What? He would suggest it, I mean... And I would add one other thing. If you look at the president's. program generally, all right, the program is going to be.

tax cuts, spending cuts, deregulation, more energy, and tariffs. Now, even all. but a hardcore partisan. would say the combination of. that can't be inflationary, Right, the combination of cutting spending, getting rid of regulation, increasing energy. Those things can't be inflationary. now. So- They're anti-inflationary. They're all-. We have inflation because we've done. the opposite. We've made energy more.

expensive. That's precisely right. We've spent too much. That's. precisely right. Okay, China. So you mentioned Germany, obviously, the beating heart of. Europe. It's decided to commit. suicide. So who knows where Germany. will be. It's hard to see Germany as a real. threat to our economy. I mean, I can't predict it, but it. seems like it's really a. conversation about China. So there are kind of two. things. One, we have a. trade problem, and that problem.

is trade deficits, and it's having all the bad effects. that I said on our people and on the. wealth of our country generally. That is a problem that has to be. resolved. Connected, but independent of that, is the question of the geopolitical. competition with China. So I always start with, you're either on one side. or the other. And I put people in like three. categories, Tucker. There are people that study the.

issue and I'm gonna go through the. kind of litany in a minute. But to set it up, there are people. that study this issue and. say China is an existential threat. to America. They are an adversary and we. have to make change and I'm in that. group. There's another group that. studies it and says, China is an existential threat, they're an adversary, but we. don't need to do anything because. it'll all kind of be resolved. through this or that. That's a group that was very popular.

in the 90s. It doesn't really exist anymore. I call it the unicorn group, right? People who have kind of been proven. wrong that it's just, you. have to do something. The third group are people that. study it and conclude. that there isn't a problem. China's not an adversary and there's. no existential threat. That group. is all invested in China, right? So you can kind of divide the world. when you think, when you're talking. to someone, which of these three. groups are you in? If you're in the last group, then. you're basically a compromised. person because no rational person.

can look at the data, look at the facts, and conclude that. China is not a threat and. an adversary. So let's look at- Wait, can I. suggest a fourth group? Might be people who look at the. current situation and say, yes, China's an adversary. Yes, China's economy is larger than. ours. Yes, the future belongs to. China. We're not equipped for a. confrontation with China, either. economically or militarily. And so we have to kind of figure out. how to deal with the inevitable. So yeah, this is kind. of the defeatist.

caucus, right? The one that is all over for the. world. I generally find that. group has a very large overlap. with group three that I articulate. The people invested in China. that are already gonna make money. But for sure there are people, but I. always say to them, You can't say do nothing in the. face of a crisis. If you say do nothing in the face of. a crisis, then I have not convinced.

you that we have crisis. Because it's irrational if. you accept the fact that it's a. crisis to say do nothing. That's not a rational. Well, it's kind of a lie back and. think of England kind of thing, like it's going to happen. while England slept. Yeah. Yeah. Although there was a. lot, there were a lot of, a lot of. differences and a lot of other. things going on there. And when you, when you mentioned. that, I always think of. Neville Chamberlain, who before he. was prime minister was chancellor of.

the Exchequer. And he, he approved. the sale in the thirties, 180 or whatever it was, Rolls Royce airplane engines. to rearming Nazi Germany. which was just on his face, ludicrous. And his explanation was that. trade, like religion, should know. no boundaries. So while rearming Nazi. Germany was a threat, it was more. important that we sell them things, even if they're gonna use them to. bomb us. I always said, I don't know why, but.

when you mentioned England during. that period, that's the first thing. Right, well, I said-. Right, well that's the capital. society of the rope. Exactly. We'll hang you. Exactly. So, let's think of why I. have this conclusion, and none of. this is going to be news, I. don't think, to anyone who's. listening, but one, China has the. biggest army in the world. and they're growing it. They have. the biggest navy in the world. They are militarizing the South. China Sea in a way we haven't seen. since the Second World War. They're claiming shoals,

building. you know, eight years of Saman, and having places that you can. militarize and land. boats on. They are asserting. territorial claims. all around them. I mean, it's not just Vietnam. and Philippines, but it's also. Japan, and you could just go all. around them. They are engaging in. espionage on a scale we haven't seen. that the FBI says. They start a new Chinese espionage.

case every few hours and. they have thousands of them. They have subborn. perjury from two. sailors about last year. and a month ago, two army officers. not perjury, but espionage, to sell secrets to them. They are building. nuclear silos all over the place. They have their diplomatic wolf. warriors go around and do whatever. they think is gonna be disruptive.

of the United States. They're building military bases. around the world. They have things like this thing. that's on the news now and this. shipping company at either end. of the shipping facility at. either end of the Panama Canal. So I mean, they're gathering data. They're engaging in. economic warfare with the United. States in terms of stealing. technology and technology transfer. and all the kinds of other things. of which we are aware. They are funding the war in the. Middle East. They're funding the war.

in. Europe. Just without question, it's their. money. They're selling all the fentanyl, at least the precursors of all the. fentanyl. that comes into the United. States. And it's not like. the people that are selling the. precursors for the fentanyl are an. odd group. They're big companies in. China that are doing it. I would suggest with the. approval of the Communist Party, because they don't have the problem at. home. So if you sort of set aside.

the diplomatic, the military, the. economic, you put all these things. back to back. And then you look at their own. words, where they talk about change. not seen in 100 years and prepare. for war and all these kinds of. things. It's pretty clear that. their view is they. should be number one in the world. Their view is the world is better. off with totalitarianism, politically, Marxism, and economically communism, right? This is their.

scheme and. that we're in their way. This is their objective. There's this centrality of China. runs through their history for. for 2,000 years, and we are. a problem. So for all of those reasons, you have to realize we have a real. existential threat and we. have to do something about it. And the first thing you do. is you stop transferring. hundreds of billions of.

dollars of wealth to. people that they're using to build. technology and. military systems to defeat you, right? That's the first thing you. do. And we are doing. that. We are transferring, we're transferring hundreds of. billions of dollars in trade. deficit. We are transferring hundreds of. billions of dollars in stolen. technology. We are transferring money through. this Fentanyl crisis that. we have. If you look at all of these.

things, you have to stop that, right? It is like the first thing. you do is you stop digging when. you're in a hole. So What we. need, I would propose, is not. no economic relationship. I'm not for decoupling, but I think. we need strategic decoupling. I think we need balanced trade in. areas that benefit America. I think we need independent. technology going forward, made with. America and with American's allies. And then I think we have to regulate. in-going and outgoing. investments so. that it's in the interest of the.

country. So I think we need. a heads up kind of a policy. We can't keep going on the direction. I. I agree. They also bribed the last. president, if I could just say, very. obviously, which is. kind of a big deal. It's been ignored. How do we regulate investment. in China? So the first question I would say, how does China regulate investment. in the United States, right? They have a state body that says, this is in the interest of China, therefore you can invest in the. United States because you're going to.

get data or technology and. inbound investment. If you try to invest over there, they've got people who sit there and. say, this is in the interest of. China, or them, and they just do it. in the interest of China. So we really need, in terms of... inbound investment. We need to take CFIUS, this. group, this group at the Treasury. Department, and expand their mandate. and fill it through a parcel. So you can invest in Iran, you can. invest in Russia, you can invest in. Venezuela right now. Well, you can only invest in China. if they determine it's in China's.

interest. No, but I'm just saying. like... No, no, exactly. Do you have all kinds of controls. about where Americans can invest. their money, but they don't apply to. China? No. And you're saying they should. Well, for sure, there's two sides to it, right? The inbound has to be strengthened. so that they're not buying into. things where they can get data which. they can use to feed. their AI or. technology. not just military technology, I. would say any high technology, and. then outgoing, it should only.

be investments that. are in the interests of the United. States. Yeah, for sure we. have to do that. What's going on now. is you have. a group of people on Wall Street who. make money by funneling money to. China, and those. people don't, I don't know which of. the three groups they're in, but you. can guess, but. for sure those people. have to be stopped, right? We have to stop that. And I'm not saying no investment in. China, but it has to be something.

that's in our interest, not in. China's interest. the howling that. will occur if you try to restrict. the ability of American citizens to. get rich in China will be really. loud. So I don't really think, the people who get rich in China. are people who take. your money and bring. it to China, right? In other words, the bankers and the. like. Then there are people who. manufacture to sell in the. United States or in other places in.

China. That group, that group, interesting, all has a half-life. Because as soon as China gets their. technology, They don't need. them anymore. And then they squeeze. them out of the business. I could give you any number. of cases in nuclear. And there's a company called Ball. Corporation, which makes containers. And they were the biggest in the US, then the biggest in the US, then the. biggest in China. Now they're the biggest in US. They're not in China at all. And the Chinese have competitors.

And I could give 100 examples. of that. So. people can temporarily make money. there while it's in their interest. for you to do it. But once you get to the point that. the Chinese say, now, why exactly am I giving you a piece. of this action? When you get to that point, you're. on the way out. So I. guess I have two things. One, the people who. actually are making money are sort. of financializers, if.

you will. Manufacturers will do it for a brief. period of time until it falls off. And then the other thing I would. say, for sure there's gonna howl, but I always say it's a little bit. like undertakers being against. cancer research, right? My view is so that you're against. cancer research, right? It's bad for business. You're absolutely right. How do the financializers get rich. in China? Well, I mean, they get a fee for. bringing money to China, right? So it's like they do anywhere else, right? They sell bonds,

they facilitate investment and they. get a piece of the action. They're politically powerful. Yeah, there's no question about it. There's no question about it. Um, if. you were to obviously. just broad strokes here, but if you. were to radically reduce. the amount of. manufacturing that American. companies outsource to China, could you take up that slot? How long would it take to, to. replace that manufacturing with. manufacturing? That is going to happen with.

tariffs. They are in fact coming back. That manufacturing is going to come. back. So it's going to have that. effect. And I think it'll take. relatively less. Now it's all not coming back, right? Some will go to other places. And my own view is that. it going, for example, from China to Mexico could very well. be in the interest of the United. States and not if it's a Chinese. company doing it. but I mean, I'm. When it when a US company. brings a facility from China puts it. in Mexico and in place Mascons.

That's more in my economic interest. as in America. I think that's right, a stable. Mexico is in her. Exactly. And I think that. sort of thing will happen and is. happening. That's not to say that we. don't have a crisis down there of. Chinese investment. And we can talk about that. separately if we want. A crisis in Mexico. In Mexico, yeah, it's a huge, huge. problem. Will you explain that? So what has happened is. we. renegotiated USMCA. and tightened it in a bunch of and. really created the.

most pro-manufacturing, pro-America. a trade deal in history, right, for the first time, the. president, it was one of President. Trump's great accomplishments, the. first time anybody had ever. renegotiated a big agreement, they. were sort of thought of as eternal, like marriage or. religion or constitution or. something, we. renegotiated it. At the same time, we put tariffs on. China, right, unrelated, but we put tariffs on. China. So what China was trying to.

do is figure out a way. to get into the U.S. market without paying the tariffs. Now, a logical way to do. that would be to move stuff to. Mexico, and as part of that process. they are infiltrating the Mexican. infrastructure and. the numbers are quite large. It's billions and billions of. dollars. of investment by China and.

this rhodium group and others who. have studied to say the numbers. probably six or seven times what the. public numbers are. So it's hundreds of. billions of dollars of investment. The purpose of this really is to. ultimately get to the US market, but. also to sort of infiltrate. the system in Mexico. And I would suggest it's very bad. for the United States and it's very. bad for Mexico. And ultimately, the president is. going to have to deal with it. I think he's aware of that. This is a freight train. coming down the road.

So if you take Chinese content. and just. substantially transform. it, just paint it or something, and. then bring it to the United States, that's very bad. So you've seen increases in. Chinese exports to. Mexico of 50% a year for. a number of years. And a lot of that, I think, is finding its way to the United States. and is dislodging other sensible. investments. So Chinese- But also giving China. some control over Mexico. Oh, that's no question.

And the president of Mexico seems. to understand that, at least to the. extent you can in their system. So-. It's a big problem, and a. lot of it has not come on stream. yet. So it's huge auto investments, it's a lot of things that they're. doing that haven't even come on. stream yet that are going to come. down like a locomotive down the. highway. And it's all bad and we have to do. something about it and. the reality is. probably that's going to be tariffs.

and it's going to be some way. that you. separate like. US companies and. neutral countries like companies. like the Japanese who are operating. down there and abiding by the. USMCA and this whole. Chinese infiltration is coming in. One of the things I've learned from. traveling is that a lot of other. countries like dealing with China. because they're easier to deal with. There's no lecturing about democracy. or transgenderism,

rights for various groups, whatever. They don't feel as. manhandled as they do. by their experience with. American government officials. Would it be helpful for the US. government to take a less hectoring. tone around the world? Well, I mean, see, first of all, they also like China, doing business in China in many. cases because they don't have a. foreign corrupt practices act. Well, exactly. Yeah, and, but I mean, to some. extent, it's because they can.

influence you in ways personally. So there's a lot of what's going. on in this belt and road is going. in there influencing. local officials who then take on. great amounts of debt, put in a. Chinese infrastructure, it goes to. hell. So some of the. advantage that China has is just. pure old corruption, right, that we. wouldn't want to be a part of. It is. It is. But we also, it seems to me, hamstring ourselves by. our posture toward other countries. Like, it is very off-putting to have. American officials come into your.

country and start telling you that. your, like, ancient way of life is. immoral. No, no, no, for sure. People don't. like that. And that's, that's, it's, I mean, it's counterproductive and wrong, so. I completely agree with you. Lourish. I wouldn't invite someone like that. to dinner at my house. So. One of President Trump's. ideas. I don't know if it's been. fully articulated, but it's very. obvious from watching is that we can. Re-establish some sort of economic. relationship with Russia once this.

war is resolved God willing. Could that happen to what extent. could that benefit the United States. if it did. So first of all, the amount of time that I spent. worrying about Russia in. the trade and and atmosphere was. minimum. Right, I'm sure. Yeah. They're a small, you know, they have GDP smaller than. Canada and they're basically a, you know, people would, you know, get into basically a gas station. right there if they're an energy. producer and not much else.

There was a time when they were also. very much at the cutting edge of. technology, but I think that's kind. of waned. And, you know, depending. on, once again, this is sort of a. little feared from where I'm an. actual expert. unlike everybody else. I actually identify when I am and. when I'm not. I find it's helpful to. me, but not other people. But I do believe. that depending on how the war. is resolved, then it will be. resolved. There's just no question.

the wars are not eternal anymore. than trade agreements should be. But when that happens, I think you will see. economic relations reestablished. That'd be flabbergasted if you. didn't. The reality is. There will be demand, there will. be people that can sell, there are. things you can do, but a lot of. it is how it is resolved. If it's resolved in a way that. Europe and others view themselves. as still more or less being at war, then you're gonna have a very slow. recovery economically.

If you view themselves as like, we've turned the page and we're in a. new decade, then my guess is you'll. see people move more quickly. Yeah, the Europeans are grudge. holders, I've noticed. Okay, you said you're. trying not to be partisan. I think you've done a great job, because not all of these are. partisan questions. But in practical. terms, what do you assess the. chances of the Democrats, any. Democrats, supporting Trump on. this program? So it should be really good. Let me just say- It should be, I.

mean, traditional Democrats would. have supported it. Remember, the Democratic Party is a. bunch of different things, like we. are, I guess. And Labor Democrats should do that. Remember, when I. renegotiated the USMCA, the. President and I did, and then I. worked its way through Congress. And during this- toxic time of. impeachment and all of this, we. worked it through for months and. months and months in Congress, and. then the final analysis. got 90% of the Democrats and. 90% of the Republicans to vote for.

it in the House and in the Senate. It's one of these things that people. don't remember, but it was, you know, whatever the hell we had, 385 votes in the. House for it. I mean, it was- That's incredible. Yeah, people don't give us credit. for that, but it was like historic. And then, so they're impeaching the. president voting for. may be one of the biggest parts of. his legacy. And there were a lot of. Democrats, particularly in the House, who were. key to that happening.

Who- I didn't, I don't know how I. missed all that. I'll tell you a. story. We have John Lewis, who was. obviously my president at all, but. who I admire as like the last, he. was then the last living civil. rights person, someone who I greatly. admire. And actually, I actually. brought my, my. senior political staff to meet him, and they were just, you know, awed by him, and he talked for 45. minutes about the Civil Rights. Movement, and we're just going to. say, you are the. last person that's going to be able. to talk to the last person who.

did this. But he made the statement, for. example, he said, you know, I fought. NAFTA with every bone in my body. I fought it as hard as I could. possibly fight, and I never thought. we'd have an Opportunity to correct. it, but now we are and I'm. supporting this So there were, he was there, you know, Rich Neal, who was. then the chairman of the Ways and. Means Committee. Nancy Pelosi was a supporter, but. there were a lot of them, Rosa. DeLora, I mean, very hard left. people who realized. what we were doing was for working.

people and that was their. constituency. So I think there is. hope, Debbie Dingell has spoken. about this recently, I think there. is hope, but it, Tucker, it requires sales. It's not like you have to go. up and actually do the retail work. I spent a huge amount. of time on the Hill. when we were doing this, a huge. amount of time. I addressed, twice I addressed the caucus. of Democrats in the House, the actual, the caucus, you know,

once with Rich Trumka, the head of. the FLCIO, just he and I, and took questions from the. Democrats. I'm sure that no one else. in the. probably in even very many. administrations of a different party. has ever done that. So it requires sort. of doing the spade work. But I really think it's worth it. because this. change economically is so. important. It has to be bipartisan. It has to be acceptable. I'm not saying don't do. it unilaterally, Mr. President,

using existing law. I'm not saying that because I'm not. Pollyanna. I think it would be very. hard to pass something. But you do want. labor democratic buy-in, because. that's how you make something. permanent, is you have. the smart people, the. caring people, the ones who care. about working people. And there's lots of Democrats who. do, lots of them. Getting those people to buy in, I think, is really, really. important. sounds achievable.

So last question is about markets, equity markets, the S&P, the NASDAQ. That seems, I mean, that's. the main measure that. the media use to. gage the health and trajectory of. the economy, as. you know. So, I mean, there are shows on TV. just about markets. Do you think that's an accurate. measure? So the answer is. no, and it's. particularly true.

in the short term, right, because. the markets are affected. more by the Fed than. they are by other things. I mean, the market's. basically affected as much by, you. know, the interest rates go down as. it is anything else. I think in a general way. That's kind of, can I suppose, that's a little weird actually. Markets are supposed to, equity. markets are supposed to reflect the. value of the companies. in which you buy equity, right? So it should be, like the.

measure should be like, how's the. company doing? And it's very often it's. It's kind of weird for the Fed. It's macroeconomics. What the notion sort of is that, well, if interest go down, you're. going to have economic activity. increase. So it's not crazy, but it's. sort of off-centered. I mean, to me, long. term, it's fair to say, what will. the markets do, right? Will these companies become. richer under this system? American companies become richer.

under this system. The metric for me is, did workers get richer? That's the metric for me. But if that happens, it should be. reflected in the market. So I think looking at a short term. is very disruptive, very. destructive, not right. Looking at a long term makes some. sense, but it's not my metric. My metric after national defense, my metric is. most Americans do relatively. better, in real terms.

And if they did, the country is. better off and the economy has done. what it is supposed to do. I actually, this is sort. of in 1996, when Bob Dole, who I worked for, you'll remember, as chief of. staff and he was chairman of the finance. committee, I wrote a speech. that sort of made this point. that the purpose of an. economic policy is to generate. wealth for the the midsection, the richer, they'll take care of. themselves, the poor you have.

programs for, but you want to take, this is the purpose of it. And it was funny, I got all the. smart people with all this. resentment in me. wanting to have him make this. speech, which he agreed was right. He was a populous Midwestern guy. And finally, I think when it. was all over and we didn't really. have a shout at the end, he just. said, I just got to keep Lighthizer. from grunting, so I'll give this. speech, and he ended up giving it. Um, so, um, he. was a good guy. Bob Dole was a good. guy. He was, you know, it's funny. There's like, um, there's.

kind of like different Bob Dole's. when you live to be 97 or. something, you have different, you. know, you have the young Bob Dole I. didn't know and he went to war and. got blown up and then kind of. gritted his teeth and fought back. and he lived in the basement. of his house so they could rent the. upstairs, you know, so they could. live. And then you have this guy in. the middle who was the guy and it. was maybe the legislator. of that time, the number one. You could make the case for a few. other people, but you can make the. case for him being the number one. legislator in that midpoint in. American history.

And then you have this older guy. who got the Eisenhower Memorial done. and got the World War II Memorial. and did all these wonderful things. in this very different way. So I had this guy in. the middle, and he was. a tough, hard, good. conservative guy. And I obviously had an enormous. amount of affection and wouldn't. have to be in a state close to him. his whole life. Bob Lighthizer, that was an amazing. tour through the. past and I hope the future and thank.

you for doing that. Well, thank you very much for having. me. Tucker, I'll put this in. my obit. I was on Tucker's podcast. That'll be in the obit. And it was just one suck up. question after it. Mr. Lighthizer, you're a very. handsome man. What's the secret? No, I just agree with you, and I'm. just so grateful to hear someone. explain it clearly for. non-economists. I think it's very important, I think. it's been neglected, and I hope this. helps. Thank you.