From New York Times. Opinion I’m Ross Douthat. And this is interesting times. Very interesting times, in fact, because just in time for the debut of this podcast, almost as if he planned it that way, Donald Trump has taken a sledgehammer to the global economy as his tariff policy yields a stock market panic, rising economic uncertainty and fears of a recession. And to talk through the chaotic rollout of the tariffs, where this radical policy came from and what it might mean going forward, I’m joined by Oren Cass, who’s the founder of American Compass, a populist conservative think tank that has been arguing for some time for tariffs and for a changed American relationship to globalization and free trade. So, Oren Cass, welcome to interesting times. Thank you. It is indeed a pleasure to be living in interesting times. I hope it is. So A podcast everything is a moment in time, and the moment in time in which you and I are speaking is Monday morning. The markets are open and down so far for the third day since Donald Trump announced the great liberation of America from the foreign yoke. And this podcast, therefore, may not cover events that transpire between now and Thursday morning when it’s released. But we’re going to try and have a fairly high level discussion about the condition of the US economy, where the tariff debate enters in before we get into the Trump tariffs themselves, so that hopefully the conversation will still be of use, even in a future in which the audience knows more about how all of this plays out than we do. So that’s the plan. And I want to start with a big picture question. When Donald Trump was reelected and entered office, a lot of people thought he had gotten very lucky that he had inherited an economy that was in really good shape with low unemployment, with inflation finally coming down after the Biden era, with a high stock market. And with a sense of big technological breakthroughs potentially on the horizon. So, Oren, to begin with, what’s wrong with that narrative from your perspective. What is wrong with the American economy in the year 2025 that could make anyone interested in any kind of radical or dramatic restructuring. Well, I think you described where we were in the business cycle quite well, but I think it’s really important to distinguish the business cycle from the long run, secular trajectory of the economy. I’ve used the metaphor of bumps on a downward slope. And I say if you’re sledding down the Hill, you can even go over a really big bump and go soaring through the air and scream whee! And then you do still land even further down at afterward. And I think what we’ve really seen in the US economy for going on 50 years now is exactly that dynamic. Obviously not in terms of overall GDP or economists favorite measure of wealth and material living standards. But when we’re looking at the actual well-being and flourishing of the typical working family, their ability to achieve middle class security, the various social measures that I think are fairly tied to economic opportunity and outcomes. We’ve seen real decay, and I think that helps to explain why, somebody like Donald Trump has become as successful politically as he has. And it’s a problem that has been decades in the making and is going to take a long time to turn around and recover from, but I think it would be a terrible mistake. Every time we’re at the top of a business cycle to say, well, unemployment is below 4 percent Therefore, the problem is solved where unemployment has been there at the top of every business cycle throughout this period. And that hasn’t changed the picture of the broader challenges that we have. So let’s be a little more specific about those broader challenges, because as you mentioned, US GDP has continued going up throughout this period. And in fact, so has, to some extent middle class incomes, not just middle income, but working class incomes. They went up in Trump’s presidency. They went up in Biden’s presidency, even though then inflation ate into them. And overall middle class Americans, just in terms of the numbers are meaningfully better off than they were in the 1970s. But you don’t think that captures something really important. There’s something those numbers are missing. Yeah, I think there’s a few things. They’re missing. One is when you’re looking at these household income numbers, it’s important to notice, for instance, the extent to which they rely upon the household having two earners. The extent to which they actually find themselves more reliant on government programs than they would have in the past. And also, I think just the factor of rising inequality, which conservatives have traditionally traditionally Pooh poohed certainly in the last 40 years as long as you have more stuff than you did 40 years ago, you’re not supposed to have any right to complain about the broader shape of the society. But I do think we’ve seen a very clear divergence in the fortunes of the typical worker who still does not have a college degree and the upper middle class. And so one thing that we look at American Compass that frustrates economists because it’s not the standard inflation measure, but that resonates with a lot of people because it speaks to the reality of their lives, is that if you actually look at the cost of attaining the basics of middle class security, health insurance, housing, transportation, being able to pay to send your kids to public University, basic basket of food. It has become much harder for the typical worker to afford that. Certainly on one income. And so I think what we have is a problem where particularly for the right of center that has sold this idea that a rising tide lifts all lifts all ships embrace our model. And we all March forward together into the brave new future. Well, people are seeing instead is that some people got to March ahead into the brave new future. And a lot of folks did not. I mean, and for particular groups, maybe this is somewhat narrow, but I think it’s really important to look at something like young men, if you want to know how your society is doing and even very kind of optimistic groups like American Enterprise Institute. Their research shows that the young men, ages 25 to 29, really are earning the same or less than they would have been 50 years ago. And so I think it’s hard to sell that as a successful economy or one that’s likely to produce a flourishing society. So stipulating that there is a big debate about all these numbers, as you mentioned, the American Compass index of human flourishing is hotly contested and much argued over stipulated for the sake of argument, that there is some kind of stagnation here, especially for young men. What does trade have to do with it. What does trade have to do with it. I guess if you’ll give me a bit of patience that I realized to answer that, I have to highlight one other element of what’s gone wrong in the economy. We were talking about the very broad statistics. I think something else that has gone wrong is the deindustrialization of the economy. What we have seen really going back even into the 90s after NAFTA, but certainly after welcoming China to the World Trade organization, is a real hollowing out of the manufacturing sector. The loss of manufacturing has been a serious problem. And so trade is at the heart of that. And figuring out how to make it relatively more attractive to make things here in America is therefore becoming a really big and correct focus for policymakers. So is the issue that we’ve lost manufacturing or that we’ve lost manufacturing jobs. Because one of the arguments that you often hear is that American manufacturing, in terms of how much stuff we produce, is still roughly where it’s been for decades now. We’ve lost ground in comparison to China because China has become such a powerhouse. But the American manufacturing sector has not collapsed. What’s collapsed is the number of Americans who work in jobs in that sector. Do you agree with that. I think that’s approximately right. Descriptively with the caveat that a flatlining in the manufacturing sector, in what is otherwise a growing economy domestically, globally is in effect, a form of collapse that weakens the American ability to essentially keep up in all sorts of vital areas. And as a result, as you just said, leads to a real loss of opportunity for people. What is so special about a manufacturing job as opposed to a service sector job. Because someone might say, Yes, the Uc economy has fewer people working in factories than it did in the heyday of Detroit and the big three auto manufacturers and all the rest. But America is also a lot richer than it was back then, and I think most people argue that global trade has led to lower prices in at least some areas for some goods. So what’s wrong with a world where someone works in a service sector job instead of a manufacturing job enjoys lower prices, and then beyond that, presumably the richer US economy can pay for an earned income tax credit or a larger child tax credit to essentially increase wages and give of premium based on the surplus of a wealthy society. Why is that not just as good as a world with many more manufacturing jobs. Well, I think it’s important to say that there’s nothing especially valuable in the abstract about a manufacturing job. That being said, in practice, there are things that are notable about the manufacturing sector and manufacturing jobs. One thing that’s very good about manufacturing jobs is where they tend to be located. If we want a broad prosperity with diffusion across the country. It’s important to have strength in a variety of sectors that are going to make sense to be in different places, not just knowledge work that’s going to agglomerate in a few big cities. And so it happens that based on logistics, access to natural resources, the need for a lot of space, the need in a lot of cases to not have the facilities so close to where people live. You’re a lot more likely to see manufacturing in a lot of the areas that do not have finance and technology and media and so forth. And so they provide an incredibly valuable diversification in that respect. A second thing that’s really nice about them is the kinds of people who tend to work in them and Excel in them. So for one thing, again, I would say, there’s nothing inherently important about a manufacturing job. It is nice to have a pluralism in our economy where people who prefer to be making things and doing that kind of work have good opportunities to. On top of which, it’s the case that if you want to have good highly productive jobs that pay a good wage. Just empirically, what you see is that those opportunities exist, especially for people with less levels of formal education in the manufacturing sector. So while it’s true that the average manufacturing job doesn’t pay more than the average services job, if you Zoom in on one type of worker and look at for the types of workers who are working in manufacturing jobs, typically folks, let’s say without a college degree, what are the comparable service jobs they would otherwise have. The manufacturing jobs do tend to be better. But suppose you had a resurgence of manufacturing jobs right now, right. Wouldn’t they look quite different from manufacturing jobs in 1985 or even just before the China shock. Because Yes, manufacturing jobs have even now have some of the features you describe. But we have passed through an age of automation and robotics. We are entering some kind of age of AI driven automation. And when I hear people talk about the factory jobs of the future, even people who are bullish on there being good factory jobs, it’s taken for granted that these are not actually the kind of jobs that a blue collar, a blue collar steelworker would have had in 1977. The argument is, well, these are actually better jobs. They are less backbreaking, they require more skills, and so on. But then if that’s the case, and maybe it’s not the case, aren’t they not filling in the same niche in the economy. So when I interviewed the vice president before he became the vice president, and we talked a little bit about this issue. And he talked about the idea of the six or seven million American men who have dropped out of the workforce, who are particularly vulnerable to opioid addiction and family breakdown and all of these things. Are those the kind of workers who are likely to be hired in the factory of the future that is highly, highly automated. Well, I think generally speaking, the answer is Yes. And one good place. We have to look to understand what this highly advanced manufacturing would look like is what’s starting to happen with the CHIPS Act, and where you see the high end chip makers locating and who they’re hiring. And so if you look at TSMC locating outside of Phoenix, Intel locating in the middle of Ohio, Micron focusing on upstate New York, obviously those aren’t rural agricultural places necessarily. But they’re the kinds of places that otherwise have not been the beneficiaries of a lot of the other kinds of growth we’ve seen in recent decades. And if you look at who they’re hiring and how you’re doing it, what you see is, Yes, there is some kind of very high skilled employment, very sophisticated types of work. And I think it’s also a good thing to bring more people with those types of skills to those communities. But then on top of that, you’re seeing a lot of what gets typically called mid-skill jobs. You’re seeing the companies partner with community colleges to equip people with the kind of training they need to be. The technicians, let’s say, in these factories, you see a lot of partnerships with labor unions. You’re seeing the same thing from the big tech companies as they need to build out data centers. Suddenly they’re very interested in electricians and figuring out how to work well with labor unions. So I think that’s all to the good. I think the caveat that’s fair, but also unfair, is to then focus on the specific example of O.K, let’s talk about the person who has been so harmed by deindustrialization. People in these left behind communities who are out of the workforce entirely are those the particular people who are going to be able to take these jobs. In some case, the answer is probably Yes. In some cases, the answer is probably no. And I think we therefore have certainly a lot of other work to do to think about how to engage those folks. But what having this will do is make sure that the next generation has a lot more opportunity than this past one did. And so the fact that it doesn’t necessarily resolve every problem we have today, I think, is certainly not an argument against building in this direction going forward. But do you think that there is a cost to overall GDP from using tariffs essentially, to wildly oversimplify the argument for tariffs that is implied by what you’re saying is that you raise the cost of importing from factories outside the United States. So it becomes more economically viable to build factories inside the US. The typical economist responds, that may be true, and you do get some potentially specific benefits, although they would have doubts about how all this works. We’ll get into in a minute. But they would say, but look, you’re the overall society is going to be somewhat poorer. And is that a trade off. We should be willing to make some points or fraction of a point off GDP to have more people working in upstate New York and Central Ohio. Well, so first of all, Yes, I think that is a trade off we should be willing to make. But I think when you’re asking, what. What is the effect here. I would really separate the short run from the long run that there are absolutely short run costs associated with this transition. The funny thing, of course, is that when we were talking about short run costs of globalization, economists just waved them away and said, oh, don’t worry, let us tell you about our long run equilibrium model that says, someday this will be for the best. It’s only when you’re talking about policies that are not their ideological preference, that they suddenly Zoom in and are focused very heavily on the immediate short run transition costs. And so I certainly acknowledge there are short run costs, but I think they’re worth it, not only to your point about the other things beyond GDP that we might accomplish. I think they’re also worth it, because they point in the direction of a much stronger and healthier economy in the long run. And so I think if we’re asking for the long run, looking across the next generation or two, what trajectory is the right one for the American economy. I absolutely think that we will be much better off if we make a commitment to reindustrialisation, rather than saying, well, according to the economic model, we should just be happy with everything being produced in China because it’s more efficient there and we get cheaper stuff. But there isn’t really from the age of globalization, I concede that relative to how the US economy was doing in the immediate post-war period, the age of globalization has been a disappointment. But it’s not like there is some counterexample where you say oh, the French practiced more protectionism, or the Germans or the Japanese, and their economies are in much better shape. Isn’t the US economy still in the best shape of any developed nation, of any big, rich, developed nation right now. And doesn’t that suggest something about the potential scenarios on the table. Well, so I certainly appreciate your point about the but for case. And I think you’re absolutely right. What I find so funny is that when you say, hey, globalization has had a lot of costs, all of the biggest pro globalization fans will just post a chart of GDP going up and say, well, you see, GDP went up. So obviously globalization was great. When I think it’s important to offer the corrective that if you actually look at performance during this era, it has been weaker, not stronger. You’re absolutely right that the US economy has been performing well relative to a lot of other developed economies. And I think that’s a function of a few things. One is there are a lot of other things that for all of America’s challenges, we still get right, whether that is in the flexibility of our economy, the way that we do embrace innovation in a lot of areas. What is generally a lighter regulatory environment. Those are all great things. At the same time and this kind of goes back to that question about the business cycle. I think if we step back and look at the indicators of social well-being and how the kind of typical working family is doing. Yeah, they do have more stuff. I don’t question that but I think there is a lot of very well placed frustration with the bargain that was struck with globalization. So what do you make of other arguments for tariffs. We’ve been focused on manufacturing. But in the swirl around President Trump’s tariffs you’ve had a lot of other cases made. One is pretty clearly linked to the rebuild manufacturing case. It’s a national security case. It says, look, China is a great power competitor. It’s possible that a global pandemic originated in certainly it originated in China. It could have originated in one of their own laboratories. They could invade Taiwan. There’s all kinds of ways where we could have to. We already did briefly decouple and could have to decouple from them. And so therefore, again, it’s worth a little bit off GDP to have more of our supply chain domestically and so on. I assume that you find that argument somewhat convincing as well. I do. I would split it into to two pieces, though, which I think also is helpful in understanding a lot of the policy under discussion, which is there’s the China out step and then into the US step, because to the extent that what we’re concerned about is the overdependence on China, we can just impose tariffs on China and try to push supply chains anywhere else, say we’re happy to get it from India or Mexico or other countries we expect to be allied with as long as it’s not China. And I think that’s actually a really important thing to do. The decoupling side of things. And that’s where particularly high tariffs on China are valuable. The other question is, what do we actually want to have made in the United States. And that’s where as you frame the question. Exactly right. Some of that is just the basic manufacturing case for all the other reasons we just discussed. But one piece I would add to it on the National security side is I think it’s really important to recognize that you can’t maintain a strong defense industrial base independent of a strong industrial base. We’ve essentially tried to do that. We’ve said, we still need to be able to make our own aircraft carriers and submarines and fighter Jets and so forth. But the other stuff, it doesn’t matter because it’s not quote, national security. And what we’ve seen is that’s not a stable equilibrium that you can’t believe that you’re going to just be able to remain good at that very high end, the end of the supply chain stuff. If you let all the basics go away. But isn’t that partially just a case for industrial policy of the kind that, for instance, the Biden administration tried to pursue. I’m looking for substitutionary policies that serve the same kind of goals without taking the growth hit from tariffs. And it seems like you could argue, well, we have a certain set of industries that aren’t technically part of the defense budget, but that we want more of in America. We want more chips and so forth manufactured in America. Why not just make that part of our spending program right, and support those industries. Because we know the specific things that we want, instead of putting up General barriers around the world that slow growth. So obviously, I’m a very strong supporter of industrial policy. I think where we identify something in particular that is absolutely critical advanced semiconductors. Industrial policy absolutely makes sense. I think the problem is that when you’re talking about a strong industrial base broadly, there isn’t some narrow set of most important things that’s all you have to worry about right. If you actually want to be an industrial power, you need first of all, the actual materials themselves. You need to know how to make the tools that make the materials right. Things like machine tooling, the actual excellence in engineering that’s going to lead to efficient production and so on and so forth. And so it’s funny, I was just doing a discussion with Congressman Ro Khanna, who was making this exact point that we should have very narrow, targeted tariffs and be using industrial policy to figure out, to support the kinds of factories we want, because otherwise we don’t have a plan for the factories. And I smiled because I think this actually gets at an interesting left right divide where the left of center tends to have much more confidence that, Yes, we can figure out all the things we need and design a broad range of industrial policies to support each of them. I always emphasize that I actually see tariffs as the much more free market position, because, Yes, they are a significant intervention into the market, but they are a relatively simple, broad and blunt one. And once you’ve inserted that rule, once you’ve changed the constraints such that domestic production is relatively more attractive, you then are able to leave more to the market to figure out, O.K, under these conditions, what else do we want to produce here. And how do we do that effectively. And so I’d much rather see us pick a few things that we really matter for industrial policy and then support that with a broad. Tariff policy that creates the conditions, generally speaking, to promote reindustrialisation rather than look to Congress again every time we realize there’s another product that we need. And what about deficits. One of the arguments that, again, has floated around in the last few weeks is that tariffs are a way to raise revenue. Which they obviously are. The Uc has a big deficit problem. And the deficit problem is itself connected to the global trading order. And it has to do with the strength, in part, the strength of the dollar relative to other currencies. So you have people arguing one tariffs will raise revenue directly helps cut the deficit. And you don’t have to do some kind of Grand bargain between Democrats and Republicans. That’s very difficult. The president can just go ahead and do it. It’s the only way a Republican President can ever raise taxes. I’ve heard people say that. And then maybe people say it can also be linked to some global negotiation, where countries come to the table and all agree to change how their currencies work, or accept lower rates on US debt, or something that helps us deal with our budget deficits. The difficulty there is that especially in the first case, if tariffs do what you want them to do, and lead to the reshoring of manufacturing, over time, they raise less and less revenue. So a successful tariff that helps reindustrialize America is not going to be a big revenue generator. So where do you see the deficit cutting stuff fitting into this. And do you buy the idea that you could do some Grand renegotiation of US debt. So I guess the first thing I’d say is I think tariffs can be a significant revenue raiser. It’s just important to be clear on what your vision for the tariff is. So if you’re proposing a tariff as a negotiating tool and you’re saying, we hope we can take this away when the country behaves the way we want. Obviously you shouldn’t you shouldn’t count that as long term revenue when you’re talking about an actual permanent tariff. Let’s take something like the kind of 10 percent global tariff that Trump seems to want to have as a permanent tariff that I think is a significant revenue raiser. And it’s worth keeping in mind that it will be for the long run, because the equilibrium you’re headed toward is not one where we shut off trade. It’s one in which there’s more friction in trade so that there’s a preference for domestic manufacturing. But at the same time, you’re still likely to have quite high levels of trade with a 10 percent tariff. The goal of permanent tariffs is not to achieve autarky and shut off trade. So I do think we should celebrate the role that they can play in raising revenue and also recognize how that therefore reduces the cost of the approach. Because I think one thing that really frustrates me when folks talk about all of the costs associated with tariffs is they tend to assume we’re collecting all this money and just setting it on fire. The revenue I mean, the Uc budgeting process has been known to do that. Fair enough. It could be spent very poorly. But, if you think O.K by default hypothetically. Yeah well, look, by default, if we collect all this revenue and all that means is that deficits are lower, that has substantial upside. And you were just elaborating some of that. The flip side is you just mentioned is that some of these tariffs certainly that Trump is using do seem intended to be used for negotiation, with the goal not being that they are permanent, but the goal being that they bring countries to the table to reach other arrangements. And there, I think the most constructive agreements we’re likely to reach are around pushing toward balanced trade and around pushing toward getting China out of our markets. I think we can make a lot of progress there. I don’t think we’re going to solve our deficit problems through those negotiations. So this you have brought us to the actual tariffs, not the theoretical tariffs. And I’m going to put words in your mouth and say briefly that the Oren Cass preferred tariff program is one that specifically tries to isolate China generally imposes a 10 percent global tariff that is stable, persistent and compatible with global trade, and maybe include some other country specific tariffs related to negotiations. Now, you could argue that is what Trump has done. The tariffs on China are quite high. There is a flat 10 percent tariff. And then there are these country by country tariffs that people have been arguing about. But I want “You to tell me because I read your take on the tariffs, and it seemed like it was very general praise wrapped around a pretty actually specific critique. So I want you to tell me what you think is wrong with what Trump is doing on tariffs. Yeah, I think that’s a quite good summary of my general views on this. I think the tools that the administration is using here are the right tools that can do a lot of good. The question is, how do you use them. And I have a few concerns, quite serious concerns with what the administration has done, again, at least in this first few days after the announcement, where I think one real issue is with phasing. I think it is important to be credible that you are, in fact, doing these things. But snapping them all in immediately imposes all the costs up front long before it’s plausible to expect anybody to have actually adjusted. So if you think reasonably, it’s going to take a couple of years to actually even if everyone starts moving today to actually be bringing new capacity online, domestically, to be moving supply chains. And so on and so forth. You want everyone to firmly believe that the tariffs will be in place by then. And so they’d better start moving immediately. So I think phase ins are very important and something that we don’t have right now. The other one on the flip side is just the predictability and the certainty. I think you need much clearer guidance on O.K, what if this is going to be permanent versus not and a real sense of where we’re going. What is the ultimate end goal that we want people planning around. My have the way I’ve articulated a goal that I think is consistent with what folks in the Trump administration have said is we want to have a large, US centered economic and security alliance. Obviously, Mexico and Canada, obviously other core allies. We want to have very low tariffs within that group. But unlike in the past, we have some conditions or some demands we want to see balanced trade within that group. So that we reshore and reindustrialize significantly in this country. And we want to see a common commitment among all these countries to decoupling from China. And I think if we communicated that clearly, we said that’s where we’re going toward here’s what’s going to be permanent. And we’re phasing in that direction. Then there would be costs. Absolutely but the costs would be much lower. And more manageable, and you would induce much more of what you want. You would get more of the kinds of investments that you’re trying to create the incentives for. And so look, these are all things that the Trump administration could still be moving toward. But it’s really important to actually get there. I think if we’re going to achieve the kinds of things that we’re talking about. And what about the country by country tariffs as they exist right now because there was the Trump administration used the rhetoric of reciprocal tariffs, which implied to most people that essentially we were saying, if you have x tariff on our goods, we will have the same tariff on your goods and we want to mutually then negotiate down from there. In practice, instead, the Trump administration has a formula seemingly that’s just designed around trade deficits, with other countries where if you have a trade deficit with us, we are putting a big tariff on you. And it seems to me pretty obvious that in a global economy, we’re going to have lots of countries that we have trade deficits with. Maybe we want to have trade surpluses with more countries. Fair enough. And that’s what we’re working towards. But it seems completely bizarre to say any random country that has a completely different economy from ours if you’re not importing exactly as many American goods as you’re exporting to us, we’re going to tariff you. Isn’t that just daft? Well, I think there are a couple of problems here. One is you can say it’s just can say it’s just daft. You could just say it’s daft. I don’t think that the idea of these tariffs proportional to the size of deficits is daft. I think you’re right that the idea of an end state where we have perfectly balanced trade with every partner is daft. That’s not what we need to be pushing toward. But to me, anyway, what the Trump administration is pushing toward with these reciprocal tariffs was something quite obvious that I wrote about a couple of months ago. And, look, maybe the word reciprocal is too confusing. And they should have called them proportional tariffs. But probably wouldn’t, wouldn’t that have been a good idea. That seems like it would have been a good idea just putting that out there. But the thing about the reciprocal tariff is that if your goal is just look, we want your tariff down in our tariff down, then kind of holding up a mirror to other countries might make sense as the Trump administration has made clear, it is deficits they are concerned about. So that basic reciprocal tit for tat model was never actually going to be responsive to what they were describing or concerned about if what they are concerned about is the trade deficits, particularly with our very large trading partners, then creating tariffs that are proportional to the size of those deficits is a good starting point. And you’re right that in a healthy, balanced economy we could have surpluses with some and deficits with others. But the reality that is not our system. We essentially have large deficits with all of them, which should be a red flag, that there are real imbalances in the system, that are not what the economists envision and are not healthy. And so I think if you were but but you were just telling me in the case against industrial policy from the right that the conservative, the free market oriented conservative would say, we’re not going to be able to micromanage which factories to build exactly which industries to support. We want to set something low and flat that in tariff policy that just encourages domestic manufacturing in general. It seems to me like the same has to be true with this country by country stuff. The idea that we’re going to be micromanaging the trade balance with Italy, Hungary, Turkey, India, Bangladesh to figure out how do we get them all back in balance, one that seems unworkable. And two, and this is something that just hangs over this whole conversation. It just seems like a way to fit in with the President of the United States. His particular obsession with the idea that from his perspective, all trade deficits seem to be bad, at least in the way he talks about it. So everyone who’s designing these policies in the White House is working around a core Trumpian perception that probably is wrong that any I mean, his view is anytime you have a trade deficit, you’re getting ripped off. And that’s wrong. So you shouldn’t make policy on that basis. So why wouldn’t you just say we’re going to have the 10 percent Oren Cass tariff, and maybe where you have countries that are particularly abusive in their tariffs. You’re going to have actual reciprocal tariffs. Why are you going to embark on this global, economic engineering project that seems destined to fail. So I agree with some of that. I agree with your point. And I think we said this and I’ve written this, that there are plenty of reasonable reasons to have bilateral deficits or surpluses, and you shouldn’t expect them to balance in every case. That’s certainly true. I also agree with your point that for all of those is this workable reasons, the kind of global tariff is preferable to the reciprocal tariff model. The piece of the reciprocal tariff case that I think is interesting and worth really engaging with and grappling with. And this is why I say I don’t think daft is fair, is that there is a question of how do you get from here to there on the kind of system we want to move to. Let’s just as a thought exercise, stipulate we really do want a large trading bloc, relatively free trade therein and all of those countries to agree China is out. You actually do need each of these countries to change their policies. You have to have some basis for the negotiation. If you actually do want these countries to change their policies toward bilateral trade to the extent that they really are distorting the relationship, you do need to have something to bring to the table. And, the classic example that we always highlight at American Compass is a Ronald Reagan example. When the Japanese autos were flooding into the US in 1980, 1981, Reagan went to Japan under threat of heavy tariffs from Congress and got the Japanese to commit to self-impose a quota on cars from Japan and instead send Honda and Toyota to build in the United States. And I think it’s very hard to describe that as anything other than an enormous success, certainly for the US economy and frankly, for the US Japan relationship. But don’t you think the American government is only capable of doing that kind of thing. Let’s say right now, in the next few years. In three or four specific cases with specific countries. You say, O.K, there’s this thing that’s currently manufactured in our ally. Germany, and we want more of it here. There’s this thing that’s currently manufactured in Japan. We want more of it here. There’s this thing that our NATO ally turkey is doing, and we can do that. But beyond that. Like say, say we concede the Reagan approach worked. The Reagan approach was with one really big, important country that we had a long standing, complex, intimate relationship with. You set a particular goal and you can get it to work. But again, the Trump administration is not doing that. It is right now setting out a plan where we’re going to be doing the we’re going to be trying to play Reagan and Japan with 137 countries around the world in the next five years, and obviously that’s not going to happen. Setting aside questions of competence and implementation. Yes, I think that’s right. So O.K, so what I’m pushing you towards and I we’re going to come down to two forward looking questions. So the first forward looking question is that it seems like everything that you’re saying in critique of the Trump administration is they went too far, too fast, too big. So trying to do a Japan style negotiation with too many countries at once, phasing in the China tariffs, too big, too fast, not enough time for markets and companies to adjust. So Trump administration went too far too fast. How do they get to the best case scenario. And so again we’re having this conversation in a moment in time, in this particular moment, there is some talk that the Trump administration could announce a 90 day pause for most of the tariff program, maybe not including China, but certainly for most of the world. And that could, in theory, create space for the kind of recalibration that you’re talking about for walking certain things back, for slowing certain things down at the same time, can you really pull that off. Is it plausible that the market will ever trust this administration again, if it’s whipsawing between of wild tariff announcements and then walk backs. And so on. Like, is it actually plausible for the Trump administration at this point to walk itself back to a more sane and sober tariff policy than the one it has. It’s a great question. The one thing I would add just to the criticism is I think there’s just communication matters here with allies, with the public, with markets. A lot of this is about everybody actually understanding where you’re going. And so that’s a big piece where there needs to be more going on as well. I think as you just described, Yes, there’s plenty of room to correct course. And something like saying the 10 percent global tariff is permanent and immediate, and we are asking Congress to pass a bill. By the way, conservative Democrat Jared Golden has introduced a bill on this already. I think that would be great. I think saying, look, China is not like the other countries. This is where we are actually going with China. Get used to it. But by the way, we probably we’re essentially going 0 to 60 right away. Let’s do this over two or three years. That would be great. Fully credible. And by the way, again great legislation co-sponsored actually now by now, Secretary of State Marco Rubio to do that on China. They should do that. Get Congress on board, make it permanent. And then with the reciprocal stuff. Yes first of all, I think at this point. And if they make that stuff permanent, they do have some credibility that they mean it. This is serious. And I think there’s room to say people are coming to the table quickly. We appreciate everybody’s interest in resolving this. And so let’s put these on hold. And let’s put a deadline by which we need to see plans from people for what they’re planning to do and countries that don’t get with the program, get hit with half of this in six months. And if they still don’t get with the program, get hit with the other half of it six months after that. I think all of that could be perfectly consistent with what has been said so far and would be an enormous improvement in reducing the costs and increasing the potential benefits to finish up. What do you see as the worst case scenario here. If you can indulge pessimism for a moment and I will offer one, which is that I do not think that the Trump administration will ride this exact policy mix all the way down into a recession. But I think there are reasons to think that Trump might stick with some bad policies. I think we know enough about Donald Trump to suggest that that’s a possibility. And I think you yourself have conceded throughout this conversation that any tariff regime probably comes with some cost to growth, hopefully modest, but some cost. So you combine that cost with extra costs added by Trump’s policies being non-optimal with a general atmosphere of dismay and uncertainty. I think uncertainty is a fair aspect of this, and that yields, if not recession, at least, let’s say, stagflation, somewhat higher prices from tariffs, lower economic growth rates. The Republicans lose Congress in the midterms. There is no appetite for making these tariffs permanent via legislation, because generally they’re extremely unpopular and associated with Trump himself. There’s no JD Vance presidency after Trump because he’s associated with these policies and they’re unpopular. And, if I may personalize it a bit right then the end of the story here is a Democratic president comes in, sweeps all of this away. No factories have been built because no one believed the policies were permanent. And the project of American Compass and the project of you, Oren Cass, is seen as bound up in the Trump administration completely blowing an opportunity for conservative governance for years and years. That’s my worst case scenario. I wouldn’t include American Compass in the worst case scenario. American Compass will do our policy work as best we can for as long as we can. I think the two elements of the worst case scenario, until the angry, the angry 401(k owners appear behind your snowy, your snowy windows. Exactly, look, I think the two very serious concerns or downsides that I’m concerned about. One is the very real costs. And I think to some extent we get tied up in the abstract of the talking points or the stock market the very real cost is actual harm to real people. If you load up costs that aren’t going to produce benefit. And then the second related cost, I think, is that this direction is discredited in the eyes of the American people, that as a political matter, the idea that, we can do better than this unfettered globalization, that there is a path back to reindustrialization is just thrown out and becomes for a long time associated with high costs and low benefits. And I think that would be unfortunate for the country, because at the end of the day, I do think it’s something we need to do, but obviously something we need to do. I think that note of pessimism is a good place to end, because I’m feeling fairly pessimistic about this policy course at the moment. So thank you so much, Oren Cass, for joining us. And we’ll see how things look soon enough. All right. Thanks for having me, Ross. Thanks, Oren.
