CHRIS SIMMONS-SOLOMON: Good day. This is Chris Simmons-Solomon, and I’m at 87 degrees, 12 minutes south, and 133 degrees 55 minutes west in Central Antarctica. I’m a mountain guide for a traverse with 13 mechanics and tractor operators in the U.S. Antarctic program. We’ve been traveling now for three weeks from McMurdo Station with essential science equipment and fuel supplies for the Amundsen-Scott South Pole Station. Now, this podcast was recorded at…
SUSAN DAVIS, HOST:
12:37 p.m. on Tuesday, November 26.
SIMMONS-SOLOMON: So things may have changed by the time you hear it. But we’ll likely still be making our way through white-out blizzards and temperatures below negative 40 Celsius – or Fahrenheit – working hard to keep all the 14 noses, 28 ears and 139 fingers we started out with. All right, let’s get to it.
(SOUNDBITE OF THE BIGTOP ORCHESTRA’S “TEETER BOARD: FOLIES BERGERE (MARCH AND TWO-STEP)”)
DAVIS: I have a chill just listening…
FRANCO ORDOÑEZ, BYLINE: Oh, my goodness.
DAVIS: …To that timestamp.
ORDOÑEZ: You know what? I mean, part of me wants to go and do the podcast from there.
DAVIS: That is an extremely cool job that I would never ever want to do (laughter). Hey there. It’s the NPR POLITICS PODCAST. I’m Susan Davis. I cover politics.
ORDOÑEZ: I’m Franco Ordoñez. I cover the White House.
DAVIS: And longtime friend of the pod, NPR’s chief economics correspondent Scott Horsley is with us today. Hi, Scott.
SCOTT HORSLEY, BYLINE: Hi. Good to be with y’all.
DAVIS: Today we’re talking tariffs because last night, President-elect Donald Trump announced on social media that he’s planning to impose tariffs on all goods coming from Canada, Mexico and China – the U.S.’s three largest trading partners – on his very first day in office. Scott, let’s do a little service to our listeners here. Let’s start with the most basic question. What’s a tariff and how do they work?
HORSLEY: A tariff is a tax that is imposed on imported goods. The president-elect likes to say that it’s the foreign country that is exporting the goods that pays the tariff. But economists are pretty much in agreement that the lion’s share of this tax is born by the businesses here in the U.S. and the consumers here in the U.S. that use the tariffs. So, in this case, you can think of this as a 25% tax on guacamole coming from Mexico three weeks before the Super Bowl.
DAVIS: OK, can you now talk through exactly what Donald Trump is saying he’s doing and what the economic consequences could be?
HORSLEY: Well, he says he’s going to attach these tariffs on all imports from Mexico, Canada and China until he gets some relief from those countries on illegal immigration and illegal drugs coming into the U.S. He says that those countries have the power to stop undocumented immigration and illegal drugs flowing into the U.S., and that until they do so, they’ll be paying a heavy price.
DAVIS: And just to be clear, this is an economic policy that he would be enacting in response to immigration and drug issues. It’s not sort of an economic retaliation against these countries. It’s because he wants them to solve a different problem.
HORSLEY: That’s correct.
DAVIS: Franco, a bit of a surprise announcement. I think we’re back to the days where the president-elect and soon-to-be president is announcing policies at all hour of the night and day. But this isn’t a surprise policy. This is exactly what Donald Trump campaigned on.
ORDOÑEZ: He would say, over and over and over again, his favorite word is tariff. He uses it as a weapon against other countries to get things that he wants. I mean, just one example is using tariffs against Mexico. He tells this story during the campaign that that’s how he got the Remain in Mexico policy. That’s the policy, of course, that requires asylum-seekers to stay in Mexico as their cases go through the courts. He tells this long story about having a conversation with a Mexican diplomat and them saying, no, no, no. No asylum-seekers can stay in Mexico. He says, yes, yes, yes. They say, no, no, no. And then he says, well, if you don’t do this, I am going to slap these massive tariffs on you. He claims within hours, they had a deal done. Now, he says that’s what he’s going to do again. And this is the kind of thing that he does over and over again. I mean, we are eight weeks away from Inauguration Day. To be this early, there is some tactics here.
DAVIS: Scott, though, I do think it’s important to remind people that this wouldn’t be the first time Donald Trump has imposed tariffs. And in fact, the U.S. still has tariffs imposed that were imparted under Donald Trump that Joe Biden continued.
HORSLEY: That’s true. The first Trump administration raised tariffs by a considerable degree. There were a lot of those tariffs that went through sort of due process at the Commerce Department or the U.S. Trade Representative. Then there were threats of tariffs which came from the president’s social media accounts, often late in the evening. A lot of those tariffs didn’t come to pass. So I think people are waiting to see whether this is going to be a genuine threat or just a lot of sound and fury signifying not much. But just the threat of these tariffs has generated lots of headlines for the president-elect, and, you know, maybe that’s part of his goal here.
ORDOÑEZ: I mean, on the sound and fury point, I mean, yes, he definitely announced a lot of tariffs in his first administration. He made threats of very widespread tariffs. But in the end, most of them were targeted tariffs that hit specific things. What he is proposing now are across-the-board tariffs on Mexico, across-the-board tariffs on Canada, as well as China. This would have a much more significant impact.
DAVIS: And this could just be a threat, right? I mean, in the past, he has threatened big consequences, but they didn’t actually happen.
ORDOÑEZ: This is the kind of thing that the president-elect does. I mean, this is part of his MO. This is how he impacts change. And I will also add, this is something that bothers diplomats. When I talk to diplomats about – well, what would it be like, you know, going back to Trump versus Biden? – this is something that is often brought up. You were talking about kind of using trade to talk about border policy, kind of, like, the mixing the buckets of issues. This is something that really drives diplomats mad because Trump will use one issue to kind of attack another. You know, he kind of mixes these buckets of issues.
HORSLEY: If these tariffs were actually to go into effect, though, this would have serious economic consequences. I mean, we heard over and over again throughout the campaign how unhappy people were with the high price of groceries. Well, prices in the produce section of the supermarket would soar if you had to put a 25% tax on all the fresh produce coming from Mexico. What’s more, the North American auto industry, which is very integrated among all three countries, would be seriously handicapped. That would affect, you know, U.S. manufacturing jobs in the Midwest, people who supported Donald Trump. So if this threat were actually to be carried out, it would have serious economic consequences.
DAVIS: But Franco, to that end, the political contradiction here is if this policy was enacted, one of the most clear impacts on everyday people is grocery store bills would go up. And how many times did we hear from voters in this past election that they were voting for Donald Trump ’cause they wanted to see those grocery prices go down?
ORDOÑEZ: Absolutely. And I think that is the reason why so many Trump supporters, you know, have really kind of questioned how serious this is. I mean, I think the phrasing that many people use is to take Trump seriously…
DAVIS: Oh, yeah.
ORDOÑEZ: …But not take him literally.
DAVIS: All right. Let’s take a quick break, and we’ll talk more about this when we get back.
And we’re back. And this is a policy, if Donald Trump chooses to do it, he can pretty much do all on his own.
ORDOÑEZ: Yeah. I mean, it is complicated a bit. The U.S. Constitution does give Congress the authority to issue tariffs. That said, they also have the authority to delegate it to presidents, and that’s what they have been doing for decades. And that’s why Trump was able to basically freely issue tariffs quite a bit in his first administration.
DAVIS: It’s also one of those ways in which Donald Trump is economically changing the Republican Party because the Republican Party has been opposed to the idea of tariffs, and here we are, where the leader of the party is now the – arguably the loudest advocate in the world for them.
ORDOÑEZ: In so many ways, Trump has expanded the presidential powers for those exact reasons.
DAVIS: Scott, is there any – I mean, as you noted in the beginning of the conversation, that there’s broad consensus among economists that this would impart higher costs on consumers or businesses. Is there an economic argument that the Donald Trump world view is relying on to say that this could actually be good policy?
HORSLEY: If you put these kinds of economic consequences in play for the sake of a bargaining chip, it creates a lot of uncertainty. It makes it hard for businesses to know what’s coming down the pike. And we know that businesses don’t like uncertainty. Businesses like to know, what are the rules of the road? How can we comply with those rules of the road? And we want to know that they’re going to be the same tomorrow and next week and next year that they were yesterday. So just rattling this tariff saber in this way, I think creates uncertainty and discourages people from wanting to do business under these circumstances.
DAVIS: Franco, do you have any sense of how the affected countries are responding or might respond?
ORDOÑEZ: I mean, they’re responding pretty aggressively as well. Mexico issued a statement just a little while ago, saying that for every tariff that the United States imposes that there will be a response in kind. They went so far as essentially pointing out that General Motors, Stellantis and Ford Motor Company have plants in Mexico and that those would be impacted. They have been in this situation before – Mexico, that is. I think if any country knows kind of the tactics of President-elect Trump better, it is Mexico. So it will be interesting to see how they respond.
I will add, though, while the response does kind of seem muted in some ways because it does seem like this is a negotiating tactic – but it is having some real-world impacts in these countries. I mean, the headlines that we’re seeing here are headlines that you’re seeing in Mexico as well. You have experts and pundits – they’re saying, this is terrible. This is the worst thing that can happen. And they are putting political pressure on their leaders to respond. So I do think this is part of Trump’s strategy to kind of create this culture of fear to affect change. And for him and his team and his allies, they would certainly argue that if they can use that fear to disrupt and to create change, then that could be good.
HORSLEY: I will say, too, there’s a growing bipartisan consensus in this country that if there is one major rival for the United States, both economically and strategically, it is China. And, you know, in the campaign, Trump talked about imposing 60% tariffs on China and 10 or 20% tariffs on other countries. Well, here he’s doing the opposite. He’s imposing 2 1/2 times the tariff rate on Mexico and Canada, our next-door neighbors, as he is on China. And every time you levy a big tax on a country other than China, what you’re really doing is handing an advantage to China. China is already the No. 1 exporter in the world. And if you make it harder for Canada, harder for Mexico to compete, then you’re basically just serving up a favor to the Chinese government.
ORDOÑEZ: I mean, I think you’re absolutely right. I just question whether Trump is looking at it that way. I mean, obviously, Trump looks at these things very much through a political lens, in the lens of his own interests. And his supporters, they are going to see this as an example of how Trump kind of uses America’s strength to create change that can benefit them. I mean, the political support for this kind of activity is real, I mean, even among Democrats. I mean, there’s a reason why Biden kept tariffs in place – because the political support is there, and the concern is if you don’t do that or you take that away, you could lose support.
DAVIS: My son is currently going through a hitting phase, where he will, for no reason at all, hit my daughter really hard. And she will just look at me and yell, I was just sitting here. I wasn’t even doing anything. And in this metaphor, that’s Canada to me.
(LAUGHTER)
DAVIS: Like, I understand the Mexico part of this policy, especially because of illegal immigration and drugs coming across the border. China, as Scott just well articulated, is seen as the largest global rival to the U.S. I’m not sure I fully understand the Canada part of this broad, sweeping tariff punishment.
ORDOÑEZ: Well, I mean, there is a connection with immigration here as well. I mean, the Biden administration has increased enforcement on the Southern border, and there has been an increase from Canada. People are flying to Canada or getting to Canada and coming through the Northern border. So there is a immigration component here that Trump is seeking to address. But there’s also a personal relationship that he has had with Trudeau, and it has been pretty rocky for a long time. You got to wonder if that is also a part of this.
DAVIS: All right. That is it for us today. Scott Horsley, thank you, as always.
HORSLEY: Good to be with you all.
DAVIS: I’m Susan Davis. I cover politics.
ORDOÑEZ: And I’m Franco Ordoñez. I cover the White House.
DAVIS: And thanks for listening to the NPR POLITICS PODCAST.
(SOUNDBITE OF THE BIGTOP ORCHESTRA’S “TEETER BOARD: FOLIES BERGERE (MARCH AND TWO-STEP)”)
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