The Tucker Carlson Show - Bob Lighthizer： Why Trump's Tariffs are the Only Way to Save the Middle Class

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00:00:15.880 Thank you for coming on to explain this.

00:00:17.680 I mean, my one frustration, I believe in what the White House is doing.

00:00:22.980 I don't think enough Americans understand it,

00:00:26.920 so I don't think there's anyone better at explaining it than you.

00:00:30.940 I mean, you're the trade representative.

00:00:34.520 What about our current system needs to be changed?

00:00:36.900 Why is it important to do this, to institute tariffs, to rethink trade?

00:00:41.480 So that's the fundamental question, Tucker, and thank you for having me on.

00:01:07.060 And it's a pleasure to be here.

00:01:09.240 I've been a fan for a long time.

00:01:12.020 So I think you have to start with the proposition, has the system failed?

00:01:16.760 And to me, it's an emphatic yes.

00:01:19.260 I think of it in sort of two ways.

00:01:22.620 One, if you think of the way trade is supposed to work, you're supposed to export in order to import.

00:01:33.820 And then you get the benefit of trade.

00:01:35.260 You get actually, you do what you do best, I do what I do best.

00:01:38.680 Or I do what you do less best.

00:01:42.020 You export, we import, and we get the benefit.

00:01:44.780 We both have higher standards of living.

00:01:47.260 That's not really what it's evolved to.

00:01:49.780 It's evolved to now where you have a few countries, the United States being the biggest,

00:01:54.260 that have an open capital system and an open trading system, and other countries have an industrial policy

00:02:01.400 that is designed not to increase the standard of living of their citizens, but to gain wealth.

00:02:09.520 So what they're trying to do is get wealth in order to get assets in the United States,

00:02:15.160 in order to get technology, in order to get all these kind of things that make you wealthy.

00:02:19.220 So I think of the kind of failure points as being, one, because this system doesn't work,

00:02:26.920 we have this giant transfer of wealth from the United States overseas, and that is in the form of trade deficits.

00:02:36.000 And the way the system is supposed to work, no one should have large trade deficits for long periods of time.

00:02:43.740 Things can happen.

00:02:44.540 You can do it.

00:02:45.140 You could have trade deficits with one country, surplus with another.

00:02:48.540 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.

00:02:56.160 We now are to the point where our trade deficits, they calculate them at about $700 or $800 billion.

00:03:04.400 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.

00:03:10.940 So that's a transfer of wealth from Americans overseas in return for current consumption.

00:03:17.540 And it has nothing to do with economics.

00:03:19.560 It's entirely the result of industrial policy of other people and are being defenseless.

00:03:25.100 So you ask yourself, what does that mean over a period of time?

00:03:29.640 Why should I worry about that?

00:03:30.880 There's a data point called the international investment position of a country.

00:03:36.400 And that is how much for us all Americans own throughout the entire world versus how much everyone else owns here.

00:03:44.880 That number is a negative $23.5 trillion.

00:03:49.580 And if you said, what was it 20 years ago, it was probably a negative $3 trillion.

00:03:55.620 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 current consumption.

00:04:09.200 Can you explain that measurement one more time?

00:04:11.360 It's what we own here versus what others own here?

00:04:15.700 It's no.

00:04:16.900 So it's how much Americans own overseas.

00:04:21.620 Okay.

00:04:22.680 All over the world versus how much everybody else in the world owns here.

00:04:27.840 And it's a real calculation.

00:04:29.140 It's not something I did, right?

00:04:30.320 It's a real statistic.

00:04:31.580 It's been around forever.

00:04:32.660 And what would that include that they own here?

00:04:36.120 So, well, I mean, so they own $23.5 trillion worth of stuff.

00:04:43.300 But if you said, what is it mostly, it's probably mostly debt.

00:04:48.260 A lot of it's debt.

00:04:49.700 A lot of it is equity in our companies.

00:04:52.780 Real estate, those are the principal things that they own.

00:04:56.180 Those are the big assets.

00:05:00.080 Debt is a big one, but also ownership and equity, a lot of it portfolio.

00:05:05.220 Now, some of it is foreign direct investment where a company actually comes in and buys a piece of land and creates jobs.

00:05:13.160 But most of it isn't that.

00:05:14.880 Most of it is just they own U.S. equities.

00:05:18.980 If you think about the United States for most of our history, particularly since the Second World War,

00:05:25.060 Americans were thought rich because we own more overseas than people owned in America.

00:05:30.520 That's what makes you rich.

00:05:31.620 Now, we are poor to the extent of $23.5 trillion.

00:05:37.460 Now, this point is an interesting one.

00:05:41.440 In 2003, Warren Buffett did an article on this point.

00:05:46.320 And he was worried about the trade deficit because it was leading to a negative net international investment position of Americans.

00:05:57.460 And it was basically transferring.

00:05:58.800 Well, it's the same thing I am.

00:05:59.840 When he was worried about in 2003 that the number was a negative $2.3 trillion.

00:06:08.340 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.

00:06:17.120 So, that's the first condemnation of the current system.

00:06:21.100 And we can talk at great length about that if you like.

00:06:24.640 The second is this system has really slowed economic growth in the United States.

00:06:30.160 So, let me give you a point here.

00:06:31.540 If you think from 1960 to 1980 and then 1980 to 2000 and 2000 to the present, think in those three increments.

00:06:42.320 From 1960 to 1980, we had 14 years of plus 3% GDP growth.

00:06:50.420 All right, reasonable GDP growth.

00:06:52.320 From 1980 to 2000, again, we had 14 years of plus GDP growth.

00:06:59.280 Since 2000 to now, we have had three years.

00:07:02.080 And one of those was COVID, which doesn't really count.

00:07:04.960 So, the last time we had plus 3% GDP growth was 18 or 19 years ago.

00:07:10.040 And that coincides with this period of uber, some would say, hyper-globalization, hyper-free trade that came on largely in the 1990s.

00:07:23.320 So, we've seen the transfer of wealth overseas were getting poorer.

00:07:28.640 We have seen America have a slower economic growth.

00:07:34.860 We've also seen a deterioration of our technology, of our technological lead.

00:07:41.080 And there's a number of ways to think about this.

00:07:42.880 Can I just ask you a question?

00:07:43.880 We've also seen, like, a lot of the world's population move here.

00:07:47.740 Like, the country's completely changed from 2000.

00:07:50.020 Well, but, yeah, but the demographics is an interesting point.

00:07:53.840 And I agree with what Vice President Manns talked about the other day about how one of the things about immigration is it does get you dependent on low wages.

00:08:05.140 And when you depend on low wages, it tends to stifle innovation.

00:08:08.620 But I make – so, I agree with that.

00:08:10.720 But I'm making a little different point.

00:08:12.380 If you think when you lose manufacturing and you lose manufacturing jobs, you also – it slows down your innovation.

00:08:19.400 There was this notion that, well, we'll innovate and others will manufacture, but it doesn't work that way.

00:08:24.680 Most of the innovation is near the point of manufacturing.

00:08:28.700 So, what are my data points to suggest that we are falling behind?

00:08:33.540 All right.

00:08:33.740 First is we invented the personal computer.

00:08:35.940 Now, we make almost none and none without foreign parts.

00:08:39.020 We invented the semiconductor.

00:08:41.320 We make now 8 percent of the global amount.

00:08:43.380 We used to dominate it.

00:08:44.580 We could say the same thing about rare earths.

00:08:46.760 We didn't invent them, but we used to dominate that solar panels.

00:08:50.100 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.

00:08:58.300 But very importantly, the Australian Strategic Policy Institute, which is this wonderful institute that's supported by the government of Australia, but also private sector people, they track 64 what they call critical technologies, 64.

00:09:16.080 The United States is behind China in 57 of the 64.

00:09:20.020 And these are things like AI and robotics and the kind of things you need.

00:09:24.460 And if you said, where were we 15 years ago, we were behind in three.

00:09:30.880 So, you've seen this deterioration during this period of hyper-globalization or hyper-free trade or huge trade deficits.

00:09:37.900 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.

00:09:57.280 Yes.

00:09:57.580 So, the United States, two-thirds of American workers have a high school education only.

00:10:02.580 Two-thirds.

00:10:03.020 So, it's not like we're talking about some fringe group on the side.

00:10:06.340 This is the heart of who we are.

00:10:09.220 We have seen these people lose their jobs.

00:10:12.220 We've seen their wages stagnant for 25 years.

00:10:15.800 There was a bump in Trump one, but we're basically back where we were.

00:10:20.200 You've seen them actually have shorter lives.

00:10:22.700 Angus Deaton and Anne Case did a book called Desolate Despair that demonstrated that these people now live, on average, about eight years shorter lives because of alcohol and drugs and suicide.

00:10:40.340 To give you an idea, when I was young, that differential was probably about a year.

00:10:45.340 And now it's eight years.

00:10:47.000 We've seen they are poorer.

00:10:48.700 We've seen despair increase.

00:10:52.840 We've seen devastation.

00:10:53.980 You don't have to drive very far in America to see devastated communities.

00:10:57.320 All of this, the result of this failed attempt at globalization, this failed attempt at free trade.

00:11:04.860 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.

00:11:14.340 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.

00:11:23.780 Now, we weren't always really – we thought of ourselves.

00:11:26.280 We definitely pretended it, for sure.

00:11:28.020 The very, very rich would – you know, they were them, and nobody cared about them.

00:11:31.740 And then the very, very poor –

00:11:32.760 There weren't very many.

00:11:33.280 But most, you know, 80% of us thought we're middle class.

00:11:37.720 And I went to Catholic schools, and we had people with – and nobody that was really rich, because I should be in Ohio.

00:11:43.920 But there were people who were relatively well-off, people who weren't – and there wasn't any big difference.

00:11:48.280 But they all ate at Denny's.

00:11:49.560 They all ate at Denny's.

00:11:51.280 They all went to the same clubs.

00:11:54.120 They all played Little League together.

00:11:56.360 They all thought of themselves as having about the same chance of success, which is an important point.

00:12:04.800 Now what we have, for the first time in American history, the top 1% has more wealth than the middle 60%.

00:12:13.500 It's never happened before.

00:12:14.640 We find kind of combining these thoughts, and we get this from Angus Neaton, we find for the first time starting in 2000, when this explosion took place in hyperglobalization, we find that American children can no longer expect to live longer than N.B. Richard and their parents.

00:12:36.560 That was what we all thought.

00:12:38.420 We're going to be better off than our parents, and we're going to live longer.

00:12:41.140 That is no longer true.

00:12:42.540 So – and I could go through one data point after another.

00:12:46.820 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.

00:12:56.020 Now it's 72 times as much wealth.

00:12:58.680 So –

00:12:58.980 This seems like a recipe for social instability and ultimately for revolution.

00:13:02.440 That's what happens in other countries.

00:13:04.340 Absolutely no question.

00:13:04.960 We have this sense that we're immune.

00:13:06.940 I don't agree with that.

00:13:07.700 And this – 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.

00:13:22.360 Very beginning of this, and we can talk history of that.

00:13:24.420 And it absolutely is why Donald Trump was elected president.

00:13:27.840 Reagan had these so-called Reagan Democrats that we all remember that.

00:13:33.160 That was the beginning of those people because that was when we sort of reached the peak.

00:13:37.780 By the time we got to the 2000s, these people were a movement, this populist movement.

00:13:43.260 And they are the reason that Donald Trump is where he is.

00:13:47.520 And to his credit, Donald Trump talked about this and worried about this issue since he was 35 years old.

00:13:55.880 This is not – this is the – in my opinion, the essence of Donald Trump.

00:14:01.020 Donald Trump's essence is we're getting – he says we're getting ripped off. 0.95

00:14:05.400 Our workers are getting screwed. 1.00

00:14:07.500 It's not because they're lazy or stupid. 1.00

00:14:10.480 It's because we have a bad system that is hurting them, and it's destabilizing the country. 1.00

00:14:16.040 And all of these are data points that kind of make that point.

00:14:19.320 And once you realize that, you realize you have to do something, right?

00:14:25.080 The purpose of the economy, first of all, obviously, is national security.

00:14:28.660 But after that, it's to distribute resources and wealth so that most Americans live the best lives they can live.

00:14:37.660 And we have lost that.

00:14:38.880 We have just plain lost it.

00:14:42.340 It hasn't been an accident.

00:14:43.460 It doesn't feel necessarily like we've evolved into this.

00:14:47.220 It feels like we've been guided into this, that this is a result of calculations and an ideology that still exists, 0.83

00:14:55.320 most prominently in the pages of the Wall Street Journal, which let me just say is a disgusting, dishonest newspaper.

00:15:00.320 But even if you like the Wall Street Journal, they have a very kind of clear ideology,

00:15:05.960 which they've promoted along with almost everybody in Washington, that free trade is the path to prosperity.

00:15:12.100 And then, in fact, it's like a moral imperative.

00:15:13.620 Like if there's something dirty about abandoning free trade, what is that?

00:15:18.900 Obviously, you know a lot about this since you've lived in Washington a long time.

00:15:21.760 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.

00:15:33.580 By name.

00:15:35.020 Oh, me too.

00:15:35.760 Yeah.

00:15:36.280 So, well, we have that in common, too.

00:15:39.740 I say they have the diversity.

00:15:42.240 The editorial page has the diversity of opinion protocol of somewhere between Pravda and the People's Daily.

00:15:48.420 Yeah.

00:15:48.640 It is their view, and they keep it. 0.96

00:15:51.760 And so, you know, why did we get to this stage?

00:15:58.920 To some extent, it was kind of misguided.

00:16:02.300 To some extent, it was wealthy people pushing it because it was good for them.

00:16:07.180 I'm not one who subscribes to the view that it was people trying to hurt America.

00:16:11.500 I think it was they just didn't care one way or another whether it hurt.

00:16:15.580 They didn't care, for example, who owned America.

00:16:19.760 Right.

00:16:19.840 They didn't care what percentage of our global wealth ended up in the hands of our working people.

00:16:25.840 Those were not metrics.

00:16:27.200 What they cared about was price optimization and how much we could consume.

00:16:31.840 And that's the opposite of what people like you and I believe in.

00:16:36.420 Conservatives and a lot of labor Democrats believe we have to worry about values and preserving what's great in America.

00:16:45.560 We're not interested in sort of the materialism of maximizing, optimizing prices and maximizing consumption.

00:16:52.860 And that's more or less where that's – there's a combination of that.

00:16:56.820 There's a combination of this financialization of America of taking profit out right away so that a few people get very rich regardless of the effect on others.

00:17:05.820 If you think of the evolution, Tucker, it's – and we could talk from the beginning of time about trade and how it evolved.

00:17:16.040 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.

00:17:33.440 And Alexander Hamilton kind of an idea of tariffs and subsidies, subsidies in the nation, in the nature of canals and roads and the like.

00:17:41.620 But tariffs were a key part.

00:17:43.620 By 1870, we had started to turn surpluses.

00:17:49.360 By 1890, we're the richest country in the world, all right?

00:17:52.360 And it kind of progresses like that.

00:17:54.160 Now we – and we can talk about that back and forth.

00:17:56.540 And those were almost all Republican presidents during that entire period, only two Democrats during that entire period, between Lincoln and Franklin Roosevelt.

00:18:07.360 And basically tariffs were a key tool and there were ups and downs in that.

00:18:11.140 And we can talk about that if people are interested.

00:18:12.920 But we got to the Second World War and then we had a different challenge.

00:18:19.160 We had to rebuild Europe.

00:18:20.320 We wanted to rebuild Japan for stability.

00:18:23.020 We wanted to fight communism in the Soviet Union.

00:18:25.500 And these were our motivations.

00:18:27.540 And so at that point, we needed a new system and they developed this new trading system.

00:18:34.320 And the trading system was sort of based on the notion of we'll all reduce barriers.

00:18:38.520 We'll all do better over a period of time.

00:18:43.000 I would say that was – at times it was a successful idea.

00:18:47.200 At times it wasn't a successful idea.

00:18:48.840 But by the time we got a few – several decades into it, we started seeing people being more and more industrial policy.

00:18:57.660 And by the 1970s into the late 1970s, we started to see our situation get worse.

00:19:05.520 We started having trade deficits.

00:19:06.520 You'll recall that Nixon in 1971 put tariffs on the whole world in order to decouple from gold.

00:19:13.040 We can talk about that if people are interested.

00:19:15.500 But there were a lot of things that were sort of signals and that was kind of the peak.

00:19:20.240 By the time we got to Ronald Reagan, as I say, there was already a loss of a lot of jobs.

00:19:26.240 There was an unsettling among our working class people, which as I say, unlike a lot of places, it is us.

00:19:32.200 It's 70, 65, 70 percent of it.

00:19:34.700 It is us.

00:19:36.300 And then you found yourself – the Berlin Wall fell.

00:19:40.920 There was this notion of the end of history that for now on, everything is going to be better.

00:19:46.500 We're all going to be democracies and we're all going to have open markets and there's all this greatness.

00:19:51.220 You can remember – 0.99

00:19:52.780 Frank Fukuyama and other morons. 1.00

00:19:55.320 Yeah. 1.00

00:19:55.600 Yeah, they're right.

00:19:56.720 So then you found yourself with Clinton in the 19 – the end of Bush.

00:20:00.180 It's just not – because I don't want to be totally partisan – the end of Bush 41, Herbert Walker Bush, and then into Clinton. 0.99

00:20:06.820 And we have what I call like the trifecta of stupid, all right? 0.98

00:20:11.060 We do NAFTA. 1.00

00:20:13.380 We do the WTO, the Uruguay around that. 0.97

00:20:17.780 And then the dumbest of them all, we give most favored nation treatment to China. 0.97

00:20:24.000 And those things are done more or less in the times of about 10 years. 0.97

00:20:27.300 Clinton, for the most favored nation status, that was something that Clinton – Clinton set it up, but Bush signed it.

00:20:34.860 Is that correct?

00:20:35.600 No, it passed under Clinton.

00:20:39.700 So this is an interesting fact.

00:20:42.300 In like 1997, I did an article for the New York Times.

00:20:48.060 And you'll recall during this – the second Clinton election, there was this talk about Indonesian money came into Clinton.

00:20:57.780 I remember very well.

00:20:58.660 Yeah.

00:20:59.340 Well, I –

00:20:59.900 Johnny something or other.

00:21:00.640 Yeah, exactly.

00:21:01.560 Was that the – the Commerce Department?

00:21:02.760 Yeah, yeah.

00:21:03.120 I did an article, which the New York Times published, that sort of said, well, what's this about?

00:21:09.000 This is not Indonesian money.

00:21:10.560 It's Chinese money.

00:21:12.180 What does China want? 0.99

00:21:13.600 They want most favored nation treatment, and they want to get into the WTO.

00:21:16.780 And if they do, there won't be an American job that's safe.

00:21:19.220 So this is in 1997.

00:21:21.420 Fast forward, you have this vote.

00:21:24.520 Clinton is pushing it.

00:21:26.500 By the way, it passes with more Republicans than the Democrats.

00:21:29.340 Republicans are worse on this at that time.

00:21:32.060 A lot of them have kind of learned.

00:21:33.980 Yeah.

00:21:35.000 And then we have these things pass. 1.00

00:21:36.900 So we have this trifecta of stupid, as I call it. 0.99

00:21:40.000 And then we have 5 million manufacturing jobs lost. 1.00

00:21:43.100 You just see jobs lost.

00:21:44.580 Wages are basically not going up in real terms since then.

00:21:48.580 You know, the rich get richer and the poor get poorer.

00:21:50.240 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.

00:21:58.060 Now, if you said, well, is this a deteriorating before then?

00:22:02.300 For sure it was.

00:22:03.280 But this was like somebody just putting it on steroids and acted like – I mean, the only thing that they missed about the evolution of economics was human nature, right?

00:22:12.940 The other thing else they got right.

00:22:14.520 They just missed human nature.

00:22:15.900 As always.

00:22:16.320 Yeah.

00:22:17.060 So then you saw very bad things happen over a long period of time.

00:22:23.420 You got to the point where you had – in 2016, you had President Trump, as I say at that point, had been complaining about this general notion since he was 35, since he was a kid.

00:22:36.120 And he kind of gets a populist move and he's elected.

00:22:40.320 And then we have whatever happened in 2020, a COVID thing that ends up affecting our election.

00:22:46.420 And now we are again because we changed in Trump 1.0 or whatever the computer people say.

00:22:56.240 We changed the way people think about these things.

00:22:58.880 And they didn't really change back much in Biden.

00:23:02.540 To Biden's credit, his people – I think some of his people were very good.

00:23:05.900 But overall, they didn't make a lot of decisions to make better what we did.

00:23:10.640 But they didn't make it worse.

00:23:11.960 And now we're in Trump or we're in a position to actually make substantial changes.

00:23:17.780 But the – and I know that's what you want me on here to talk about.

00:23:20.840 But the most fundamental thing is the system has failed America generally and it's failed our working people dramatically.

00:23:32.480 And that's been going on for – in an acute state for at least 25 years.

00:23:38.680 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.

00:23:45.480 They have their mail and phone calls monitored.

00:23:47.720 So if you take away someone's privacy, you take away that person's freedom.

00:23:53.380 Here's the thing.

00:23:54.440 You don't have any privacy when you go online, probably online most of the day.

00:23:58.260 And everything you do is being monitored and sold by data brokers, recorded.

00:24:03.980 That's like a random search behind bars.

00:24:07.040 All of this is done in an attempt to profit from you.

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00:25:02.720 Don Jr. here, guys.

00:25:04.000 Are you receiving letters from the IRS claiming you owe back taxes?

00:25:07.180 As penalties and interest fees pile up, the IRS gives you no clear path to resolution.

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00:25:29.680 That's 1-800-780-8888.

00:25:32.260 Tucker says it best.

00:25:34.460 The credit card companies are ripping Americans off and enough is enough.

00:25:39.100 This is Senator Roger Marshall of Kansas.

00:25:41.820 Our legislation, the Credit Card Competition Act, would help in the grip Visa and MasterCard have on us.

00:25:48.980 Every time you use your credit card, they charge you a hidden fee called a swipe fee, and they've been raising it without even telling you.

00:25:56.460 This hurts consumers and every small business owner.

00:25:59.400 In fact, American families are paying $1,100 in hidden swipe fees each year.

00:26:05.880 The fees Visa and MasterCard charge Americans are the highest in the world, double candidates, and eight times more than Europe's.

00:26:13.820 That's why I've taken action, but I need your help to help get this passed.

00:26:18.220 I'm asking you to call your senator today and demand they pass the Credit Card Competition Act.

00:26:24.960 Paid for by the Merchants Payments Coalition.

00:26:26.920 Not authorized by any candidate or candidates committee.

00:26:28.960 www.merchantspaymentscoalition.com

00:26:32.100 When life expectancy in an advanced country goes backward, I don't think there's any clearer sign of an emergency.

00:26:40.300 I mean, that's the one thing you can't fake, when people die.

00:26:43.600 We are the only G7 country that has a life expectancy of under 80 years.

00:26:50.820 And supposedly, we're the richest country in the world, supposedly.

00:26:57.380 Now, there's a lot of things contributing to that.

00:26:59.560 Everyone sees it all their own way, and there's a lot of things contributing to it.

00:27:03.680 But it's an emergency.

00:27:04.800 It's an absolute crisis.

00:27:06.020 And I'm telling you, this divergence between this income inequality is another real, real emergency.

00:27:16.080 I couldn't agree more.

00:27:16.700 It changes the kind of country we live in.

00:27:19.660 It's not the kind of country.

00:27:20.880 I don't care whether you're well-off or not.

00:27:22.780 It's not the kind of country you want your children living in.

00:27:26.440 It's not America. 0.65

00:27:28.200 And we have to do something about it.

00:27:29.840 And this is, I believe, this is the motivation for Donald Trump.

00:27:34.640 This is the motivation for the people in his administration who are informed on these issues.

00:27:40.420 Some of them obviously deal with other kinds of issues.

00:27:43.040 It's bad for everybody.

00:27:44.560 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.

00:27:52.020 And 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.

00:27:57.080 And you can feel it in the way people talk to each other, in their attitudes.

00:28:00.500 We're all sort of in this together.

00:28:02.680 You know, you do not get that sense in a pyramid-shaped social structure at all.

00:28:07.000 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. 0.61

00:28:18.260 So, no, I couldn't agree more.

00:28:20.980 It makes me hate the people in charge for ignoring this stuff.

00:28:24.620 So what do you do about it?

00:28:27.820 So the first thing you do is you acknowledge you have a problem.

00:28:32.080 Second thing you do is you put your finger on what is the nature of the problem.

00:28:35.100 The problem is industrial policies of other people.

00:28:39.780 Now, this is a really important point, Tucker.

00:28:42.900 The president and some others will say the tariffs are different.

00:28:46.600 They're ripping us off on tariffs.

00:28:50.180 And for sure, that's true.

00:28:51.280 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.

00:29:03.000 Tariffs are the most visual thing, the easiest to see.

00:29:07.920 But the real problem goes far deeper than that.

00:29:10.880 So that if you end up with equal tariffs, you will still have a catastrophe for America.

00:29:15.640 It will not resolve the issue at all.

00:29:17.080 So what are the things in industrial policy that tilt the scale against, we would say, open markets and free trade and fair competition?

00:29:28.140 All right.

00:29:28.380 They are everything from the banking system.

00:29:31.100 So in China, they have a banking system.

00:29:32.980 They tell you to put your money in the bank.

00:29:34.320 They make you have low interest rates.

00:29:36.080 They take the money.

00:29:37.240 They can loan it to manufacturing at what we would consider to be a below market rate.

00:29:42.780 And that encourages manufacturing.

00:29:44.500 And they've done that.

00:29:45.340 They've increased those loans from $60 billion a few years ago.

00:29:51.780 This is according to the New York Times to almost $700 billion in the last year or so, but for a year.

00:29:58.940 So it's the banking.

00:30:00.000 It's the labor system. 1.00

00:30:01.500 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.

00:30:13.040 An example of that is this huku system in China where you can't really move around and be part of the system and get wages.

00:30:21.360 Just kind of stay where you were born.

00:30:23.680 But there are lots of other ones, not allowing unions, not allowing organization.

00:30:27.520 I mean, there's a lot in the labor law.

00:30:30.720 But it's subsidies.

00:30:33.620 It's denying market access.

00:30:36.700 It's fake non-scientific standards to get products.

00:30:41.020 It's value-added tax.

00:30:43.580 It's a tax system.

00:30:44.420 Can you explain that a little more?

00:30:46.220 Fake standards?

00:30:47.600 So it's one of the big things we have.

00:30:50.460 Fake is a – see, that just shows you that I'm a Trump person, right?

00:30:54.060 So a person, a more sensible person than me would say non-scientific sort of standards.

00:31:00.880 So, I mean, you could take a case as a simple case that how long should a tractor have to break before it stops?

00:31:10.180 And you could say, okay, fine.

00:31:12.760 You know, safety is – these are making these numbers up.

00:31:15.860 Safety is 40 feet.

00:31:17.940 And maybe the Europeans would say, well, it's got to be 10 feet. 0.64

00:31:20.900 We have to be very safe.

00:31:22.780 And the net of that would be to eliminate products coming in, that kind of a standard.

00:31:28.040 So it's – or health and safety.

00:31:30.440 For example, the Europeans saying chicken shouldn't come in if you chlorinate it.

00:31:35.180 That is to say, when you're done, you put chlorine on it to make sure there's no microorganisms.

00:31:41.560 They would say, well, that's unsafe.

00:31:42.560 So it's sort of non-scientific standards like that.

00:31:46.340 And there's a lot of them.

00:31:47.260 Which are, in effect, trade barriers.

00:31:48.640 They're absolutely trade barriers.

00:31:49.500 Everything I'm talking about either basically shifts national wealth from consumers to manufacturers to give them an edge.

00:32:01.040 And the tax system, currency manipulation. 0.82

00:32:05.260 There's all these things.

00:32:06.600 These things are – the point I'm trying to make is are multiples in terms of importance versus tariffs.

00:32:13.120 If we have equal tariffs with everyone in the world at zero, for example, we won't have a middle class. 0.94

00:32:18.440 We won't have manufacturing because all these other factors will give them this unfair, uneconomic advantage.

00:32:27.280 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.

00:32:34.740 It's all these other things, and I – and the – Jameson Greer, the USTR, is looking at all these other things.

00:32:43.140 But when we think of the kind of migration for me, let me just say, was like, okay, we need free trade.

00:32:51.640 And then you said, okay, we need fair trade.

00:32:53.960 The reality is you can't get fair trade because there's too many ways to twist it.

00:33:00.200 What we really need, I've evolved to, is balanced trade.

00:33:03.720 We need a system that enforces kind of trade balance, not with countries, but globally.

00:33:10.460 Countries shouldn't be able to be huge surplus countries year after year, like China, of course, being the worst example.

00:33:16.900 But also Germany, Ireland is evolving to that.

00:33:19.660 There's a bunch of other countries we could talk about.

00:33:22.660 Countries shouldn't be able to do that.

00:33:25.040 And so you say, well, how do you achieve that?

00:33:27.520 But you really need to put in place, I would say, some kind of tariffs to offset this fundamental unfairness.

00:33:34.560 You're not just offsetting their tariffs.

00:33:36.640 Europe's 10 percent on autos.

00:33:38.060 We're doing half percent.

00:33:39.320 If Europe went to zero, we still wouldn't sell very many cars in Europe.

00:33:42.660 We just wouldn't.

00:33:44.140 Our companies basically make small trucks.

00:33:46.260 They don't need them there.

00:33:46.920 I mean, it's just there's a lot of reasons why that wouldn't happen.

00:33:49.260 But what you need is you can't have countries have huge trade surpluses over long periods of time.

00:33:55.940 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.

00:34:07.000 If you do that, you then get the benefits of trade.

00:34:09.280 So how do you get to balance trade?

00:34:11.840 There's basically three ways you can get to balance trade.

00:34:15.540 One is the way that Warren Buffett talked about in this article.

00:34:21.220 And it's a wonderful article.

00:34:22.240 I recommend anyone to read it.

00:34:23.640 I would just Google Warren Buffett squanderville because he talks about squanderville and thriftville.

00:34:28.480 And it's a short article.

00:34:29.160 It's very nice.

00:34:30.140 2003.

00:34:31.020 It was 2003.

00:34:31.820 And he says what we should do is have export-import certificates.

00:34:38.720 So in order to import, you need an export certificate.

00:34:41.600 So you want to bring in T-shirts.

00:34:43.220 You go to a steel mill and say, okay, fine.

00:34:44.860 I'm going to – you export it.

00:34:45.880 I'm going to buy that.

00:34:46.600 And that would get you to balance.

00:34:48.540 And I would certainly support that.

00:34:50.960 Another way you could do it is you could put – and this is a little more complicated.

00:34:54.960 You could put a tax on the money that comes back, this $23.5 trillion, this trillion

00:35:01.700 so that comes back every year where they buy U.S. assets.

00:35:04.800 You could tax that.

00:35:06.020 So that really wasn't worth a dollar.

00:35:07.720 It was only worth 80 cents.

00:35:09.220 In that case, there would be less incentive for people to run up these zero buses.

00:35:13.340 That's called a capital access fee.

00:35:15.100 And there are people that will propose that.

00:35:16.420 And that also would work.

00:35:18.380 And then there's tariffs.

00:35:19.280 So I prefer tariffs, one, because people understand them.

00:35:26.240 Two, every country in the world has a system set up to deal with tariffs right now.

00:35:30.180 They all have the legality.

00:35:31.860 They all have the process of how to do it.

00:35:35.160 Three, they're flexible.

00:35:37.800 You can move them around based on need to get to your objective of balance.

00:35:43.520 But any three of those things would work.

00:35:45.440 And I just think, and obviously the president thinks, that tariffs are the simplest, easiest,

00:35:52.320 most understood way to kind of do it.

00:35:55.180 And the objective has to be to offset all unfairness and to get moved towards, over a period of time,

00:36:03.300 move towards balance and ultimately have balanced trade.

00:36:05.560 If you had balanced trade, you'd have another trillion dollars' worth of domestic GDP, right?

00:36:11.040 I mean, it would be a huge boom and most of it would be, or a lot of it would be in manufacturing

00:36:14.780 and things spun off by manufacturing.

00:36:17.080 And that's what the president is trying to do.

00:36:19.200 He's trying to get us to use tariffs, to move towards balance,

00:36:23.280 to get a better distribution of wealth within our country

00:36:27.180 so that working people end up with a higher percentage of the wealth.

00:36:31.060 And we have this economic boom that's going to come by from reducing that huge perennial trade deficit.

00:36:41.040 I think a lot of people, some people anyway, in Washington for sure,

00:36:45.540 have given up on the idea that America can be a manufacturing power once again.

00:36:51.120 So I think that's, you know, I think that's fundamentally wrong.

00:36:54.380 So the first thing they would say is manufacturing doesn't matter.

00:36:59.560 People still say that?

00:37:00.400 Oh, there are people, yeah.

00:37:02.020 Outside of AEI or?

00:37:03.540 No, well, you'd have to, you're in a pretty small group of people

00:37:06.920 that have everything in common except sense.

00:37:11.060 So this is a view.

00:37:17.660 We people who think like I do, and I believe the president's in this category,

00:37:21.720 really think manufacturing is essential.

00:37:24.680 One, the wages are better.

00:37:29.080 The benefits are better.

00:37:30.080 Are people saying the job is better for that group of people that are not going to be brain surgeons and astronauts?

00:37:40.100 Secondly, if you look at manufacturing, it employs about 80% of American engineers.

00:37:50.640 It accounts for about 90% of private sector R&D.

00:37:55.100 It disproportionately accounts for productivity gains.

00:38:02.200 So if you go right down the kind of things you use to measure your economy more and more,

00:38:07.520 manufacturing throws off about eight or nine jobs for every job in manufacturing,

00:38:13.560 and these are good jobs.

00:38:15.740 So, and finally, you need manufacturing to have innovation.

00:38:21.000 You need manufacturing to defend your country.

00:38:25.100 Without manufacturing, and that doesn't just mean on this national security issue,

00:38:30.560 it doesn't just mean being able to make bombs and submarines.

00:38:33.580 It means being able to make steel and automobiles and batteries and solar panels.

00:38:39.280 You have to make all those things to have, and semiconductor chips to wage war

00:38:45.320 or to deter a war from happening, which is probably really our objective.

00:38:49.600 So these people who think we're post-industrial are just fundamentally wrong.

00:38:57.220 And once again, they don't really – it doesn't bother them who owns America.

00:39:01.200 It doesn't bother them, the distributions in the country.

00:39:04.620 And it doesn't bother them that we're funneling behind technologically.

00:39:08.440 What they're thinking about is, yes, but we're optimizing consumption.

00:39:12.300 If it doesn't bother you who owns the country, if it doesn't bother you what's happening

00:39:15.740 to the people who live in the country, then, you know, I think it's fair to assume

00:39:20.500 you have no love for the country.

00:39:22.660 How did people who have no love for the country end up running the country?

00:39:26.400 Well, that's a good question.

00:39:29.720 One on which I think you and I have a lot of agreement,

00:39:32.200 but on which I profess less expertise than I do on other things.

00:39:36.000 Because it is – I think a lot of these people – well, some of them just don't

00:39:41.900 like the country because of our history for various – they'll take up a data point

00:39:46.380 in our history and say that means we're bad.

00:39:48.960 A lot of them take it for granted, you know.

00:39:52.780 But I'm – once again, I'm not an expert on that.

00:39:56.700 I certainly agree with your conclusion.

00:39:59.360 It is – it's troubling to me people who are globalists, not only economic globalists,

00:40:08.820 but sort of geopolitical globalists.

00:40:11.080 They don't realize that there's a force that wants to take over the world.

00:40:14.500 Indeed, there are lots of them.

00:40:15.960 And those forces, if they succeeded, would be very bad for America.

00:40:20.260 A lot of us who were sort of united in this cold war, particularly in the early years,

00:40:27.320 it kind of brought the country together.

00:40:28.780 That we realized we were in a cold war.

00:40:30.460 Indeed, I think we're in a cold war, a second cold war now.

00:40:34.180 But I think there's just more fifth columnists than there used to be.

00:40:38.040 A lot more.

00:40:38.980 A lot more.

00:40:43.360 How tiny a minority of economists believe what you believe?

00:40:49.160 Like how out of step are you in Washington right now?

00:40:53.080 Well, I mean, so I basically – you know, people say,

00:40:56.800 why do I think the way I think?

00:40:58.260 And some people will say it's because you're from Ashtabula, Ohio,

00:41:00.660 which was one of the places that was decimated one of a million.

00:41:04.160 What did they build there in your hometown?

00:41:05.940 So Ashtabula was a great town.

00:41:08.420 It was a little town between Cleveland and Erie, Pennsylvania.

00:41:12.200 It was a port town.

00:41:16.320 They had steel.

00:41:18.920 They didn't have steel mills, but they had steel fabrication.

00:41:22.360 They made a lot of auto parts.

00:41:24.120 Indeed, at one point, the fiberglass body of the Corvette was made in Ashtabula.

00:41:28.920 One of the famous things about us.

00:41:31.520 They brought in ore from the Great Lakes and then trained it down to Pittsburgh where they made steel.

00:41:42.580 Obviously, there was agriculture, a lot of agriculture in the area.

00:41:45.520 A lot of machine tools, those kinds of things.

00:41:49.540 It was the sort of stuff that was really, really hit first with the Japanese wave that came on. 0.94

00:41:57.620 And which wave was one of the other motivating things in President Trump's mind

00:42:05.500 because that was the first thing that we all complained about was Japan and Japanese cars and the like.

00:42:13.420 And then it was all Japanese manufacturing.

00:42:15.400 And once again, I just want to say because I – and I love Japan.

00:42:19.100 I'm not anti-Japanese at all.

00:42:20.580 But that had nothing to do with economics either.

00:42:23.140 It was they kept their currency low.

00:42:25.040 They had an industrial policy to subsidize all this.

00:42:27.300 And then they – we sat here and they took our jobs.

00:42:31.800 And now we're seeing that on a far greater scale.

00:42:35.740 What's your hometown like now?

00:42:37.960 Oh, you know, I cover this in the book.

00:42:41.940 It is – I have to be careful because I love my hometown.

00:42:45.020 But, you know, the poverty rate's probably 35 or 40 percent.

00:42:50.620 Oh, gosh.

00:42:51.060 Yeah, the college graduation rate's probably 15 or 20 percent.

00:42:54.340 And by the way, by the way, this is not like we're some – the bottom of the pit.

00:43:02.780 This is across the country.

00:43:05.640 The whole United States.

00:43:06.360 It's everywhere you go, you see these kind of communities.

00:43:09.740 These were wealthy people.

00:43:12.060 I mean, they weren't wealthy people.

00:43:14.220 They were people who were well off.

00:43:16.080 A person could have a job, own a car, pay off their house, and support their family.

00:43:22.720 And now they can't do that anymore.

00:43:25.680 And there's this kind of notion that, well, you know, other jobs have come back.

00:43:30.760 And indeed, in many cases there have.

00:43:32.560 And there was just a study by Gordon Hansen out of Harvard and some other people.

00:43:36.680 Other jobs did come back, but they were jobs at the lowest level of health care and the like.

00:43:43.300 In other words, they were – did employment come back?

00:43:46.360 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 you really couldn't.

00:43:55.920 Only three things are absolutely certain in this life, and you know two of them.

00:43:59.380 First is death, second is taxes, and the third, unfortunately, is getting ripped off by your cell phone company.

00:44:04.480 If you're a Verizon, AT&T, or T-Mobile customer, you know exactly what we're talking about.

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00:45:02.740 The housing crisis in the GTA has reached a critical point, with more than two in three residents being affected.

00:45:08.440 Reporting that almost 9 million Canadians are living in food-insecure households.

00:45:12.660 Over 1 million people in the GTA now live below the poverty line.

00:45:16.400 Just out today, mental health support is the number one reason people are calling 2-1-1 for a...

00:45:22.000 At United Way, we wake up to a different alarm every day.

00:45:25.960 Help us end poverty and build a better GTA any way we can.

00:45:30.160 Donate today at unitedwaygt.org.

00:45:32.740 I've got to say, almost everyone on our team looks suspiciously well-rested every morning.

00:45:38.020 It turns out most of them are using a product called Sambrosa.

00:45:41.200 Sambrosa blends antihistamine with a syrup of herbs and honey, and is designed to help you sleep well, waking up, feeling refreshed and revitalized.

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00:46:00.520 They are faithful people, and they are about the happiest family we've ever run across.

00:46:05.360 The product, Sambrosa, has a ton of five-star reviews.

00:46:07.860 You can check it out on their website, sambrosa.com.

00:46:11.680 And being proud of your job is a huge part of the formula for a healthy, strong, stable nation.

00:46:19.260 If there's a huge difference between making something and being a mortgage broker, I'm sorry.

00:46:23.260 Just look at the dignity of work is what is the key.

00:46:29.020 But useful work.

00:46:30.040 Yeah, be a useful, productive work.

00:46:32.720 Useful.

00:46:33.540 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.

00:46:44.120 And we're losing that.

00:46:45.420 We need that.

00:46:46.260 We need families where people work and do productive, good work, and they're proud of the work, and they feel better about themselves.

00:46:57.720 And they project that to their children and to the community, to the Little League, to all these kinds of things.

00:47:03.840 These people who worked in these factories in Asheville when I was growing up, and some of them, and some farmers, they were proud, hardworking people who, at the end of the day, you know, said, my dad is this.

00:47:17.040 You know what I mean?

00:47:17.460 It was a proud, healthy thing.

00:47:20.420 What did your dad do?

00:47:21.600 Yeah, my father was a doctor.

00:47:23.700 Wow.

00:47:23.920 Yeah, my father's an interesting story.

00:47:26.040 The Leitheisers, of course, there's a lot of us that aren't Leitheisers, right?

00:47:30.320 But the Leitheiser strain came over to the United States in 1748.

00:47:35.860 There was a guy named George Leitheiser who came over.

00:47:38.020 He was an illiterate from what is now Germany. 0.96

00:47:41.080 He fought in the Revolution.

00:47:43.340 He was two years older than George Washington.

00:47:46.240 He was an old guy.

00:47:47.920 He fought at Trenton.

00:47:49.260 He was at Valley Forest, this guy.

00:47:50.640 At Princeton, he was on the line with two of his kids who were quite young, all three of them on the line together.

00:48:00.760 He got out after three years.

00:48:02.940 Of course, by this point, I don't know what he would have been, maybe 48, which was an old, old person.

00:48:07.480 The kids stayed on and fought all the way through to Yorktown.

00:48:11.180 So fast forward multiple generations, and it's a whole interesting, fewer generations than you think.

00:48:21.140 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.

00:48:26.140 But you find my father and his brother, after that 100 and 200 and some years of here, were the first ones to go to college.

00:48:36.060 And both of them went to college and ultimately to medical school.

00:48:40.700 My father graduated from college at 29, having worked in the steel mills, you know, before he went to college.

00:48:47.560 And then finally ended up graduating from the University of West Virginia and then NYU Medical School.

00:48:52.360 So it was like the American dream.

00:48:55.400 How did he wind up in the town?

00:48:57.580 In Ashtabula?

00:48:59.040 Yeah.

00:48:59.220 You know, he was, they were from Ohio.

00:49:03.600 They were from the other side of Ohio.

00:49:05.760 I think he knew some people in Ashtabula.

00:49:07.980 This would have been, you know, in the mid-30s, right?

00:49:14.620 1930s.

00:49:15.340 But in terms of this, it's just a quirky thing.

00:49:18.880 So my grandfather's grandfather, all right?

00:49:23.720 No, I never knew my grandfather on my father's side.

00:49:26.000 And my grandfather's grandfather fought in the Battle of Baltimore.

00:49:31.660 That's incredible.

00:49:32.300 In 1814.

00:49:34.540 So my grandfather, if you think of it, it's just like, you know what it is, a bunch of older guys having kids.

00:49:40.820 Yeah.

00:49:41.260 One after the other.

00:49:42.620 But it's like one of these kind of weird, I tell people, they'll think, well, that can't possibly be true.

00:49:46.440 But it's in fact true.

00:49:47.180 My grandfather's grandfather.

00:49:48.680 And that guy who fought, had half-brothers who fought at, you know, in the American Revolution.

00:49:58.240 Amazing.

00:49:59.000 It's just like a little, literally, it's kind of a crazy thought.

00:50:02.960 Are there any Lighthizers left? 1.00

00:50:04.540 You know, there are.

00:50:05.600 In the town?

00:50:06.580 No, there are none.

00:50:07.540 We're not in the town.

00:50:08.380 No, no.

00:50:08.980 There's none in the town.

00:50:10.080 Did you go to high school there?

00:50:11.280 No, I didn't.

00:50:11.960 I went away to school outside of Cleveland.

00:50:15.060 Yeah.

00:50:15.260 I went to a Catholic boys' school outside of Cleveland called Goward Catholic School.

00:50:18.760 The guys you grew up with, are any of them still there in the town?

00:50:21.240 Yeah, there are some.

00:50:22.620 Not a lot, but there are some.

00:50:25.140 It's a different world, you know.

00:50:28.120 And it's, as I say, if it was just Ashtabula, who would care? 1.00

00:50:32.360 But it's not just Ashtabula.

00:50:33.640 We've got to care about every American.

00:50:34.620 It's across the country.

00:50:36.140 It's like this.

00:50:36.700 You go to Cleveland.

00:50:38.380 You can't go to these major cities.

00:50:40.640 It's Chicago.

00:50:41.360 It's, you know, it's Omaha.

00:50:42.960 As you go to these cities and you say, it shouldn't be like this.

00:50:47.000 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 the managers were bad.

00:50:59.760 And none of those were true.

00:51:00.760 It was the result of an economic policy, largely in other countries, and a defenseless kind of foolish notion of benign neglect in America.

00:51:14.200 And all of these bad outcomes are the result of this.

00:51:17.700 And it's – and other things.

00:51:19.240 I don't want to simplify it too much, but it's a sad thing.

00:51:22.980 And we now have a chance to turn it around.

00:51:26.440 And is that going to create disruption?

00:51:29.380 Of course, it's going to create disruption.

00:51:30.480 And there's never been great change that didn't create disruption.

00:51:33.560 But 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.

00:51:56.860 There's nothing I want more than that for the country, and you can hear the bitterness of my voice as someone who spent his life in D.C.

00:52:05.020 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.

00:52:17.140 The free market think tanks, Cato, AEI especially, basically tried to tell you for 40 years as you watched your country die that this was all good.

00:52:26.860 Yeah.

00:52:27.240 And I do think they should be publicly shamed for that if not held accountable and so on.

00:52:31.580 In some cases, it's a combination.

00:52:36.580 And then I want to get back to this question about economists.

00:52:39.140 At some point, it's a combination of that and corporations funding it.

00:52:44.560 Well, of course.

00:52:45.660 Of course.

00:52:45.840 They were just the instruments, right.

00:52:47.440 Who literally benefit from it.

00:52:49.640 And you're like, holy cow, why won't they?

00:52:51.820 And then you have to try to chase that through the political system.

00:52:55.320 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.

00:53:06.280 And they're not against these things because they help those people.

00:53:11.360 That's just not a function.

00:53:12.960 They're against them because the elites, the powers that be that are benefiting from the system, object to them.

00:53:20.400 Now, on your question about economists, there are a growing number of economists who see this problem.

00:53:31.100 They don't necessarily agree with me on the solution, right.

00:53:33.480 But if you see, you know, Angus Deaton is one who would say we have to reevaluate whether the costs of this thing called free trade were worth the benefits.

00:53:46.940 And that's an important first step.

00:53:49.180 There's Paul Romer, another Nobel laureate, has the same thing.

00:53:52.300 But so you can go through and you can find various ones.

00:53:54.800 There's a guy named Michael Pettis who's a Carnegie guy who's thought these things through.

00:54:02.120 And he wrote a book 10 years ago called Trade Wars or Class Wars with a guy named Matthew Klein.

00:54:09.340 And it's sort of, you know, so there is some movement.

00:54:14.360 But I don't want to suggest that it's a light at the end of the tunnel.

00:54:17.560 It's maybe a prick, you know, a thousand miles away.

00:54:23.560 But I'm, you know, I'm hopeful that economists, I've had several of them tell me, well, you're wrong.

00:54:29.680 But you're, you at least realize that, you know, we at least agree with you that things aren't good.

00:54:35.720 You know, so there's the beginning of people starting to see it.

00:54:38.640 Is they, I mean, the city had a collective heart attack when you became United States Trade Representative.

00:54:43.740 I think that's a fair statement.

00:54:45.100 The city and the business community.

00:54:49.320 Yeah, the business community.

00:54:53.240 So you said there were, if you take a system that's been in place for generations, which the current one has been,

00:55:00.900 even if it doesn't work well, even if it hurts your country, changing it is still,

00:55:06.300 or changing anything that's been in place a long time is still a major lift.

00:55:10.740 And it has, you know, turmoil that accompanies it.

00:55:13.800 So can you just be more specific about what sort of turmoil you anticipate as this administration puts into place this new system?

00:55:21.400 First of all, I have complete confidence that the president will do what he said he's going to do, right?

00:55:25.760 And unlike a lot of politicians, he ran on, like, real substance and big ideas.

00:55:36.680 And this is probably the biggest of the ideas that he ran on.

00:55:40.940 And I think he's going to follow through on his promises because that's the most important thing.

00:55:44.980 The worst case would be that he doesn't.

00:55:46.840 So what you have to do is put in place tariffs, as I say, to offset not just tariffs.

00:55:55.540 That's a tiny thing.

00:55:56.740 I just keep going back to this point because it's so fundamental.

00:55:59.800 The problem is not just foreign tariffs.

00:56:02.060 That's a tiny part of the problem.

00:56:04.160 But to offset this unfairness.

00:56:07.880 So he has to put those tariffs in place.

00:56:09.320 When you do that, I do not believe you'll have inflation, and we should talk about that in a systemic, fundamental way.

00:56:16.460 But you will have people who have supply chains that are going to have to make adjustments.

00:56:21.660 You've got some things that may go up in price for some period of time.

00:56:25.680 And all these kinds of things will have an impact on people in daily life.

00:56:37.280 But I think it'll be short-term.

00:56:39.580 I call them disruptions.

00:56:40.720 I think it'll be short-term.

00:56:41.960 I don't think it'll lead to systemic inflation.

00:56:46.640 And I think that people say, well, what should a businessman do?

00:56:52.640 And I say, the smarter businessmen and businesswomen are going to figure it out, right?

00:56:58.680 And they get paid a lot of money to do that.

00:57:00.920 And they're going to say, here are the rules.

00:57:03.760 Just on that point, I've had business people, really smart business people, when I would explain this problem.

00:57:09.960 And they would say, Bob, it's the government's responsibility to set up the rules.

00:57:16.140 I'll figure out a way to make money in the rules.

00:57:18.500 That's my responsibility.

00:57:19.600 But I shouldn't be doing this social stuff.

00:57:21.460 That's not my job.

00:57:22.220 My job is to make whatever widgets and to make them profitably, employ my people.

00:57:27.820 And I think that's kind of an important point.

00:57:30.060 It's President Trump's responsibility now.

00:57:33.220 He's the president to set in place a system where these good results for our people will come out.

00:57:40.360 And I think he will.

00:57:41.440 So you're going to have to have tariffs to offset this basic unfairness.

00:57:48.100 That will lead to some disruption.

00:57:49.600 Over a reasonably short period of time, I think you're going to see this manufacturing renaissance, these new jobs.

00:57:57.440 Wages go up, right?

00:57:59.480 I mean, this notion that we're not productive because our wages are going up.

00:58:03.480 I'm like – I had this conversation with someone in the White House early on, and this is in the first term.

00:58:08.180 And he was concerned about wage inflation.

00:58:11.780 And I said to him, I said, this is by the way –

00:58:15.000 You're paying Americans too much. 0.96

00:58:16.640 Yeah, exactly.

00:58:17.640 This is like a person that had his plane.

00:58:19.660 I'm playing it now.

00:58:20.400 And I'm sitting –

00:58:21.100 I said –

00:58:21.460 You can guess who it was.

00:58:22.460 Yeah.

00:58:22.800 I said, we haven't had a raise in the middle class in 15 years.

00:58:29.560 And you're worried about wage inflation.

00:58:30.580 This is a man with a plane.

00:58:33.860 I'm playing – I'm praying for wage inflation.

00:58:37.220 This is what I want.

00:58:39.020 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.

00:58:47.320 So anyway, there will be changes.

00:58:52.620 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.

00:59:02.580 So a liberal will say, I diagnosed the problem the way Lighthizer does.

00:59:08.100 Let's tax the rich people and give it to the other people. 0.99

00:59:11.260 My idea, that's insanity.

00:59:12.880 What you need to do is devise a structure where these people have good jobs and make lots of money.

00:59:19.760 And that's the way you transfer resources and make the country great.

00:59:23.640 You don't do it by tax policy or things like that.

00:59:27.780 So what's the president done so far and what do you anticipate he will do going forward?

00:59:31.800 So when you think about tariffs, you have to kind of think of it in two categories.

00:59:37.480 There are – I think like two buckets.

00:59:41.080 There are national security issues which you have to deal with.

00:59:48.780 And if the issue is of sufficient importance to really merit national attention, you should do everything you can to solve that problem.

00:59:57.080 If we were in a war, people would say, of course, do whatever you have to, right?

01:00:00.280 Take over, whatever.

01:00:00.960 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.

01:00:12.080 And that's a national security issue.

01:00:13.760 In my opinion, it's not an economic issue and it should be separated from it.

01:00:17.820 Do you think fentanyl is a sufficiently important crisis to merit doing everything you can to solve it?

01:00:24.280 I believe it is.

01:00:25.760 So for me, doing something in that space makes sense and the president threatened that and I think we got good results.

01:00:32.600 That's national security.

01:00:34.280 The bigger question is what – and you can use that tool in other times.

01:00:39.060 But – and the debate is not whether the tool is appropriate.

01:00:42.080 The debate is whether the national security issue is of sufficient importance to pay that price.

01:00:46.880 So then the other issue is tariffs generally to get us to, I would say, balance.

01:00:52.860 Some people would say fairness.

01:00:54.280 Some people would say reciprocity.

01:00:55.880 But basically to get us to balance, to offset all this unfair – not just tariffs, but unfair practices.

01:01:03.080 And I think what you're going to see on April 2nd is an attempt.

01:01:08.800 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.

01:01:25.660 And now how – the form that takes, I don't think it's really been determined yet.

01:01:32.960 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.

01:01:48.040 And one of them is, as I say, taxes and value-added taxes.

01:01:51.380 And if people are – so we can talk about that in a second.

01:01:54.320 But – 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 offset – enough to offset their unfairness.

01:02:06.160 At some point – and he's right, of course.

01:02:08.640 But at some point, you're going to have to simplify that because you can't have 4,000 tariff codes in 180 countries.

01:02:16.460 And, you know what I mean?

01:02:17.100 You would need a supercomputer to decide what – you know.

01:02:20.600 So at some point, there's going to 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.

01:02:31.660 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 it's April 2nd.

01:02:40.040 Now, going forward, everything is perfect.

01:02:41.820 You're going to have to have adjustments.

01:02:43.200 We're always going to still be here.

01:02:44.680 There will 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.

01:02:52.140 We did that.

01:02:53.160 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.

01:03:01.000 The reason that it didn't blow up really was that we let the steam out of the balloon.

01:03:10.980 We had to.

01:03:11.560 We did enough so that we took care of urgent problems that might have collateral effects, which were not good.

01:03:19.220 And so you're going to see modification.

01:03:20.880 You're going to see change.

01:03:21.660 So there are a lot of fine motor skills involved.

01:03:23.420 It's not just –

01:03:24.220 And you have to recognize that.

01:03:26.120 You have to recognize it.

01:03:27.260 And it's going to be mistakes that are going to be made.

01:03:28.840 But the problem is here.

01:03:32.200 We have to do this remedy, and we've got to get there as quickly as we can.

01:03:37.300 And another thing to remember is, you know, in the first administration, there weren't that many people who agreed with us, right?

01:03:43.700 As you say, there was the president, who everybody thought was crazy in this area, and me, who they thought was maybe crazier.

01:03:51.760 But the Overton window of acceptability has moved.

01:03:55.640 Yes.

01:03:55.940 And so a lot more people understand the crisis a lot.

01:04:00.020 And in fairness, the data has helped us make our case that you have to do this.

01:04:05.980 So I think people are going to be more accepting of it.

01:04:09.680 But you're going to have disruption.

01:04:11.100 You're going to have the people who are benefiting now benefiting less, and they're not going to like it.

01:04:16.700 I think that's the best part.

01:04:17.800 You know, yeah, it is.

01:04:19.500 You know, there was this thing called concentrated benefits and diffuse payments.

01:04:24.580 This guy Buchanan, who was the economist, and he basically talked about the political system.

01:04:29.720 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 all the people with diffuse payments.

01:04:43.840 And we've kind of had that system.

01:04:46.240 My hope is that we can kind of reverse that and push back on those people who have had the concentrated benefits and give more of the benefits to the people who, until now, at least, have been, you know, relatively quiet and just accepting of a pretty bad hand dealt to them.

01:05:03.980 So of all the – I just want to go back to the downside for a second, short-term downside – of all the potential effects of changing our system to the one that you described, it seems to me that inflation is – certainly as a political matter and an immediate matter, the scariest.

01:05:22.640 First of all, it's really easy to measure.

01:05:24.400 Second, it – or it's obvious.

01:05:26.740 I don't know if it's easy to measure.

01:05:27.600 It's very obvious to people when the things they buy regularly become more expensive.

01:05:32.400 So, I mean, I just want to linger on this for a second.

01:05:36.480 To what extent are we going to see increased inflation because of this?

01:05:40.520 So, Tucker, I think there's going to be disruption and disruption is going to have some prices go up but some won't.

01:05:49.160 So let's think about inflation just the way we should think about it.

01:05:54.400 One, inflation is a systemic thing.

01:05:58.160 It's not like your shirt costs more.

01:06:00.140 If your pants cost less, that's not inflation.

01:06:02.740 That's just a more expensive shirt.

01:06:04.620 So the question is whether it's going to systemically raise prices.

01:06:08.300 A lot of people would say, including Milton Friedman, that that's really a monetary phenomenon.

01:06:15.000 It's basically monetary policy that's going to dictate whether everything goes up or everything goes down.

01:06:20.080 And this is not going to change monetary policy necessarily.

01:06:24.780 Now, someone might say, oh, it's going to slow down the economy.

01:06:28.920 Thus, we should lower interest rates.

01:06:30.180 Someone else will say it's going to have inflation.

01:06:31.760 Thus, we should raise interest rates.

01:06:32.900 So it's kind of a conundrum for the Fed.

01:06:34.920 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.

01:06:48.640 If anything, it will be deflationary.

01:06:50.400 So that's our idea that 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 and full employment.

01:07:08.700 So if you have a model like that, then that's going to show inflation.

01:07:13.180 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 percent.

01:07:24.620 So a lot of the economists are using a model that's unhelpful.

01:07:28.740 But so the notion is you're going to increase production, and that will happen, and that that is not going to be inflationary.

01:07:35.040 The idea is that inflation is systemic, not individual prices, so you can't just stack stuff up.

01:07:42.840 The other thing is, in the argument against inflation, is that we did it last time in a big way.

01:07:49.740 All the same people said it would be inflationary, and we had no inflation, right?

01:07:53.580 We had 1.3 percent, so we had no inflation.

01:07:55.540 So they were proven wrong.

01:07:57.860 And then the final thing I would say, if the notion that economists use, which 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?

01:08:16.780 Why is it that the country with the most trade barriers actually has no inflation at all?

01:08:22.300 And if you look like at Germany, they have some inflation, but it's less than a lot of the rest of Europe.

01:08:27.300 So it would suggest that there is not necessarily a relationship between tariffs and inflation.

01:08:32.480 It would suggest it, I mean.

01:08:34.100 And I would add one other thing.

01:08:36.380 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.

01:08:49.600 Now, even all but a hardcore partisan would say the combination of that can't be inflationary, right?

01:08:59.780 The combination of cutting spending, getting rid of regulation, increasing energy, those things can't be inflationary.

01:09:06.520 Now, some—

01:09:07.300 Well, they're anti-inflationary.

01:09:08.800 They're all anti-inflationary.

01:09:09.440 We have inflationary because we've done the opposite.

01:09:11.220 We made energy more expensive.

01:09:12.140 That's precisely right.

01:09:13.000 Spend too much.

01:09:13.740 That's precisely right.

01:09:15.240 Okay, China.

01:09:16.340 So you mentioned Germany.

01:09:19.260 Obviously, the beating heart of Europe, it's decided to commit suicide.

01:09:23.600 So who knows where Germany will be? 0.80

01:09:25.560 It's hard to see Germany as like a real threat to our economy.

01:09:29.280 I mean, I can't predict it, but it seems like it's really a conversation about China.

01:09:35.100 So there are kind of two things.

01:09:37.580 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.

01:09:48.620 That is a problem that has to be resolved.

01:09:52.600 Connected but independent of that is the question of the geopolitical competition with China.

01:09:59.380 So I always start with you're either on one side or the other, and I put people in like three categories, Tucker.

01:10:09.860 There are people that study the issue, and I'm going to go through the kind of litany in a minute.

01:10:15.220 But to set it up, there are people that study this issue and say China is an existential threat to America.

01:10:22.780 They are an adversary, and we have to make change, and I'm in that group.

01:10:26.720 There's another group that studies it and says China is an existential threat.

01:10:33.660 They're an adversary, but we don't need to do anything because it will all kind of be resolved through this or that.

01:10:40.500 That's a group that was very popular in the 90s.

01:10:43.680 It doesn't really exist anymore.

01:10:44.920 I call it the unicorn group, right?

01:10:46.560 They're people who have kind of been proven wrong.

01:10:48.500 It's just you have to do something.

01:10:50.500 The third group are people that study it and conclude that there isn't a problem, China is not an adversary, and there's no existential threat.

01:10:57.960 That group is all invested in China, right?

01:11:00.740 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?

01:11:06.320 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. 0.62

01:11:17.440 So let's look at –

01:11:18.600 Wait, can I suggest a fourth group?

01:11:20.520 What's that?

01:11:21.260 Might be people who look at the current situation and say, yes, China is an adversary.

01:11:26.120 Yes, China's economy is larger than ours.

01:11:27.880 Yes, the future belongs to China. 1.00

01:11:30.100 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.

01:11:38.820 So, yeah, this is kind of the defeatist caucus, right?

01:11:45.520 The one that is all over for the world.

01:11:47.980 I generally find that group has a very large overlap with group three that I articulate.

01:11:54.740 The people invested in China.

01:11:55.680 The people invested in China that are already going to make money.

01:11:58.620 But for sure there are people – but I always say to them, you know, you can't say do nothing in the face of a crisis.

01:12:07.780 If you say do nothing in the face of a crisis, then I have not convinced you that we have a crisis because it's irrational if you accept the fact that it's a crisis to say do nothing.

01:12:18.680 That's not a rational –

01:12:19.740 Well, it's kind of lie back and think of England kind of thing, like it's going to happen, so.

01:12:24.420 While England slept, yeah.

01:12:27.960 Yeah, although there was a lot – there were a lot of differences and a lot of other things going on there.

01:12:33.180 And when you mention that, I always think of Neville Chamberlain, who before he was prime minister, was chancellor of the Exchequer.

01:12:42.340 And he approved the sale in the 30s, 180 or whatever it was, Rolls-Royce airplane engines to rearming Nazi Germany, which was just on his face, ludicrous.

01:12:56.180 And his explanation was that trade, like religion, should know no boundaries.

01:13:02.560 So, while rearming Nazi Germany was a threat, it was more important that we sell them things, even if they're going to use them to bomb us. 0.91

01:13:10.220 I always – I don't know why, but when you mention England during that period, that's the first thing.

01:13:14.660 Right, well, it's the capitals to sell you the rope.

01:13:17.000 Exactly. 0.99

01:13:17.400 They will hang you. 0.99

01:13:17.880 Exactly. 0.63

01:13:18.200 So, let's think of why I have this conclusion, and a lot of – none of this is going to be news, I don't think, to anyone who's listening.

01:13:29.520 But one, China has the biggest army in the world, and they're drawing it. 0.98

01:13:33.540 They have the biggest navy in the world.

01:13:35.440 They are militarizing the South China Sea in a way we haven't seen since the Second World War.

01:13:40.000 They're claiming shoals, building, you know, 18 inches of cement and having places that you can militarize and land boats on.

01:13:50.860 They are asserting territorial claims all around them.

01:13:57.200 I mean, it's not just Vietnam and Philippines, but it's also Japan, and you could just go all around them.

01:14:03.220 They are engaging in espionage on a scale we haven't seen, the FBI says.

01:14:10.740 They start a new Chinese espionage case every few hours, and they have thousands of them.

01:14:15.780 They have suborned perjury from two sailors about last year and a month ago, two army officers to – not perjury, but espionage – to sell secrets to them.

01:14:32.140 They are building nuclear silos all over the place.

01:14:36.720 They have their diplomatic wolf warriors go around and do whatever they think is going to be disruptive of the United States. 0.67

01:14:42.640 They're building military bases around the world.

01:14:46.180 They have things like this thing that's on the news now, this shipping company at either end of the – shipping facility at either end of the Panama Canal.

01:14:54.820 So, I mean, they're gathering data.

01:14:56.320 They're engaging in economic warfare with the United States in terms of stilling technology and technology transfer and all the kinds of other things of which we are aware.

01:15:08.240 They are funding the war in the Middle East.

01:15:10.540 They're funding the war in Europe just without question.

01:15:16.100 It's their money.

01:15:16.880 They're selling all the fentanyl, at least the precursors of all the fentanyl that comes into the United States.

01:15:26.580 And it's not like the people that are selling the precursors for the fentanyl are an odd group.

01:15:32.700 There are 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.

01:15:39.420 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.

01:15:54.040 It's pretty clear that their view is they should be number one in the world.

01:16:00.580 Their view is the world is better off with totalitarianism, politically, Marxism, and economically, communism, right?

01:16:10.520 This is their scheme and that we're in their way.

01:16:16.080 This is their objective.

01:16:17.020 This centrality of China runs through their history for 2,000 years, and we are a problem. 0.97

01:16:27.700 So, for all of those reasons, you have to realize we have a real existential threat, and we have to do something about it.

01:16:35.240 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?

01:16:48.160 That's the first thing you do, and we are doing that.

01:16:51.340 We are transferring hundreds of billions of dollars in trade deficit.

01:16:56.800 We are transferring hundreds of billions of dollars in stolen technology.

01:17:00.500 We are transferring money through this fence-all crisis that we have.

01:17:09.200 If you look at all of these things, you have to stop that, right?

01:17:12.980 It is like the first thing you do is you stop digging when you're in a hole.

01:17:17.460 So, what we need, I would propose, is not no economic relationship.

01:17:22.520 I'm not for decoupling, but I think we need strategic decoupling.

01:17:25.520 I think we need balanced trade in areas that benefit America.

01:17:28.540 I think we need independent technology going forward made with America and with America's allies.

01:17:35.000 And then I think we have to regulate ingoing and outgoing investments so that it's in the interest of the country.

01:17:42.180 So, I think we need a heads-up kind of a policy.

01:17:45.200 We can't keep going on the direction of going.

01:17:47.100 I agree.

01:17:47.520 They also bribed the last president, if I could just say, very obviously, which is kind of a big deal.

01:17:52.760 It's been ignored.

01:17:53.360 Howard, how do we regulate investment in China?

01:18:00.660 Well, so the first question I would say, how does China regulate investment in the United States, right?

01:18:06.140 They have a state body that says, this is in the interest of China.

01:18:09.440 Therefore, you can invest in the United States because you're going to get data or technology.

01:18:12.680 And inbound investment, if you try to invest over there, they've got people who sit there and say, is this in the interest of China?

01:18:18.600 And they just stood up and said, is this in the interest of China?

01:18:20.540 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.

01:18:33.320 Right, so you can't invest in Iran, you can't invest in Russia, you can't invest in Venezuela right now.

01:18:38.720 Well, you can only invest in China if they determine it's in China's interest. 0.67

01:18:41.880 No, but I'm just saying, like, we do have all kinds of controls about where Americans can invest their money, but they don't apply to China.

01:18:48.400 No.

01:18:49.100 And you're saying they should.

01:18:50.180 Well, for sure, there's two sides to it, right?

01:18:54.580 If 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.

01:19:10.240 And then outgoing, it should only be investments that are in the interest of the United States.

01:19:16.080 Yeah, for sure, we have to do that.

01:19:18.560 What's going on now is you have a group of people on Wall Street who make money by funneling money to China, and that's – those people don't – I don't know which of the three groups they're in, but you can guess.

01:19:32.260 But for sure, those people have to be stopped, right?

01:19:37.040 We have to stop that.

01:19:38.060 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. 1.00

01:19:44.040 The howling that will occur if you try to restrict the ability of American citizens to get rich in China will be really loud.

01:19:54.160 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?

01:20:03.760 In other words, the bankers and the like.

01:20:06.620 Then there are people who manufacture to sell in the United States or in other places in China.

01:20:12.420 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.

01:20:24.440 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 U.S., then the biggest in the U.S., and the biggest in China.

01:20:37.720 Now they're the biggest in the U.S.

01:20:38.940 They're not in China at all, and the Chinese have competitors, and I could give 100 examples of that. 1.00

01:20:45.180 So people can temporarily make money there while it's in their interest for you to do it.

01:20:52.040 But once you get to the point that the Chinese say, now, why exactly am I giving you a piece of this action?

01:20:58.640 When you get to that point, you're on the way out.

01:21:00.520 So I guess I have two things.

01:21:05.260 One, the people who actually are making money are sort of financializers, if you will.

01:21:13.060 Manufacturers will do it for a brief period of time until it falls off.

01:21:16.480 And then the other thing I would say, for sure, there's going to howl, but I always say it's a little bit like Undertaker's being against cancer research, right?

01:21:24.080 My view is so much.

01:21:25.220 You're against cancer research, right?

01:21:26.500 It's bad for business.

01:21:27.220 You're absolutely right.

01:21:30.280 How do the financializers get rich in China?

01:21:32.920 Well, I mean, they get a fee for bringing money to China, right?

01:21:36.680 So it's like they do anywhere else, right?

01:21:39.440 They sell bonds.

01:21:42.460 Yeah.

01:21:42.760 They facilitate investment, and they get a piece of the action.

01:21:47.060 They're politically powerful.

01:21:48.640 Yeah, there's no question about it.

01:21:50.420 There's no question about it.

01:21:51.440 If you were to, this is 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 slack?

01:22:06.480 How long would it take to replace that manufacturing with manufacturing?

01:22:09.940 That is going to happen with tariffs.

01:22:13.160 They are, in fact, coming back.

01:22:16.780 That manufacturing is going to come back.

01:22:18.660 So it's going to have that effect, and I think it'll take relatively less.

01:22:22.660 Now, it's all not coming back, right?

01:22:24.140 So it'll go to other places.

01:22:25.220 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, not if it's a Chinese company doing it.

01:22:34.880 But, I mean, when a U.S. company brings a facility from China and puts it in Mexico and employs Mexicans, that's more in my economic interest as an American. 0.87

01:22:44.220 I think that's right.

01:22:44.920 You know.

01:22:45.260 A stable Mexico is in our.

01:22:46.880 Yeah, exactly.

01:22:47.440 In our.

01:22:47.660 And I think that sort of thing will happen and is happening.

01:22:50.460 Yes.

01:22:50.580 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.

01:22:56.600 In Mexico, yeah.

01:22:57.540 It's a huge, huge problem.

01:22:58.940 Will you explain that?

01:23:01.180 So what has happened is we renegotiated USMCA and tightened it in a bunch of ways and really created the most pro-manufacturing, pro-America trade deal in history, right?

01:23:18.460 We, for the first time, the president, it was one of President Trump's great accomplishments, the first time anybody to ever renegotiate a big agreement.

01:23:26.120 They were sort of thought of as eternal, like marriage or religion or constitution or something.

01:23:31.640 We renegotiated it.

01:23:35.340 At the same time, we put tariffs on China, right?

01:23:39.340 Unrelated, but we put tariffs on China.

01:23:41.180 So what China was trying to do is figure out a way to get into the U.S. market without paying the tariffs.

01:23:46.840 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.

01:24:02.620 It's, you know, billions and billions of dollars of investment by China and this rhodium group and others who have studied it, say the numbers probably six or seven times what the public numbers are.

01:24:17.380 So it's hundreds of billions of dollars of investment.

01:24:21.080 The purpose of this really is to ultimately get to the U.S. market, but also to sort of infiltrate the system in Mexico.

01:24:29.020 And I would suggest it's very bad for the United States, and it's very bad for Mexico. 0.99

01:24:34.060 And ultimately, the president is going to have to deal with it, and I think he's aware of that.

01:24:38.580 This is a freight train coming down the road.

01:24:41.480 So if you take Chinese content and just, you know, substantially transform it, just, you know, paint it or something, and then bring it to the United States, that's very bad. 0.99

01:24:53.200 So you've seen increases in Chinese exports to Mexico of 50 percent a year for a number of years.

01:25:00.860 And a lot of that, I think, is fine against the United States and is dislodging other sensible investments.

01:25:07.660 But also giving China some control over Mexico.

01:25:10.180 Oh, there's no question.

01:25:11.580 And the president of Mexico seems to understand that, at least to the extent you can in their system.

01:25:16.720 So it's a big problem.

01:25:20.640 I mean, and a lot of it has not come on stream yet.

01:25:23.760 So it's huge auto investments.

01:25:26.420 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.

01:25:32.840 And it's all bad, and we have to do something about it.

01:25:36.060 And the reality is probably that's going to be tariffs, and it's going to be some way that you separate, like, U.S. companies and neutral countries, like companies like the Japanese who are operating down there and abiding by the USMCA and this whole Chinese infiltration that's coming in. 0.56

01:25:58.820 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.

01:26:06.360 There's no lecturing about democracy or transgenderism, rights for various groups, whatever.

01:26:14.300 They don't feel as manhandled as they do by, you know, their experience with American government officials.

01:26:23.940 Would it be helpful for the U.S. government to take a less hectoring tone around the world?

01:26:29.920 Well, let me say, first of all, they also like China, do business in China in many cases because they don't have a Foreign Correct Practices Act.

01:26:36.600 Well, exactly.

01:26:37.300 Yeah, but, I mean, to some extent it's because they can influence you in ways personally.

01:26:43.020 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.

01:26:54.380 So some of the advantage that China has is just pure old corruption, right, that we wouldn't want to be a part of. 0.99

01:27:00.000 It is, but we also, it seems to me, hamstring ourselves by our posture toward other countries.

01:27:07.280 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.

01:27:14.140 No, no, no, for sure.

01:27:14.680 People don't like that.

01:27:15.620 And that's, I mean, it's counterproductive and wrong.

01:27:20.520 So I completely...

01:27:21.660 It's lorish, right?

01:27:22.640 I wouldn't invite someone like that to dinner at my house.

01:27:24.660 No.

01:27:24.920 So to 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 reestablish some sort of economic relationship with Russia once this war is resolved, God willing.

01:27:45.220 Could that happen?

01:27:46.420 To what extent could that benefit the United States if it did?

01:27:48.560 So, first of all, you know, the amount of time that I spent worrying about Russia in the trade and economic sphere was minimum, right?

01:27:57.480 Right, I'm sure.

01:27:58.280 Yeah, of course.

01:27:58.620 Because they're small, you know, they're a small, you know, they have GDP smaller than Canada, and they're basically, you know, people would, you know, get into basically a gas station, right?

01:28:09.060 They're an energy producer and not much.

01:28:11.760 There was a time when they were also very much at the cutting edge of technology, but I think that's kind of waned.

01:28:17.480 And, you know, depending on, once again, this is sort of a little afeard from where I'm an actual expert. 0.73

01:28:26.320 Unlike everybody else, I actually identify what I am and what I'm not.

01:28:30.480 I find it's helpful to me, but not other people.

01:28:34.000 But I do believe that depending on how the war is resolved, and it will be resolved, right?

01:28:40.300 I mean, it's just there's no question the wars are not eternal anymore than trade agreements should be.

01:28:43.900 But when that happens, I think you will see economic relations, you know, reestablish.

01:28:52.920 I'd be flabbergasted if you didn't.

01:28:54.360 The reality is that there will be demand.

01:28:57.640 There will be people that can sell.

01:28:58.860 There are things you can do.

01:28:59.960 But a lot of it is how it is resolved.

01:29:02.500 If it's resolved in a way that Europe and others view themselves as still more or less being at war, then you're going to have a very slow recovery economically.

01:29:11.440 If you view themselves as like we've turned a page and we're in a new decade, then my guess is you'll see people move more quickly.

01:29:17.380 Yeah, the Europeans are grudge holders, I've noticed. 1.00

01:29:19.420 First, okay, you said you're trying not to be partisan.

01:29:24.420 I think you've done a great job because not all of these are partisan questions.

01:29:28.240 But in practical terms, what do you assess the chances of the Democrats, any Democrats, supporting Trump on this program?

01:29:36.920 So it should be really good.

01:29:40.380 Let me just say.

01:29:41.360 It should be.

01:29:41.800 I mean, traditional Democrats would have supported.

01:29:43.240 Remember, the Democratic Party is a bunch of different things, like we are, I guess, and Labor Democrats should do that.

01:29:51.540 Remember, when I was – when I renegotiated the USMCA, the president and I did, and then I worked its way through Congress.

01:30:00.060 And during this toxic time of impeachment and all of this, we worked it through for months and months and months in Congress.

01:30:06.100 And then the final analysis got 90 percent of the Democrats and 90 percent of the Republicans to vote for it in the House and in the Senate.

01:30:12.940 It's one of these things that people don't remember, but it was – it was, you know, whatever the hell we had, 385 votes in the House for it.

01:30:21.940 I mean, it was –

01:30:22.740 That's incredible.

01:30:23.540 Yeah.

01:30:23.700 And people don't give us credit for that, but it was like historic.

01:30:27.240 And so they're impeaching the president and voting for maybe one of the biggest parts of his legacy.

01:30:31.680 And there were a lot of Democrats, particularly in the House, who were key to that happening.

01:30:42.800 I didn't – I don't know how I missed all this.

01:30:44.100 I'll tell you a story.

01:30:46.020 We have John Lewis, who was obviously not president at all, but who I admire as like the – he was then the last living civil rights person, someone who I greatly admire.

01:30:54.200 And actually – I actually brought my senior political staff to meet him just – and they were just, you know, awed by him just to – and he talked for 45 minutes about the civil rights movement.

01:31:05.460 And we just sort of say this – you are the last person that's going to be able to talk to the last person who did this.

01:31:11.660 But he made the statement, for example.

01:31:15.020 He said, you know, I fought NAFTA with every bone in my body.

01:31:18.640 I fought it as hard as I could possibly fought, and I never thought we'd have an opportunity to correct it.

01:31:23.700 But now we are, and I'm supporting this.

01:31:26.020 So there were – he was there.

01:31:27.640 You know, Rich Neal, who's the – who was then the chairman of the Ways and Means Committee.

01:31:34.160 And Nancy Pelosi was a supporter.

01:31:36.000 But there were a lot of – Rosa DeLauro, I mean, very hard-left people who realized what we were doing was for working people, and that was their constituency.

01:31:44.160 So I think there is hope.

01:31:45.160 Debbie Dingell has spoken about this recently.

01:31:47.620 I think there is hope.

01:31:48.580 But it – Tucker, it requires sales.

01:31:51.760 It's not like you have to go up and actually do the retail work.

01:31:55.540 I spent a huge amount of time on the Hill when we were doing this, a huge amount of time.

01:32:01.680 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.

01:32:18.240 I'm sure that no one else in the – probably any – very many administrations from a different party has ever done that.

01:32:24.120 So it requires sort of doing the spade work, but I really think it's worth it because this change economically is so important.

01:32:34.780 It has to be bipartisan.

01:32:36.600 It has to be acceptable.

01:32:38.060 I'm not saying don't do it unilaterally, Mr. President, using existing law.

01:32:42.840 I'm not saying that because I'm not Pollyanna.

01:32:44.900 I think it would be very hard to pass something.

01:32:46.700 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.

01:33:01.740 And there's lots of Democrats who do, lots of them.

01:33:04.740 Getting those people to buy in I think is really, really important.

01:33:09.460 And sounds achievable.

01:33:10.260 So last question is about markets, equity markets, the S&P, the NASDAQ.

01:33:17.260 That seems – I mean that's the main measure that the media used to gauge the health and trajectory of the economy, as you know.

01:33:28.420 So, I mean there are shows on TV just about markets.

01:33:32.480 Do you think that's an accurate measure?

01:33:34.140 So, the answer is no, and it's particularly true in the short term, right?

01:33:44.380 Because the markets are affected more by the Fed than they are other things.

01:33:51.160 I mean the markets basically affect it as much by, you know, they're going to have interest rates go down as it is anything else.

01:33:58.000 I think in a general way –

01:34:00.380 That's kind of – can I suppose that's a little weird actually.

01:34:02.680 Markets are supposed to – equity markets are supposed to reflect the value of the companies in which you buy equity, right?

01:34:10.180 So, it should be – like the measure should be like how's the company doing, right?

01:34:15.200 And it's very often –

01:34:17.020 But it's kind of weird for the Fed.

01:34:18.540 It's macroeconomics.

01:34:19.620 Yeah, but the notion sort of is that, well, if the interest rates go down, you're going to have economic activity increase.

01:34:25.140 So, it's not crazy, but it's sort of off-centered.

01:34:30.320 I mean to me, long term, it's fair to say what will the markets do, right?

01:34:36.240 Will these companies become richer under this system?

01:34:39.500 American companies become richer under this system?

01:34:42.260 The measure – the metric for me is did workers get richer?

01:34:46.780 That's the metric for me.

01:34:47.980 But if that happens, it should be reflected in the market.

01:34:51.680 And so, I think looking at a short term is very disruptive, very destructive, not right.

01:34:57.160 Looking at a long term makes some sense, but it's not my metric.

01:35:00.980 My metric after national defense, my metric is do – most Americans do relatively better.

01:35:09.720 And if they – in real terms, and if they did, the country is better off and the economy has done what it is supposed to do.

01:35:18.040 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.

01:35:27.380 I wrote a speech that sort of made this point that the purpose of an economic policy is to generate wealth for the midsection.

01:35:38.480 The richer, they'll take care of themselves.

01:35:40.560 The poorer, you have programs for.

01:35:41.840 But you want to take – this is the purpose of it.

01:35:44.680 And it was funny.

01:35:45.560 I got all the smart people with all this resentment in me wanting to have him make this speech, which he agreed was right.

01:35:51.940 He was a populist Midwestern guy.

01:35:53.840 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.

01:36:02.980 And he ended up giving it.

01:36:05.160 So –

01:36:06.120 Was he a good guy?

01:36:06.860 He was a good guy.

01:36:07.740 Bob Dole was a good guy.

01:36:08.740 He was – you know, it's funny.

01:36:09.780 There's like – there's kind of like different Bob Dole's when you live to be 97 or something.

01:36:15.700 You have different – you know, you have the young Bob Dole, who I didn't know, and he went to war and got blown up and kind of gritted his teeth and fought back.

01:36:22.680 And he lived in the basement of his house so they could rent the upstairs, you know, so they could live.

01:36:28.680 And then you have this guy in the middle who was the guy I knew who was maybe the legislator of that time, the number one.

01:36:35.340 You could make the case for a few other people, but I could – you could make the case for him being the number one legislator in that midpoint in American history.

01:36:41.140 And then you have this older guy who, you know, who got the Eisenhower Memorial done and got the World War II Memorial and did all these wonderful things in this different way.

01:36:51.000 So I had this middle – this guy in the middle.

01:36:53.180 And he was a tough, hard, good, conservative guy.

01:36:58.280 And I obviously was – had an enormous amount of affection when it's been a state close to him his whole life.

01:37:04.440 Wow.

01:37:06.060 Bob Lighthizer, that was an amazing tour through the past and I hope the future.

01:37:11.300 And thank you for doing that.

01:37:12.320 Well, thank you very much for having me.

01:37:14.420 Tucker, I'll put this in my obit.

01:37:17.800 I was on Tucker's podcast.

01:37:19.620 That'll be in the obit.

01:37:20.460 And it was just one suck-up question after.

01:37:23.960 Mr. Lighthizer, you're a very handsome man. 0.75

01:37:26.160 What's the secret?

01:37:27.480 No, I just agree with you and I'm just so grateful to hear someone explain it clearly for non-economists.

01:37:33.680 I think it's very important.

01:37:34.680 I think it's been neglected and I hope this helps.

01:37:37.060 Great.

01:37:37.560 Thank you.

01:37:37.940 Thank you.

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01:38:03.820 We'll see you next time.

The Tucker Carlson Show - March 19, 2025

Bob Lighthizer： Why Trump's Tariffs are the Only Way to Save the Middle Class

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