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Tariffs | Munk Debates

EPISODE #6

Tariffs

Be it resolved, tariffs are terrific

Guests
Alan Tonelson
Jason Furman

About this episode

The White House believes that the US has been a victim of a bilateral trade imbalance with its trading partners for far too long, creating a global economy where foreign businesses profit at the expense of American industry, and specifically it’s working class. It's time for other countries to step up and pay for doing business with the US. Advocates of free trade and financial globalization are sounding the alarm. They believe Trump's increased tariffs on Europe, Mexico, and specifically China will have a devastating effect on the economy and plunge the US into a recession.

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Guests

Alan Tonelson

The main question that arises is not should these trade policies be fundamentally changed, but why did they remain in place so long to begin with?

Alan Tonelson

The main question that arises is not should these trade policies be fundamentally changed, but why did they remain in place so long to begin with?

Alan Tonelson is Founder of the blog RealityChek – www.alantonelson.wordpress.com – which covers a wide range of domestic and international policy issues along with political and social trends.
 
Previously, Tonelson followed trade and manufacturing-related trends for the U.S. Business and Industry Council, which represents nearly 2,000 small and medium-sized domestic manufacturers.
 
Tonelson has been called by The New Republic “the most influential economist spreading the nationalist gospel.” His book on globalization and the U.S. economy, The Race to the Bottom, was published by Westview Press in 2000 and issued in paperback in 2002. His articles and reviews have appeared in Foreign AffairsThe AtlanticHarper’sFOREIGN POLICYThe New RepublicThe Harvard Business Review, and most major national dailies and news websites, including The New York TimesThe Washington PostThe Wall Street JournalUSAToday, BloombergView, Fortune.com, and Marketwatch.com. Tonelson also comments regularly on economic issues for many broadcast and print news outlets.
 

Jason Furman

Tariffs are regrets of tax. They fall the highest on the families that have the hardest time paying them.

Jason Furman

Tariffs are regrets of tax. They fall the highest on the families that have the hardest time paying them.

Jason Furman is Professor of the Practice of Economic Policy at Harvard Kennedy School (HKS). He is also nonresident senior fellow at the Peterson Institute for International Economics. This followed eight years as a top economic adviser to President Obama, including serving as the 28th Chairman of the Council of Economic Advisers from August 2013 to January 2017, acting as both President Obama’s chief economist and a member of the cabinet. During this time Furman played a major role in most of the major economic policies of the Obama Administration. Previously Furman held a variety of posts in public policy and research. In public policy, Furman worked at both the Council of Economic Advisers and National Economic Council during the Clinton administration and also at the World Bank. In research, Furman was a Director of the Hamilton Project and Senior Fellow at the Brookings Institution and also has served in visiting positions at various universities, including NYU’s Wagner Graduate School of Public Policy. Furman has conducted research in a wide range of areas, including fiscal policy, tax policy, health economics, Social Security, technology policy, and domestic and international macroeconomics. In addition to articles in scholarly journals and periodicals, Furman is the editor of two books on economic policy. Furman holds a Ph.D. in economics from Harvard University.
 

Show Notes

After years of negotiations, President Donald Trump has recently agreed to a “Phase One” trade deal with China. Under the new trade agreement, Washington will reduce some tariffs on Chinese imports in exchange for Chinese purchases of agricultural, manufactured and energy products, increasing by about $200 billion US over the next two years. The next phase of the agreement will attempt to resolve issues such as Chinese subsidies to state-owned firms and digital trade.
 
Alan talks about the hallowing out of America’s manufacturing sector, which currently comprises 12% of GDP. In 1947, roughly 33% of Americans were employed by the sector, compared to less than 10% today. Some economists attribute this to a shift towards a knowledge-based economy.
 
Jason talks about the import of intermediate supplies used to make export goods, like the import of steel to make cars.  You can read more about the intermediate goods trade and its role in the manufacturing sector here.
 
Alan wants to see a decoupling of the Chinese and American economies. Many experts agree that in order to do this, US firms must re-orient their supply chains away from China, and eliminate the trade deficit between the two countries. You can read more about Trump’s ‘decoupling’ strategy here.
 
Alan mentions the growing East Asian trade surplus with the US. The US goods and services trade deficit with ASEAN countries was $82 billion in 2017. The US services trade surplus with ASEAN countries was $10 billion, according to the latest available data. Meanwhile, the US goods and services trade deficit with China was $378.6 billion in 2018.
 
Jason Furman’s Wall Street Journal op-ed makes that case that Trump is losing the trade war with China
 
You can read Alan Tonelson’s blog on the economy and trade here.
 
 
 

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