How Trump's tariffs are shaping the economy

AYESHA RASCOE, HOST:

President Trump has been in office just under two months. And in that time, his announcements about tariffs have made news on a weekly, sometimes daily basis. He’s imposed new tariffs, threatened still more, delayed and even backtracked on others.

We were curious to know, if the president pushed through all the tariffs he wants to, what would a Trump economy look like? Here to offer some insight is NPR White House correspondent Danielle Kurtzleben. Good morning, Danielle.

DANIELLE KURTZLEBEN, BYLINE: Hey, Ayesha.

RASCOE: So what tariffs has Trump put in place? And what has he said the goals are?

KURTZLEBEN: Well, Trump has listed a lot of tariff goals, but chief among them is revitalizing manufacturing.

(SOUNDBITE OF ARCHIVED RECORDING)

PRESIDENT DONALD TRUMP: We’ve lost 90,000 factories since the beginning of NAFTA. It’s not that long ago. Ninety-thousand factories - think of that. And we’re going to get them back.

KURTZLEBEN: And the tariffs President Trump has already imposed on steel and aluminum imports, not to mention the tariffs he’s put on Chinese goods - those are clearly aimed at boosting American manufacturing. But he also talks about a lot of other goals - for example, the Canada and Mexico tariffs. He has said those are aimed at curbing drugs and immigration.

He also wants to impose what he calls reciprocal tariffs, possibly starting April 2. And from what we know, those are tariffs that would be equal to what other countries impose on the U.S. And also with all tariffs, he has touted the possibility of increased revenue. These are, again, taxes paid by importers.

RASCOE: Let’s talk about manufacturing. Could tariffs bring back industries that left the U.S. years ago?

KURTZLEBEN: Well, let me start with the logic of how that could work. A tariff on steel and aluminum means American importers would have to pay more to bring those metals into the country, which would make them more expensive. So then American businesses and consumers would buy American. It would make American goods more attractive.

I talked to David Weinstein. He’s an economist at Columbia University who studied the tariffs from Trump’s first term. He said that, yes, steel and aluminum tariffs could boost U.S. steel and aluminum manufacturing, but...

DAVID WEINSTEIN: Other sectors are going to shrink. That is, in order for us to make more steel or shoes or whatever, that’s going to pull people out of jobs in our high tech sectors.

RASCOE: Could you give us an example of that?

KURTZLEBEN: Yeah. So Weinstein illustrated with iPhones. If you put tariffs on iPhones coming into the U.S. from China, you make those more expensive. So then...

WEINSTEIN: Apple is going to sell fewer iPhones. And while that does create some jobs for people assembling iPhones, those are not high-wage jobs. So we’re giving up on high-wage jobs to create low-wage jobs, and that’s the real danger of this policy.

KURTZLEBEN: To Weinstein, it appears that Trump is comparing the U.S. to manufacturing-heavy economies, especially China. Now, it’s true that China is a competitor and is in many ways an adversary to the U.S., but Weinstein’s point here is that doesn’t mean the U.S. wants to try too hard to make its economy just like China’s.

RASCOE: The president has also spoken about goals, like fairness and national security. So can you explain what the intention is there?

KURTZLEBEN: So one specific rationale for the steel and aluminum tariffs is national security, to make sure the U.S. doesn’t rely too heavily on other countries for these metals the U.S. needs for basic needs, like defense. But the goals he presents are often contradictory. For example, a tariff might presumably help U.S. manufacturing, but if people aren’t buying foreign goods, there’s no tariff revenue.

RASCOE: So how is the White House trying to sell these tariffs to the American people?

KURTZLEBEN: Well, they’re saying this could create short-term pain for long-term gain. And we are seeing pain. We’ve seen those stock market plummets. Consumer confidence is down. And look, trying to steer this giant ship of the U.S. economy in a new direction by revitalizing manufacturing - yeah, that takes time. That’s the long-term gain they want. The big question for the White House is how much pain they think is OK in getting to that goal.

One thing I’d add here is it’s important to stress that the White House has put out some misinformation in selling these tariffs. Trump has talked about tariffs as being paid by other countries. That is not true. It’s companies in the U.S. importing goods that pay them. And right now, regardless of the state of goals, though, we don’t know what the impact’s going to be, but mainstream economists say all of this will have major costs to the U.S. economy, and it’s very possible the costs will outweigh the benefits in the end.

RASCOE: That’s NPR White House correspondent Danielle Kurtzleben. Thank you so much.

KURTZLEBEN: Thank you. Transcript provided by NPR, Copyright NPR.