>> From WXXI News.

This is Connections.

I'm Evan Dawson.

Our connection this hour was made on the car lot near you.

New car prices have reached record highs in this country, with the average car surpassing $50,000.

Manufacturers cite a number of reasons more people are buying bigger vehicles and they cost more.

Trucks and SUVs.

They also cite, in part, tariffs.

President Trump recently published an op ed in the Wall Street Journal claiming that tariffs have brought America roaring back.

He wrote, quote, we have proven decisively that properly applied tariffs do not hurt growth.

They promote growth and greatness.

Just as I said all along.

End quote.

But the Wall Street Journal has had to offer a correction for some of the president's claims.

For example, Trump says he has slashed our monthly trade deficit by 77%, which is not true.

Trump says that Americans do not pay tariffs at all, that tariffs do not contribute to rising prices.

We're going to get to that claim coming up here.

And I've been wondering, have economists been reconsidering some of their widely held views on things like tariffs?

What about other policies.

Has anything changed their minds in the past 12 months?

My guest this hour is the former chief economist at the center for Governmental Research.

Kent Gardner is back with us.

Welcome.

Thank you for being here.

>> Oh, it's a pleasure, Evan.

Always.

>> Chief.

Egghead.

>> Yeah, sure.

>> That's what the vice president says.

You egghead economists.

>> Yeah.

I'll have to put on my business card.

I need to get a business card.

I suppose.

>> You know.

So Kent has was telling me before the program you didn't get a chance.

You did not get a chance to read the president's op ed in the Wall Street Journal.

>> I don't know how I missed it.

>> The the word that he used to describe the closing of the trade deficit by 77% was astonishing.

Are you astonished?

>> I am astonished.

>> Is that because.

>> Particularly because it's false?

>> Yes.

It would be an astonishing claim.

That's right.

Okay.

We haven't cut our trade deficit by 77%.

>> No.

Not exactly.

>> Are you sure?

>> No.

>> Okay.

>> But I'm pretty sure.

Okay.

I did not look up the most recent Commerce Department figures.

Of course, the Commerce Department is now you know, owned by the president.

So I think that's one of the disappointing pieces of this administration is I don't know how much we can trust numbers coming out of this administration.

>> Well, actually, we do have some numbers.

And it turns out that the trade deficit increased, not decrease by nearly 37% in November.

That was the most recent month for which data is available through the first 11 months of 2025.

The trade deficit was 4% higher than it had been in 2024.

>> Boy, I fear for the person who signed that report.

>> Yeah, right.

Exactly.

So, you know, in the past year, one of the reasons I wanted to come on this.

There's a lot of talk about theory ideas about globalization, which we'll talk about ideas like tariffs.

And of course, tariffs have existed.

They existed under the Biden administration.

They weren't invented in 2025.

But a lot has happened that kind of put some of the theories into real practice in the last 12 months, enough so that the vice president, people like Howard Lutnick, have been saying in the last couple of months that we've really learned that economists are not to be trusted, that they've been wrong about most of this stuff.

And I wondered, have you felt like 2025 invalidated the work that you've done in your.

>> Career?

Yeah, absolutely.

I've questioned myself every time the president opens his mouth and talks about economics.

What didn't I know?

>> But, you know, sometimes you can be wrong, right?

>> Absolutely.

>> Okay.

>> All right.

>> So let's start then with tariffs.

And we're going to go through a number of issues.

And we'll see what Kent has seen in the last year and what kind of work through that.

So first of all the the latest data that I have on how much revenue has come in from tariffs, the president has thrown in the last couple of weeks.

He's thrown out a couple different numbers.

At one point he said $500 billion.

Then he said 700 billion.

The number according to this federal government is between 264 and $289 billion in tariff revenue for the calendar year.

And that is a massive increase from previous years.

So that looks pretty accurate to me.

Do you accept some of those figures?

>> Absolutely.

It's certainly in that ballpark.

I've seen similar numbers and and it's it's a it's a wonderful revenue injection for the, the federal government that's been running nasty deficits for as long as we can remember.

So it is real revenue.

It's one of the things that makes a policy like this a little dangerous, is that it makes it, less necessary to cut, cut spending or raise taxes to achieve something remotely resembling a budget.

you know, balanced budget.

>> We don't.

Are you saying we don't have a balanced budget despite all the tariff revenue?

>> Well, even with the tariff revenue, we do not have a balanced budget.

Okay.

Yeah, but that's not that's not unique to Trump.

It's been true for a long, long time.

And and that's a larger conversation as to how necessary it is for the budget to be strictly balanced at the federal level.

>> Are you worried about the federal debt?

>> Absolutely.

I think anyone who thinks seriously about the federal debt should worry about it.

I don't think that it is.

it's not an existential threat in the near term.

but I do think that there's a point at which I mean.

Well, so these are all linked.

I mean, that's one of the issues we're talking about economics, macroeconomics, particularly talking about trade policy, is one of the things that makes it possible for us to have such a significant debt.

Is that everybody on the, on the planet wants to own U.S.

government securities.

We are the most trusted economy.

We are the largest economy, and our debt is the most trusted debt in the world.

So that means that if you endanger the trust that people put in the U.S.

economy, the trust that people put in U.S.

government debt, then they may borrow money from somebody else instead of us.

Maybe they'll start borrowing from China, in which case it becomes more and more expensive for us to have a significant government debt.

So eventually the debt cost goes up and the debt cost goes up.

That means there's less money to do anything else, particularly for sending that money to overseas lenders.

>> So I think a lot of Americans who are not economists think that when you look at the federal debt, not the deficit, the debt, the mechanism by which it would become a crisis is something like, well, we owe $39 trillion.

And whoever we owe calls us one day and says, time to pay up and we can't pay up.

It's not quite that simple.

>> It's not that quite that simple.

But but at some level, it is that simple.

It just takes a long, long time to work out.

And it's going to be more complicated.

I mean, a significant portion of the federal debt is actually held by by us because of the Social Security Trust Fund is invested in the most secure security on the planet, which happens to be American securities.

It's true for the the Medicare trust fund, all these these pots of money that we keep around that we hope will be supplying us with our revenues when we get to my age and you're on Medicare and Social Security you know that those pots of money are invested in U.S.

government securities.

So it's all intertwined.

But the debt eventually could be a problem.

Once again, if we endanger the U.S.

dollar as the reserve currency for the planet, that puts that whole debt situation front and center.

>> I mean, there have been interesting discussions in the last six months about, well, are we actually moving?

Are there people who want to move away from the dollar's dominance?

Do you see any of that happening?

>> Oh, God.

You know, that's the whole crypto.

curiosity.

the notion that that we should be working actively to abandon our attachment to the U.S.

dollar and and make it easier for other people to not be attached to the U.S.

dollar.

It's really dangerous talk.

And if that were successful, it would be serious.

>> Okay.

I mean, crypto wasn't even in my notes to talk to you about, but has anything in the last 12 months with the Trump administration's love for cryptocurrency, has that changed your mind on crypto?

>> you know, crypto is the greatest scam that I think we've seen in a long time.

And, you know, particularly as it's, as it's been exploited by the Trump administration.

>> Exploited how how do you mean?

You mean when they created their own currency, the president and his wife, and $2 billion overnight has flown in.

>> World Liberty Financial and you know, and supporting a what is a largely unregulated industry.

You know, many of the people who are benefiting from that largely unregulated industry are affiliated with the administration.

And the difficulty, you know, I spend way too much time talking about crypto, but the difficulty with crypto is that it's really not tied to anything at all.

You accept Bitcoin because someone else will accept the bitcoin.

Now, that's not a lot different from, you know, why do you accept a dollar from me?

It's because somebody else will accept the dollar from you.

Crypto isn't really any different, except that the dollar's value is backed up by the strength of the U.S.

economy and by the the robust monetary policy that we have traditionally pursued in the United States that ensures that inflation will remain under control.

So you don't have any of those controls when it gets to crypto.

So crypto is it's not unlike holding gold.

Why do we why do we hold gold?

Because we think someone else is going to want gold from us next year.

But the value of gold fluctuates a lot, just as the value of crypto.

>> But crypto has not become a currency that people use to make purchases with any regularity.

It is really more of a speculative item.

It is not.

I mean, it, it's a it's a lottery ticket for a lot of people.

>> But it but it's moving in that direction.

I mean, you think of.

>> People are using it to make purchases.

>> You look at stablecoins.

Stablecoins are a way to to move to create a currency that it's outside of the U.S.

financial system.

You know, stablecoins are more complicated than crypto.

I don't know which is more complicated, but but nonetheless, that whole attempt to remove the these, these, these currency, currencies and currency, like characteristics away from the U.S.

dollar does threaten the dominance of the dollar and the stability of the dollar.

so I do think that there's going to come a run on, on crypto at some point that's going to make it more difficult, I think, to, to for the stablecoins to retain their value.

Now stablecoin are typically tied to the U.S.

dollar.

but that's dependent on the regulatory structure the control stablecoins stablecoins.

If you issue a stablecoin, the federal government at the moment does issue.

And I'm not deep into the the regulatory structure here.

But they say that that's fine.

You've got money backing up your stablecoin.

Where can that money be invested?

Once again, if stablecoin is invested in U.S.

government securities and we erode the value of U.S.

government securities through our monetary policies, you know, so the stablecoin itself becomes endangered.

So it's it's all bound up.

But the lack of regulation around around crypto and the related, you know, the related characteristics of stablecoins is something I think we need to worry a lot about.

>> All right.

We're going to get back to tariffs.

Now I'm going to grab a phone call.

But if we're keeping a scoreboard can't one into 2025 concerned about the debt.

He's still concerned about the debt he went into 2025 thinking that crypto was a scam.

Nothing that's happened in the last year has dissuaded you from the idea that crypto is a scam, but it's a dangerous scam.

>> Well, it's it's a new kind of commodity.

And if you want to invest in pork bellies, you want to invest in gold, silver, platinum.

I mean, at least those things have some some value, as do pork bellies.

I have to say but crypto is a commodity that doesn't actually have any, any tie to ordinary products and services.

so but but nonetheless, I mean, gold and silver is much of gold is held for speculative purposes, and it doesn't make crypto a whole lot different from that.

>> All right.

Let me grab a phone call from Jack in Greece.

We're getting back to tariffs here.

Hey Jack.

Go ahead.

>> Oh hi Evan.

Thanks I got a question for Kent.

but about regarding tariffs the the U.S.

trade.

Maybe it's from a different angle, but and you may have answered part of this already, Kent.

But I'm curious on your thoughts of, you know, our trading partners, historical trading partners that the United States have had like our neighbor Canada, we see trade policy Donald Trump using our trade policy to punish other other nations.

I don't want to call it a trade war, but it almost feels like that.

But but to punish other nations, and we see Canada now making arrangements with China.

They're going to do more trade with China and others.

as at at the expense of their trade with us.

And I'm curious you've touched on it, the strength of the U.S.

dollar, the U.S.

dollar.

My understanding, the U.S.

dollar is the most sort of currency in the world.

And that helps fund our debt, I think.

And I'm curious from your perspective, if this continues to gather steam, how much of an impact will this have on the funding of our debt, and how much of an impact will that have on our economy long term?

Short term is one thing, but long term, what's going to be the long term effect of that?

>> Thank you, Jack Kent.

>> So Jack, you've raised a, you know, several topics that I want to come back to.

one is the one you said at the very end, which I think is so very important.

You said, you know, you separated the short term from the long term.

And when we start talking about, about trade and about tariffs, we have to understand that the traditionally the United States has played the long game.

We have been willing to be, the supporters of the global financial system and not out of of immediate self-interest.

I mean, we yes.

Let me let me back up.

Some would argue that we have supported the world financial system because it's been in our interest and that that that Trump has simply adopting a different view of our self-interest.

But I would say that historically, it has been our enlightened self-interest.

To take short term losses in favor of long term gains.

We have been a tremendous beneficiary of the global financial system that we established in the Bretton Woods process back in 1945. and for that reason, it's in our interest to keep it, to keep it going.

But once trust is lost in that, then you know, all the benefits that we have gained.

Once again, the U.S.

dollar being the world reserve currency, you know, all those benefits go away as well.

So first, you know, we playing along or we playing a short game.

Is it the long game to to insult our most important trading partner?

to to in assume that the that that the leader of our most important trading partner, is a fool.

you know, his insults against Mark Carney are astonishing, particularly given the Mark Carney was head of the Bank of Canada, head of the the the Bank of of the of the UK.

Carney is the most sophisticated monetary policy.

one of the most sophisticated monetary policy consumers on the planet.

So yeah, no offending you know, Canada is is really not in our best interest.

But again, you know, short term, long term arguably there have been some benefits of the tariffs.

We certainly have seen some reshoring.

we have certainly seen some global companies willing to put more money into the United States that they might not have otherwise.

but when you when you lose your friends and you and life takes its various turns not having friends anymore is a real problem.

So we've lost a lot of friends.

I think losing Canada as a friend is could be catastrophic for us long term.

>> A couple of points there.

Carney's speech at Davos was remarkable, and he talks of a rupture, not a strain in a friendship, not a strain in an alliance, but a rupture.

And he, without saying the word Trump in his speech and barely referring to the United States by name, he spent a 17 minute speech describing the world as having fundamentally changed.

And now there are three major hegemons, assumedly the United States, Russia and China.

And that Canada would would seek to rally the middle powers, the middle powers, who are on their own under the thumb of the hegemons, but perhaps working in concert, much more able to stand up and create their own systems and and essentially said the world order, the, you know, the the rules based order of the world that we have understood is gone.

He's not saying it's eroding.

He's saying that we have to observe that it is fundamentally gone.

And if he's right that this isn't temporary and that one singular election, because a lot of Americans who who don't like if you like this administration, you think Good he's right.

Maybe he's maybe we should have been punishing these guys.

If if you don't like this administration, maybe you're thinking, well, wait to the midterms, wait till 2028.

Mark Carney is essentially saying the world needs to reorder itself.

Because of the last decade in the United States, and we're going to do it.

What do you make of that?

>> I hope he's wrong.

I think that there's still a chance for us to to reclaim the role we have traditionally played as at least one of the leaders of that rules based global order.

but, you know, we have another three years of this administration.

I think if we continue to have the administration kind of tearing at the fabric of the global financial systems, I don't know what will be left.

when someone new comes in.

Nor do I think that that Donald Trump is, is truly unique in his views.

I think there is a shift that towards a more of a, a self-interested perspective on global policy.

>> Do you think Carney was hyperbolic?

>> I'm not going to go that far.

But I mean, given the position he's in, I mean, the attitude that the Trump administration has taken towards Canada is so, so hard to understand.

once again, our, our, our best trading partner, our best partner in so many respects, I mean, and then to attack, you know, even to attack you know, our, our global, our, our traditional partners for being unwilling to support, you know, Afghanistan.

Was you know, went after the Brits and said, oh, the Brits didn't do anything to help in Afghanistan, which is, you know, patently false.

you know, I think you really do lose the trust of, of global leaders.

And then, you know, what do your trade, what do your agreements mean?

I mean, you just completely lose any kind of integrity.

So I, I don't know, I'm I start to get a little hyperbolic myself here thinking about all this.

>> But let me keep trying to steel man the case that tariffs have been good.

And you said that there's been some onshoring.

I mean, the president talks about a manufacturing revolution coming, and I don't know if we have evidence of that.

but let's, let's say what's the best case that, that you can make for tariffs?

>> I think that there are, you know, certainly there are countries.

So there are a lot of things governing global trade besides tariffs.

There are a lot of things we call non-tariff barriers that make it more difficult to for the free flow of goods, you know, among nations.

And, you know, we have often in the past used tariffs as a way of saying to another country, you know, the the rules that you've imposed on this trading relationship sometimes, you know, with the EU, what's often been health and safety rules, they develop health and safety rules for imported grains, for imported you know, it's typically in the agricultural sector and make it very difficult for American exporters to compete in their market because they've got, you know, some really peculiar rules.

And those peculiar rules are intended to keep American imports out.

Absolutely.

And we've used tariffs on occasion to say, hey, listen, clean it up.

You know, let's change your your policies on sugar on, on on bananas, on you know, on beef, on grains, on all these on dairy products, all these picayune little rules that are really designed to keep American goods out.

So it's not like people everybody else plays, you know, plays fair.

They sometimes play dirty.

And we've used tariffs as a way of redressing those, those those inequities.

but over time, I mean, it depends on whether you think that the free flow of goods among nations is really a good thing or not.

Economists are pretty convinced that over time you end up with a much more efficient global economic system, and that in general, the rising tide lifts all boats.

It's not always equal, it's not always fair.

but that a free flow of goods and services among nations works to all of our benefit.

Certainly works more to the benefit of those people who have more power.

So the United States has definitely benefited more from the free flow of goods and services than have many other nations.

But still, everyone has benefited.

And when you tear that up, and I don't know what you're left with.

>> Okay, so let let me grab one other phone call, then we'll put a wrap on tariff.

And we're going to talk about a number of other things, because listeners have sent some emails with questions for Kent, which we'll get to in our second half hour on the phone next in Brighton is Phillip.

Hey, Phillip.

Go ahead.

>> Hi.

the tariff manufacturing renaissance is a complete pipe dream.

And I'll tell you why.

I've been importing goods now from China for quite a while.

And I'll tell you that, you know, if you wanted to manufacture a good, you're going to require a bunch of raw materials and parts to make those goods.

And a lot of times, the Trump administration's tariffs make importing those raw materials and goods that are necessary to make products in the United States completely untenable.

And that's one of the major problems.

And I'll tell you, China has already outmaneuvered us.

There are three steps ahead of us.

So what happens now is that a lot of the factory owners are relocating their factories to Vietnam and other countries in Southeast Asia, where there are lower tariffs.

They're even trying to open sites in Mexico.

they've learned that you can transship goods through third countries.

You can you know, undervalue your goods.

And with the number of packages that are coming into this country every day, it's really hard to stop that kind of thing.

But the bottom line for consumers, I think, happened for us, the worst thing was the de minimis exemption that was repealed last year.

And that allowed goods that were under about $600 in value to enter here, tariff and paperwork free.

And now what's happening is you say you want to order a cuckoo clock from Germany.

Well, cuckoo clock may be $350, but when UPS delivers it, they've tacked on a $38 paperwork fee.

There's a 15% tariff right off the bat.

And then the various components of the cuckoo clock may come under different tariffs depending on what those things are.

And a lot of the manufacturers are saying put through their arms up and they're saying we're just not going to sell cuckoo clocks in the United States anymore because the paperwork requirements and the fact that the post offices in those countries have to collect our tariffs and pass them along has made it untenable.

So now we've kind of cut ourselves off and consumers are getting the bill for these things.

They're shocked by these $200 tariff bills they're getting from UPS or Fedex before they even get their product.

So the whole thing is just complete nonsense.

>> Philip.

Okay.

Thank you Kent.

How did he do there?

How would you rate that analysis?

>> You did just just fine.

>> I do think that there's a there's a place for a de minimis exemption.

and it's partly because of the paperwork cost.

And, you know, I think we've got to come up with a new solution because I think there are a lot of global retailers you think of as it Sheehan and some of these other Chinese retailers that have you know, driven entirely entire business models through both how we handle postal regulations and postal fees and also completely exempting policies, you know, products under a certain price.

So I think there ought to be a way to manage that trade without going back to going going to what we have right now.

So and the other a couple of other points you made, and these are really important to understand.

We think about there's an old there's an old joke about economic historians.

Someone will say to an economic historian what's been the impact of the French Revolution?

And the response is, well, gee, it's too soon to say.

And that's a that applies some ways to tariffs because, you know, the global trading system takes a long time to shift.

I mean, if you think you're a manufacturer, like like like the gentleman who just called you know, how long did it take to find the supplier that you could trust in another country and develop a good process by which you transmit what you need and get what you, you know, get what you need and validate that whole transaction.

It takes a long time.

Those relationships take a long time to change.

You don't just turn a switch and say, well, gee, I can't get it from China anymore.

So I'm going to pick from a list of 200 other suppliers in different countries that don't face the same tariff, and I'm going to buy from them instead.

So it takes a long, long time to make those changes.

so the so I think that's that that's a real challenge.

But a couple of other things before we get off the whole tariff piece.

Yeah, the Kiel Institute just released a report in January.

This is a well respected German, institute that studies global trade.

They estimated that American consumers are paying about four.

I mean, suppliers are paying about 4% of the tariffs, and American consumers are paying the other 96%.

>> And that's not what the president has said in the Wall Street Journal.

>> It's not what the president said in the Wall Street Journal.

And but another little tangent.

You know, I've been talking for a long time about the value of of gas tax.

Now, why do you like gas tax?

Because it changes behavior.

Sure.

And sometimes we want to use tariffs to change behavior.

But what in the gas tax example I've always said is okay we do the gas tax.

Then we use the revenue from the gas tax to make whole.

Some of the people who suffered because of the imposition of gas tax.

And we can do the same thing with the tariff thing.

I mean, the president floats the idea of sending people tariff dividends, and we could actually change the the prices on certain specific goods that we think probably should be purchased locally.

You know, defense related products, things like that, and then use that revenue for something to make whole the consumers who suffer the cost of that tariff, that that would be a possible fix.

>> Well, the USDA recently put out let me see here.

>> Oh, yeah.

Farmers, for heaven's sake.

>> Yeah, here.

>> It is.

Farmers have been at the gravy train of the federal government.

>> Well, it's in my notes somewhere.

Here it is.

so the this is from the USDA.

Trump administration announces $12 billion farmer bridge payments for farmers impacted by what they called unfair market disruptions.

The reality here is so in the last year, you heard soybean farmers in particular, who were largely a pretty good block of Trump supporters in more rural states, but in a lot of different states come out and say, we've lost all of our market in China.

They're going to buy from Brazil.

And China says, all right, fine, slap that 25 or 33% tariff on.

We're not buying your soybeans.

We're buying from Brazil.

American soybean farmers, meanwhile, tell the president that's like a third of our market.

I mean, that's a we're in we're going to grow soybeans and throw them on the ground.

And so now the Trump administration says, well, here's $12 billion for your troubles.

And so but but didn't you just say that's a good thing, make them whole.

>> well, what I would say is that if you're going to set up an unfair trading regime, you know, perhaps you need to to think about ways in which you can soften the blow.

And I'm just saying that, you know, again, back to my gas tax example.

If we want people to consume less petroleum based fuels, we can change the we can use the tariffs or tax as a way, as influencing behavior.

But you want to use it very carefully.

And that's a great example.

We really do want to eviscerate the whole soybean market.

>> The Trump administration said we didn't want them to have to throw the soybeans on the ground, but if they had to because of the tariffs, we'll just give them a bunch.

>> Of give them the money.

That's right.

>> Yeah.

It might not be very efficient.

I have a feeling that if the president had a D in front of their name and not an R, a lot of conservatives would find this sort of grotesque.

But is this the right move?

>> Well, talk to Democrats about their support for farm subsidies.

I mean, that's the.

>> Other thing.

Farm.

Did you call it a gravy train?

>> Oh my gosh.

You know, my PhD is from the Department of Agricultural and Applied Economics at Wisconsin.

So I spent a lot of time taking a look at how farms are price supports, work, and the ag market is so deeply influenced by federal policy, and some of it is completely wrongheaded.

So that don't get me started.

>> But what's the case that giving soybean farmers $12 billion is not a good idea?

>> is not a good idea.

Well, you should just what you should do is fix the problem, which is the stupid tariffs.

>> Okay.

All right.

I see where you're going with that.

One other thing on this is the the relation to prices.

I want to listen to a clip from CNBC in which economist Justin Wolfers is responding to a question on how prices have worked with tariffs.

>> Trump promised that tariffs would bring the factories and jobs roaring back to the U.S., but manufacturing employment that's been on a steady decline each month.

In fact, as small companies are struggling to manage the rising costs.

So where are the jobs that Trump promised?

And will we maybe just see them this year?

>> Look, this is just a mistake in economic theory.

this is someone who I think struggled in his introductory economics class, but I want to give folks at home a very simple way of thinking about it.

Realize that a lot of tariffs are tariffs actually on inputs into American production, for instance, Trump put enormous tariffs on steel.

That's a little bit like putting tariffs on flour and asking what do you think is going to happen to bakeries.

Steel.

Yes, we do have a small steel industry.

A few more people will be employed in steel.

But steel is used throughout the rest of the U.S.

economy.

And what that means is that Americans and only Americans have to pay more for their steel as part of their input into their productive processes.

A lot of manufacturing uses a lot of steel.

Trump has put us at an enormous disadvantage relative to foreign competitors, and that's part of the story of what's going on there, that manufacturing employment just keeps shrinking.

>> So we'll get to jobs in a second.

In general, on prices, do you agree with him?

>> Absolutely.

Yeah.

Yeah.

And and the point he made is that because the tariffs you know, are typically on inputs, you know, you don't see it on the, on the, the product.

But you do see it in the inputs.

And there are some inputs particularly much of what comes out of China that are these are inputs to a vast array of products and services.

Given that many of our services depend on purchasing you know, computers and related electronic equipment.

So if you make you know, electronic equipment more expensive, then you're, you know, the, the ripple effects throughout the entire economy are significant.

>> Okay.

And then on jobs anything else you want to add on what you expect the impact on jobs to be vis a vis the Trump tariffs?

>> I think I think it's going to be difficult to measure accurately again, because these things take so long to work through.

but I see absolutely no suggestion that we're going to see an increase in, in jobs in manufacturing because of the tariffs.

We're, you know, the we're going to see a shift in manufacturing jobs.

We're going to see a shift in jobs across, you know, many, many sectors because of the tariffs have been imposed so irrationally.

That's the other problem is if you're going to have a policy, let's have some concept behind what you're trying to achieve from the policy.

And that brings back a comment that I think was Jack made earlier, is that, you know, clearly this is not an economic policy.

This is a global hegemonic power game for the president.

The the tariffs are being used not to achieve economic purposes, but to as as a way of influencing behavior.

I mean, again, why would you beat up on on Canada unless you really, you know, want to punish the Canadians for some imagined flight a slights.

And that's the other thing that makes it just wild for economists to think about that, this very significant economic tool is being used simply as a way of imposing the the president's notions of what the global world order should look like.

>> You're suggesting that Howard Lutnick is the one who's wrong here, not you.

>> Well, just possibly.

>> We have to take our only break.

And when we come back, I got some emails.

Some listeners want to know, okay, if things are as unstable or the way that our guests describe, why is the stock market roaring?

Well, we can talk about that.

There's some other questions as well.

In fact, I've got some sound from the president on a number of topics that we're going to listen to as we talk to Kent Gardner, who is the former chief economist at the center for Governmental Research.

And one of my one of my favorite guests, because I've never known Kent to pull a punch or to you know, occasionally surprise you.

if the evidence leads him in that direction.

And so we're talking about what we've learned in the last year on Connections.

Coming up in our second hour, we're joined by Rochester native, an award winning composer, Adolphus Hailstork.

He says that he is willing to take on the task of creating art that represents African Americans in this country.

One of his recent pieces is called A knee on the neck, an oratorio in tribute to George Floyd.

We'll talk about the intersection of politics, social change and art next.

Our.

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>> We don't really do speed rounds on Connections, but I've got a lot of emails and more phone calls and a lot to get to in the last 20 minutes.

So you're ready?

Oh, boy.

Okay, so Joe emails to say you and your guests are ignoring the stock market, which is roaring.

and, Joe, I'm not trying to ignore anything.

In fact, I have a piece of sound from President Trump talking about that roaring stock market.

Let's listen to the president.

>> But the stock market's the highest.

How is John Deere stock doing?

Great.

All time high.

It's all time everyone I don't have to even ask the question.

I mean I made a lot of people rich.

>> He made a lot of people rich Kent stock market's all time high.

And Joe says you're ignoring that.

>> Yeah.

Let's not mistake the stock market for the real economy.

The stock market is is about people's estimates for individual company prospects.

And there are many, many things that the Trump administration has done that does make a domestic manufacturers more competitive globally.

I mean, that's the whole point of the tariffs, right?

So if you throw a tariff on company, on your competitors, you whether you're John Deere or your you know, General Motors or any other company you might name, that is good short term.

But I do think that that the, the the tariffs, it's an it's an unstable way to fix the problem.

And you know the I think we do have to think about the long term.

>> So don't just look at what the Dow is doing and say that's the economy.

>> Yeah.

The Dow is.

The other thing is the Dow is a is a crazy standard for stock values.

It's only 30 stocks for heaven's sake.

It's a I don't know why we keep reporting.

>> Every economist I've ever talked to says can we get past this 30.

>> Yeah.

For heaven's sake let's go to at least start with the S&P 500.

Okay.

But but no, I think the the stock market is important.

But the other thing to remember about the stock market is that it's deeply influenced by what 30 stocks.

And that's not the 30 stocks in the Dow.

But it's the you know the 30 tech stocks that are really driving the market right now.

And this is an economy that's been pretty good to those companies.

And so, you know you can't just take a look at the stock market and say, gee, everything's great.

>> All right.

Earl and Rhonda, quite next on the phone.

Hey, Earl, go ahead.

>> Hey I don't want you to present me as a carney expert like you tried to.

>> Earlier.

Well, you know, you Canadians, you're all carney experts, I guess.

Or Poilievre experts.

No.

Go ahead.

>> Yeah, yeah, yeah.

So.

So what I wanted to say is the comments about unfair trade practices standards in other countries.

My question is, who should set those standards?

Because what I'm seeing right now is an imperialistic, oligarchical approach to these things.

For example, the dairy quotas in Canada, milk and eggs and cheese, that sort of thing.

We've never Canada has never gotten any money from those dairy quotas.

The Kuzma deal made sure that the the barrier was set so high that it wouldn't be an issue.

But the point of those was supply management, not restriction.

Right.

Because Canada knew that the United States overproduced milk and other dairy products and they could easily flood the Canadian market, putting people out of work.

So what is fair?

Who gets to decide?

Does a sovereign nation get to decide its own rules or not?

And that's what I see behind a lot of this is the tech Bros and the Multibillionaires saying, hey, we don't have enough.

We want more.

And the way to get that is to convince the American people that, you know, we're being mistreated.

And I don't think that's true at all.

So that's just my comment, Earl.

>> Thank you.

>> Yeah.

So the first thing on, on on those trade rules, I mean, that's one of the reasons why we set up these, these multinational talking shops to, to to establish rules.

And, you know, even in, in dairy products and even in agricultural products as a whole, you know, the general agreement on Tariffs and Trades and the all the, the institutions that that followed that have slowly made those reduced the irrationality of those things, but still particularly in, in, in the ag system, the rules governing ag trade are crazy.

I mean, when I was a graduate student at Wisconsin, we were still determining the the price of fresh milk according to the number of miles the farmer was from Eau Claire, Wisconsin, because Eau Claire, Wisconsin was the center of the the the country's dairy business.

And so the further you were from Eau Claire, the more you could charge for your milk.

Literally.

>> What a story.

Earl, thank you for the phone call.

let's get this email from Charles, who says, I'd love to know how far off the United States is from establishing a sovereign wealth fund, as well as the feasibility of a trade alliance that includes South and Central American countries.

The way I see it, with Maduro out of power, there's a unique opportunity to establish a supply chain that creates jobs in these regions, which in turn would hamper both illegal immigration and the cartels.

And simultaneously reduce the number of goods we obtain from a hostile nation on the other side of the world.

>> Well, the hostile nation on the other side of the world happens to be particularly adept at a lot of things we need.

So I just want to be careful that we don't try to demonize.

>> Him about China.

>> Yes.

That's the.

>> We're talking about China here.

>> Yeah, yeah.

And China.

Yeah.

So China, I think cutting ourselves off from China is, is is itself something we do at our risk.

longer conversations we can have about about about China.

But China's innovation is not is something we want to embrace and participate in, not keep ourselves away from.

I mean, that was the sort of thing that happened in the, you know, back in the, you know, 70s and 80s.

We attempted to insulate ourselves from Japanese innovation.

And eventually that came back to bite us just because the Japanese were innovating, particularly in the auto sector, so fabulously that we kept raising tariff barriers to keep those Japanese cars out.

And eventually, when they were able to come in, they ate domestic car manufacturers for lunch for decades, U.S.

manufacturers are back in the game.

But boy, it took an awfully long time.

And that was partly because they were insulated.

And the same thing is true for EVs.

Wall Street Journal did a story just last week from their tech journalist looking at the Xiaomi Su7, which is an EV that we keep out of the United States.

And she was just blown away by it.

She's a regular driver of a Ford Mustang Mach-E and has, you know, test driven all these things.

And she says, wow, this is just a great car.

And they sell it for $49,000.

Why can't we have it in the United States?

So, you know, you keep this these these better products out.

All you're doing is reducing the competition on domestic manufacturers to be to be the best they can be.

>> What about possible trade alliances with South America?

Certainly you would think that there is an open door to improve relations with Venezuela.

I mean, the president called in the oil executives about that, for goodness sake.

But but other nations as well, perhaps.

>> Well, why why necessarily South America?

I mean, I just you know, I don't unless you want to start talking about this Don Rowe Doctrine that somehow we should control what's going on in this hemisphere.

I don't see why we would necessarily set up a trade relationship with, with, with, with South America.

I mean, you know, let's go back to Europe.

You know, they've been our friends for a really long time, and we've had a very productive trade relationship with the folks in Europe.

And I think that, you know, managing to strengthen our relationship, reassert our relationship with our traditional trading partners is the first thing to do.

I don't know why we would look to South America.

>> I mean, I certainly think there is a theory of a theory of thought, perhaps the Monroe Doctrine, whatever you would want to call it.

And I think it's espoused by the vice president more than the president.

you know, he certainly is developing a worldview that looks like hemispheric hegemony is a good idea for us.

and that, you know, you sort of leave Russia, its sphere of influence, you leave China, its sphere of influence, and we have ours.

>> I don't know why.

I don't know on what planet that makes any sense.

you know, the, you know, global communication, the barriers to global communication and global travel keep falling year after year after year.

I mean, how long has it been that you've been able to simply place a simple phone call to to Germany or to the Czech Republic or to Italy or, you know, or into South America at almost zero cost.

You know, the transportation has gotten better and better.

Package delivery, for heaven's sake.

We can receive packages from around the globe.

And, you know, and this is a time when we should say, well, let's worry about geography.

Now.

You know, we've seen a tremendous what we call the shrinkage of distance.

I mean, distance means much, much less economically than it did only ten years ago, 20 years ago, 30 years ago.

We had to worry a lot about distance.

It really doesn't make any sense.

>> All right.

I want to ask you a little bit about what the president said last week in regards to housing prices.

And I want to listen to the president's remarks on this.

He's talking about why he actually disagrees with the many people on all sides who tell him we need we need policy that will bring housing prices down.

He says, no, no, let's listen.

>> I think Scott said, though, is again, existing housing people that own their homes.

We're going to keep them wealthy.

We're going to keep those prices up.

We're not going to destroy the value of their homes so that somebody that didn't work very hard can buy a home.

We're going to get we're going to make it easier to buy.

We're going to get interest rates down.

But I want to protect the people that for the first time in their lives, feel good about themselves.

They feel like they've, you know, that they're wealthy people.

And I want them to understand that, you know, there's so much talk about, oh, we're going to drive housing prices down.

I don't want to drive housing prices down.

I want to drive housing prices up for people that own their homes.

And they can be assured that's what's going to happen.

>> Let's set aside the fact that it's possible that that was an A.I.

clip created by Democrats to run as ads in the upcoming election.

It wasn't.

>> That was a pretty good one.

>> That's the actual president talking about driving housing prices up.

But you heard his explanation for why.

What do you think?

>> Well, he says that, you know, that we need to be nice to people who've worked hard and now own their own homes.

What about all the people who have been worked, who have worked hard and now can't afford to buy them?

>> Well, the implication he has is that for people who haven't worked hard, they can't afford homes.

But if you've worked hard, you can and you deserve that home to be a great asset.

>> Yeah, yeah, yeah.

And we talked to a lot of younger people about that.

So so that maybe plays well with people over the age of 50.

You know, maybe he's preaching to boomers.

you know, for a lot of people in my age bracket, you know, we're, you know, we've done pretty well by real estate you know, baby boomers, investments in real estate have proven to be sound investments.

But but, you know, we've made it more and more difficult for people to buy in, you know the, the, the Ezra Klein abundance book talks a lot about why.

>> Are you an abundance person?

>> Oh, you bet.

I think, you know, I think Klein and Thompson put their fingers on some wonderful things.

These are not I mean, pardon me, but a lot of people in my part of the, the, the world have been saying these same things for 20 years.

>> You're going, come on.

It's way too hard to build new housing in California.

That's a revelation.

>> Exactly.

Or or, you know, the fact that it costs us three times as much to build a mile of of of subway in New York City than it does in Paris, for heaven's sake.

Yeah.

You know, that's not a problem.

>> Well, hey, listen, just like the SNL sketch from this weekend with the family yelling at their mom who's changing her mind, you can't just yell at people when they finally come to your position.

Can't you have to show more grace?

I will, okay, but but.

>> But I'm.

I'm really relieved that we start to see some some action on on the left to understand that you can't fix everything with a regulation.

and that's, you know, there's another economist quip.

You can teach a parrot to be a good economist by saying supply and demand, supply and demand.

If you don't understand those fundamentals, you're not going to have a functioning economic policy.

>> Well.

So a couple of things stand out to me in the president's clip here when he's talking about owning your home and it becoming this rising, rising value for the most part that that helps you in two ways.

Number one, if you die and someone benefits from the sale of that property, or if you own more than one home and you can sell it and you don't have to subsequently buy something because it's great if you bought a house for 100,000 and now it's worth 300,000.

But what house are you buying when you sell that house?

So I don't know.

That's not the best kind of asset to be chasing in terms of soaring values.

From a policy perspective.

>> I think even if even even if Donald Trump, you know, sat down and thought about that for about 47 seconds, he probably would realize that that's a very short term policy.

It's a very narrow policy.

It's just it just is not a sensible way to think about it.

>> But he did.

say he did say we're going to see interest rates coming down.

And Vice President Vance recently said, you know, about this kerfuffle with Jerome Powell.

The vice president said, look, the fed chair is not elected by the people.

The president is the president gets to have a say baloney to this idea that the fed should be independent, that we should be setting policy in that way independently.

It should be the president's prerogative.

And that's who was elected.

What do you make of that?

>> It's a real challenge in our constitutional order.

I mean, the the Supreme Court has been struggling with the question of the with this unitary executive theory that says that everyone in the executive branch is under the control of the president.

The president gets to make all those decisions.

And we have had this odd compromise with from the Constitution, particularly around the fed, that says that the fed is going to be independent of Congress, independent of the of the of the executive.

And, you know, it is set up that way.

I mean, the, you know, so many of these positions are appointed by the president, but then they have to be confirmed by Congress, but nonetheless, it's it's hard to avoid the argument.

I think the argument is not completely fallacious that the president has enormous power over pretty much anything the executive branch does.

And it gets back to that whole tariff question.

We're still waiting for the Supreme Court to, to, to to rule on this business.

And I certainly hope that that they acknowledge that perhaps the president does get doesn't get to make absolutely every decision that the executive decision, the executive agency is involved with.

It's but it's it's an uncompromising it's a very uneasy compromise with our Constitution.

Our Constitution doesn't resolve these issues.

>> This is an administration acting as if a unitary executive is the goal, the effect, the policy.

>> And he has there are supporters of that, you know, clearly, clearly.

Three that that support him on the Supreme Court.

And we're kind of hoping that there's a couple more that will see that as a bridge too far.

>> Okay.

lastly, here in our last 30s doesn't sound like too much has surprised you in the last year.

Has anything look anything in 2025 and go, huh?

>> How could we not be surprised?

>> I don't mean, like, everything in the world I'm talking about in your sphere of work and economics.

>> Well, you know, it's it's as we've all discussed with with Trump, it's it's not the direction, but it's the magnitude, the size of the decisions, the enormity of the consequences with very little deliberation.

you know, the fact that the, the president has no patience for any kind of consultation, you know, and you know, believes that that what he believes is, is, is the truth.

you know, we you know, are still looking back to the, the, the great fiction of the West Wing that we've got a Nobel Prize winning economist as president.

Oh, well.

>> An economist as president.

You're you're waiting for that future.

>> Well, that's right.

We'll go back to, to to to to to.

Was it Jed?

what's.

>> The Bartlett?

Jed.

Bartlet.

>> Jed Bartlet.

>> Yeah, but you're out of touch with the people.

>> yeah.

Well, so is Jed.

>> I suppose.

Kent Gardner is the the retired former chief economist with the center for Governmental Research actually wears a lot of hats in this community.

Thank you for coming in.

>> Thank you.

Evan.

Always, always fun.

And and this is this is such an important topic.

>> It is an important topic I absolutely agree.

We appreciate your expertise.

More Connections coming up in just a moment.

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