I'm going to be president of this country.

I'm going to put a 100, 200, 2000 percent tariff.

President Trump says he would look to impose tariffs between 60 and 100 percent on China.

100 percent tariffs on BRICS nations.

He will, quote, charge Mexico and Canada a 25 percent tariff on all products coming into the United States.

Hello and welcome to GZERO World.

I'm Ian Bremmer.

And today we are talking about the future of the American economy.

We're long overdue.

Over half of U.S. voters listed the economy as an extremely important issue in the election, the highest percentage since the Great Recession.

U.S. President-elect Donald Trump has promised to usher in a golden age of America.

On the campaign trail, he vowed to raise tariffs, cut taxes, slash business regulation, and deport millions of undocumented immigrants.

Policies, he says, will put Americans first.

But what will that mean practically for workers and for businesses?

Today, I'm talking with Oren Cass, a leading scholar of conservative economics of the new right, the younger and more populist arm of the Republican Party that includes people like J.D.

Vance, and is pro-worker, pro-union, and critical of the free market capitalism of the last few decades.

Don't worry, I've also got your puppet regime.

As soon as I'm president, we'll impose on you a tariff of 100 percent.

But first, a word from the folks who help us keep the lights on.

Funding for GZERO World is provided by our lead sponsor, Prologis.

Every day, all over the world, Prologis helps businesses of all sizes lower their carbon footprint and scale their supply chains.

With a portfolio of logistics and real estate and an end-to-end solutions platform addressing the critical initiatives of global logistics today.

Learn more at Prologis.com.

And by Cox Enterprises is proud to support GZERO.

Cox is working to create an impact in areas like sustainable agriculture, clean tech, health care, and more.

Cox, a family of businesses.

Additional funding provided by Jerry and Mary Joy Stead, Carnegie Corporation of New York.

And...

If you flip through the paper on September 2, 1987, you might have stumbled on a full-page ad with a letter addressed to the American people bearing a familiar signature.

"Japan and other nations have been taking advantage of the United States," Donald Trump wrote, calling for an end to trade deficits and a boost to the U.S. economy.

Trump's political views have changed over the years, but his economic worldview has been consistent.

I think a lot of people are tired of watching other countries ripping off the United States.

Today, Trump's chief target is China.

But the message is the same.

Unfair trade practices help foreign countries and hurt American workers.

His proposed solution on the campaign trail is also consistent.

When you put on tariffs, tariffs are the greatest thing ever invented.

To me, the most beautiful word in the dictionary is tariff.

I think it's more beautiful than love, the word tariff.

Trump says tariffs will reshape America's trade relationship, revive manufacturing, and create jobs.

It's an argument that resonated with many working-class voters who feel left behind by globalization.

Tariffs are essentially a tax on imports, which makes foreign goods pricier and promotes domestic products.

During his first term, Trump issued targeted tariffs on raw metals, solar panels, and $250 billion in Chinese products.

This time around, he's proposing 60 percent or more on all Chinese goods and up to 20 percent on nearly all foreign imports.

Trump isn't wrong.

Tariffs can boost manufacturing.

His 2018 tariffs on steel raise domestic production.

But they can also hurt it.

Those same tariffs raise costs for factories that use steel to make other products, reducing output.

Tariffs have a cost, and someone, somewhere, will pay for them.

Higher import prices hit consumers, company profits, and suppliers.

They're also regressive because they impact poorer Americans much more than they impact wealthy ones.

Economists warn that Trump's new tariffs could raise household expenses by up to $7,600 annually.

Retaliatory tariffs from China, Canada, and others during Trump's first term reduced exports like pork and soybeans, hurting U.S. farmers and leading to tax-funded subsidies.

But supporters point out that the Biden administration kept or even expanded those Trump tariffs, and prices didn't dramatically spike during Trump's first term.

But Trump 2.0 tariffs may well be bigger and more sweeping, targeting everything from clothes to computers to carrots to cat toys, the latter of which I don't care about at all.

Some think Trump might use the threat of tariffs as a bargaining chip, not an endgame.

But Trump has a strong mandate from voters, and he is likely to follow through on his biggest policy proposal.

So here's the gamble.

Americans hate inflation.

Protecting U.S. workers sounds great in theory, but rising prices could sour voters fast.

If inflation surges, Trump risks backlash in 2026.

But for now, he's betting that voters will endure short-term pain for long-term gain.

Will Trump's protection is fed pay off?

Joining me to help explain why tariffs are misunderstood and what economists get wrong is Oren Cass, founder and chief economist at the conservative think tank American Compass.

Oren Cass, welcome to GZERO.

Thank you for having me.

I want to talk today with you about what we should expect from a Trump administration on economic policies.

And, you know, this is an area that there's a lot of misinformation.

There's also a lot of polarization.

I want you to tell me first, just lay out a little bit where you think a Trump administration will be most different from what we've had under Biden-Harris for the last four years.

Well, I think what you're going to see in the Trump administration is a much more aggressive focus on trying to tighten the labor market, trying to remove illegal immigrants who are working jobs they are not legally authorized to be working, trying to confront China, potentially remove their China's normal trade status, raise tariffs, all in service to trying to make it much more attractive to be investing in building things in America, making it more necessary to invest in American workers.

And so I think there's a whole host of ways and we can dive into any of them that that will be front and center.

And that will just be very different from a Biden-Harris administration that certainly talked about some of those things, but seemed to have most of its energy focused on actually not enforcing the border, really focused on climate change, really focused on student debt relief, just a very different set of interests.

Bigger gap between Trump and Biden on immigration than on tariffs, certainly.

But let's, I'll get into both of them.

Start with immigration.

The numbers, of course, we see, and there are different people that say different things, but let's say 15 some million odd illegal immigrants living in the United States right now.

Trump saying that maybe you need to use the military to help find them, round them up.

The ability, the resources would be really challenging to get it done.

But if you had a meaningful bite at that, let's say you were able to get, you know, a million of them out of the United States every year.

What are the economic implications of doing that?

Well, I think the economic implications are that you would see a much tighter labor market, meaning that you would see a lot of employers who might have been planning to rely on illegal labor, which tends to be especially low paid, which tends to be most easily exploitable.

And instead, you'll find a situation where they actually need to find a way to run their businesses with American workers.

And that's going to mean a couple of things.

One thing it's going to mean is they're probably going to have to offer better conditions, better wages.

But then at least as importantly, the follow on effect of that is to make that work, you're also going to have to invest in better processes, more technology, more training, things that actually make workers more productive.

And, you know, in my mind, that's that's sort of the secret sauce of capitalism.

We're only going to spread prosperity broadly if the way to make a lot of money in this country as a business is also tied up with creating good jobs for workers.

And I think unfortunately, having an open southern border, welcoming in or doing nothing to stop, you know, millions of migrant workers from coming in is you really lose that connection and you lose the pressure to actually make things work for American workers.

Do you believe when we look at the numbers of illegal immigrants in the US right now, do you think that really that that is a problem that 100 percent of that needs to be addressed?

Because, I mean, you hear the implications that that would have not just for labor market, but also for prices, also for infrastructure required and the rest.

It seems like an unmanageable challenge.

How far do you think the Americans need to go?

How far should they go?

The question, if you're actually serious about the problem, is where do you start?

And I think especially given the approach that the Biden-Harris administration took of adding so many new migrants over the past four years, certainly folks who have not put down roots, a lot of folks who are here on on temporary statuses that that required abuse of things like our parole system.

What you start with is things like that.

So, you know, there are more than a million people in this country who are already under deportation orders.

We should, in fact, follow through on those.

And then the last thing I would emphasize is and then you actually get serious about enforcing this against employers.

You know, the the the immigrant is not the only person breaking the law here.

The employer who chooses to employ someone who's not here legally is also breaking the law.

And so we need to have you know, we have a system called E-Verify that makes it much easier to check whether people are in the country legally.

We just don't actually require employers to use it.

And so mandating the use of that system would then again further push things in the right direction toward ensuring that employers are hiring legal Americans and that we don't have that magnet making it seem like you can get across the border.

There's there's also going to be a job for you here.

Do you think that the problem is really the first few groups that you're talking about or is the problem like broadly speaking, we need to address all forms of illegal immigration?

How broadly do you think the problem exists?

And I also I was very pleased to see you talk about the corporate side of this because it gets almost never it gets almost no attention from the leaders.

And yet you would think would be the place you would start because it's the easiest thing to actually enforce the corporations that are based in the United States that are major taxpayers.

They have accounting books that you can actually go through.

Like, you know, it's hard to police a long border.

It's very easy to ensure that big corporations are actually employing the right folks.

And yet no one's had any interest in doing that.

Do you have reason to believe that will be prioritized?

There's no question there's a corporate lobby that that is pushing on all sides and that there are some in the Republican Party who would like to just go along with the cheap illegal labor game as long as possible.

But by and large, I think there's a quite strong commitment among conservatives at this point to taking this seriously as an economic problem and recognizing that, you know, enforcing the law is is a value in and of itself.

We are a nation of laws and we do need to enforce our laws.

But a huge piece of this is the economic dynamic.

And if we want to follow through on our commitment to actually create good jobs for American workers and to say to businesses that this is the expectation, the point of our market economy isn't to create the highest profits as possible for corporations.

The point of our market economy is to create prosperity for working families.

And so I think you see increasing seriousness on that.

Certainly, I hope this is a place they focus and certainly it would help in advancing the goals that that the president has espoused.

So let's move to tariffs.

And we saw tariffs under the first Trump administration, which were in the case of China, fully maintained under the Biden administration.

Now we're talking about significant larger numbers.

You're an economist.

Do they strike you as the right level of additional tariffs?

And if so, why, if not, why not?

I think they are at the right level, certainly the right magnitude.

You know, China has a very explicit industrial strategy to try to hollow out the United States industrial base and to seize leadership in a wide range of vital sectors and essentially make the U.S. and the rest of the world dependent on China and whether that's for pharmaceutical products, for communications equipment, for critical minerals, and to reverse that, to actually send a signal, look, we are OK buying things from all around the world, but frankly, we are not OK continuing to buy them like this from China.

What you want to have is a very high tariff on China that makes it clear that a product from essentially anywhere else would be preferable.

One specific policy that I think we'll be hearing a lot about is revoking what's called permanent normal trade relations.

If you think back to the year 2000, when there was this big fight of, you know, should we let China into the WTO?

Ultimately, what was decided was to give China what's called most favored nation status, to say we're going to treat China the same way we treat all of our favorite trading partners.

That was a catastrophic mistake and really is at the root of so much of what has gone wrong in the global economy in the last couple of decades, given the way that it flouts international rules and any concept of a free market or free and fair trade.

And so that's, I think, what you're seeing on the China side.

I think that is a place where we need to continue ratcheting up the pressure.

And, you know, that doesn't necessarily mean the production comes back to the United States in all cases, but it means we would much rather have it happening in an allied country anywhere in the world than continuing to let China dominate it.

>> The cost to consumers is worth paying to ensure that the Chinese do not have the ability to use leverage over the American economy.

>> When you're talking about moving production out of China and to other countries, you actually have a lot of other countries that also have a lot of capacity to make things at competitive prices.

And you still have a very large, robust, competitive market, not only in the U.S., but among its allies as well, to be both doing the production and consumption.

So I do think absolutely there are costs involved, partly just as a result of disruption and the need to move supply chains.

There are undoubtedly some things that China is making especially cheaply, and at least in the short run won't be made as cheaply somewhere else.

But at the end of the day, I think what we have to do is step back and look at that tradeoff we chose to make 25 years ago.

The pitch that was made was, look, let's integrate with China.

We will all enjoy cheaper stuff, and that's a great deal.

And I think most Americans look at this and say, actually, this has been a horrible deal.

We made the wrong tradeoff, and we are worse off as a result.

And if that's the case, then choosing the other side of the tradeoff now is the one that's going to lead to the better result.

I don't want to get into a debate over exactly how much the cost is going to be in the disruption effects and the moving away from, clearly in many cases, much cheaper goods.

We saw with the 25 percent tariffs from the Trump administration first time around that, I mean, there were a whole bunch of goods that Americans had to pay more for.

But specifically, we are now coming out of a much higher period of inflation, a particularly unusual period of inflation because of the pandemic.

And that was just toxic for so many Americans.

So I'm wondering if you think the timing here is going to be problematic of putting in significant tariffs, particularly against China, given the scale of that trade deficit the Americans are running right now and just how many goods the U.S., the average American buys inexpensively from China, given where inflation has just been.

The reality is that, as you said, we're coming out of a really unprecedented for 40-year inflationary spike where you're seeing 10 percent change in the price level in a single year.

If you think about the kinds of tariffs that we're talking about here, even let's take the 10 percent global tariff, what you're talking about is a potential one to two percent change in the price level that takes time to phase in.

And that then you also get to see the response of other sources coming online, which of course is the whole point.

In addition to which, just to emphasize one other thing, when you raise money through a tariff, you don't set that money on fire.

It's also tax revenue.

We have a $2 trillion deficit.

If I told you that there was some other tax that was going to go up to help reduce the deficit, no one would say, "Oh, that's inflationary."

In fact, they would probably say it would help bring inflation in.

And so I think it's really important, again, not to fall into this sort of rhetorical point of, "Well, we don't like tariffs, so let's try to link them to inflation in people's minds," and recognize the policies we're talking about here and their effects are not going to bear any resemblance to what we just went through.

And the other component of tariffs are with countries that the United States is actually quite aligned with in terms of political system, economic system.

In an environment where the U.S. is aligned with these countries, that we have challenges with them, they have challenges with us, but you're trying to get much more alignment vis-a-vis China, why would you be trying to pick a fight with allies at the same time?

Because certainly many of those countries are very concerned about the potential of additional tariffs coming from the U.S., especially at a time that the American economy is outproducing them.

Is this like, "Well, we can get away with it because we're the most powerful, so we should do it," or is there another argument at play here?

The U.S. role in the economic system globally, really since the end of World War II, has essentially been an extraordinarily benevolent one.

I mean, going all the way back to the support of Europe and Japan, to the support in the post-Cold War period, the U.S. has been willing to accept the role essentially of supporting and in many ways financing all of that development in ways that have not actually been good for U.S. industry.

One of the most fascinating statistics in my mind about our economy in recent years is that productivity in our manufacturing sector is actually declining.

Not that growth is slowing.

For all the talk of automation and robotics and technology, we literally need more labor in American factories to produce the same amount that we would have produced a decade ago.

What we have seen in recent decades is a pattern where you have a very warped economy in which the rising productivity, the rising profits, the rising prosperity is concentrated in narrower segments, in narrower geographies, and has not served, I would say, broad swaths, most of the country very well at all.

What's happened in our manufacturing sector, what's happened with global trade, is a huge part of that.

That's where, therefore, you get into this question of the global tariff.

If you actually believe that making things in America matters, which economists historically have not believed, they've dismissed, much to our regret.

If you believe that matters, then we are going to have to find a way to put a thumb on the scale for getting more of that investment back here.

I think that's what a tariff can help do.

Before we close, talk a little bit about the US system.

So much of why Trump was voted for is because a lot of Americans feel like the US system, their political leaders aren't working for them.

Where do you think that is most clear in the domestic running and functioning of the US economy?

Well, I don't know if you would count immigration as domestic in that respect.

Another piece that I think is very important, and doesn't get as much attention in political fights, but something I'm hopeful we'll see a lot of progress on in the coming years, is the way that we've approached our education system.

What, over the last couple of generations, we have built, what I think is fair to call a college for all system.

We oriented our high schools almost entirely toward college prep.

We vastly defunded what you would call more vocational training, preparation for the trades.

Then we took hundreds of billions of dollars a year and jammed it into subsidizing college and telling everybody, "This is what you should go do.

If you don't go do it, we have nothing for you."

The reality is that that just doesn't work for the vast majority of people.

Along with that, I think you have to invest a lot more in building up alternative pathways.

Yes, for people for whom college is the right thing, obviously we want to have colleges.

I think we should support people in pursuing that.

Not just with cheers, but with financial support as well.

It can't be more than the support, both moral support and financial support, that we provide to people in other pathways.

If anything, it's all those other pathways that need the greater support.

I think if we could get that right over this next generation, that will do more than anything else to start to address some of these deeper problems that we're struggling with.

Oren Cass, thanks so much for joining us today.

This was great.

Thank you.

Now we move to our thriving felt-based economy where world leaders have more than a few strings attached.

I've got your Puppet Regime.

You listen to me, you radical red terror.

You've been ripping off the United States for so long with your low-cost workers, surveillance of our children, and your duty-free shipping.

And so I, as soon as I'm president, will impose on you a tariff of 100 percent.

Oh, Donald, I assume this will not go into effect before I send you those six flat-screen televisions you've ordered for the Oval Office and the, what's that?

Oh, yes, right, the 10,000 crates of MAGA 47 hats for the inauguration.

All right, look, let me call you back in February.

How's that sound?

Puppet Regime That's our show this week.

Come back next week.

And if you like what you see, or even if you don't, but you hate inflation and want to gab about it, you can check us out at gzeromedia.com.

(Music) Funding for GZERO World is provided by our lead sponsor, Prologis.

Every day, all over the world, Prologis helps businesses of all sizes lower their carbon footprint and scale their supply chains.

With a portfolio of logistics and real estate and an end-to-end solutions platform addressing the critical initiatives of global logistics today.

Learn more at Prologis.com.

And by Cox Enterprises is proud to support GZERO.

Cox is working to create an impact in areas like sustainable agriculture, clean tech, health care, and more.

Cox, a family of businesses.

Additional funding provided by Jerry and Mary Joy Stead, Carnegie Corporation of New York, and