Most mainstream economists agree that the massive tariffs Donald Trump is imposing on most of the United States’s trading partners are a bad idea — that they will make the economy weaker and inflation worse.
The mild-mannered thinker — who is chief economist at American Compass, an influential conservative think tank, and counts JD Vance, Marco Rubio, and Josh Hawley as allies — is waging a lonely battle to convince the intellectual class that Trump’s tariffs (with some tweaks) are worthwhile. He made the case to Jon Stewart on a recent episode of The Daily Show and argued with Democratic Rep. Ro Khanna (CA).
We asked Cass to come on Today, Explained to make the best argument he could for what is, in fact, a fundamental reordering of the global trading system.
“This is a policy at the end of the day that’s oriented toward helping some of the folks who have really been the losers in the economy and have been left behind for a long time,” Cass told Today, Explained co-host Noel King.
King and Cass talked about the tariff rollout, what a re-industrialized America might look like, and how much we would be willing to pay for American-made shoes. The interview below is edited for length and clarity. Make sure to listen to the whole thing.
You are somewhat unusual for an economist in that you support tariffs. You and I are speaking on Monday, just after 1 pm. As we speak, the S&P is down more than 10 percent in the last five days. Now, presumably, you knew that the announcement of tariffs would lead to a market shock. Did you know, though, that the shock would be this big?
Well, I think the shock is proportional to the size of the announcement. On what President Trump was calling “Liberation Day,” he went with an all-of-the-above approach. He did a global tariff, plus very large tariffs on China, plus across-the-board “reciprocal tariffs” on most other countries. The level of those reciprocal tariffs in particular was very high. That has pushed the shock to the high side.
The other factor that is very important in doing tariffs is that ideally they are phased in because people need time to adapt. If you want more domestic production, you need time to build more factories. So I think having everything snap in immediately rather than announce what they would be as they phased in has been a major factor in the shock.
So do you think the Trump administration rolled this out wrong?
I think phase-ins would be better. The reality is that there are absolutely going to be costs associated with tariffs. I think it is worth incurring those costs in the short run for the long-term benefits to the American economy. But you don’t want to bear costs unnecessarily.
Give me the argument for tariffs as you see it.
The fundamental argument for tariffs is that making things matters — that we care what we can make in the United States; we care whether we’re making anything in the United States.
And economists had rejected that idea. Economists said it didn’t matter what we make. We will have other jobs instead, and those will be better jobs. And that turned out just not to be true, particularly for people who are not in big coastal cities, people who might have less education, the kind of industry in raw materials, in manufacturing, in logistics and infrastructure. Likewise, having a strong industrial base is just really important to the kind of growth we get, and we forsook all of that.
Tariffs work from the opposite assumption — tariffs say, yes, making things does matter. We do have a preference at the margin for something made here versus something made overseas. And so, we’re going to make it relatively more attractive to produce things here and to buy things that are made here.
If the United States were to do things the way you want us to do them, what does the country look like? What do we have that we don’t have today?
Well, I think the best way to answer that question is to look at what has happened over the past couple of decades, especially since we let China into the World Trade Organization. Very shortly after that, manufacturing in our country just stopped growing. We’ve continued to buy and consume more stuff, but we stopped making more stuff. We simply relied on other countries to provide it for us.
The question is: What if we hadn’t done that? What if our manufacturing sector had continued to grow? What if we’d continued to invest in leading-edge technologies, staying at the frontier on semiconductors, being the leading producer of airplanes, having heavy industry that makes the most important materials the most efficiently?
We would still obviously be a modernizing economy. We would still be heavily reliant on services, but we would also have a growing manufacturing sector. Those places that saw all of their industry shut down and move away, that wouldn’t have happened. They would have more valuable, more productive factories than ever in those areas.
Critics of the tariffs will concede that there are very good arguments for reshoring production of things like semiconductors or electric vehicles, but across-the-board tariffs don’t aim to do that. The way the Trump administration talks, we want to bring everything back to the United States. And that’s why we’re putting tariffs on T-shirts and screws and picture frames and bicycles.
Once again, I’m just going to ask, do you think the Trump administration is doing it wrong?
On this front, we support the Trump administration’s approach. I think a global tariff is the right way to do things. It might sound nice to say, “We’re just going to focus on the sexy or politically popular products like the advanced semiconductor or the electric vehicle.” But there are two problems with that.
First, the things that are going to be most politically popular are not necessarily going to be the things that are actually most important. We’re already seeing this even just in the electric vehicle space, where it turns out if you don’t do the critical mineral mining and processing, you’re going to have an awfully hard time making the batteries and the electric vehicles and leading there. You really have to think all the way up and down the supply chain, and not just think, “Well, maybe we’ll bring in all the parts and just pick and choose certain things to do ourselves.”
The really nice thing about having a broad global tariff is maybe it sounds like a big intervention in the market — in one way it is, but in another way, it’s really the much more free market approach. It’s a very simple, broad policy that conveys a value that we see in domestic production. And then within that constraint, it really does leave it up to the market, figure out which things it makes sense to bring back, figure out there are still gonna be plenty of things that we trade with the rest of the world, and that’s good too. But ideally, we start to bring that trade back toward balance.
Do you think Americans are willing to pay more for stuff because it’s made here?
When we’re thinking about the trade issue, the question is a very fundamental trade-off between globalization and offshoring in pursuit of cheap, efficient production, as opposed to a reindustrialization that takes seriously the value of having a strong industrial economy domestically.
We made that trade-off in one direction after the year 2000. And insofar as that’s what we want, it worked, right? We did in fact de-industrialize and get a lot more cheap stuff. And it seems to me that people quite reasonably and rationally are not happy with having made that trade-off.
I think we’re offering them the converse of it, saying, “Would you prefer an economy and a nation that has a stronger industrial base, that provides more of these kinds of opportunities, that gets all the other benefits in terms of innovation and national security and so forth?” But it also means that maybe there are some things that are more expensive. Maybe the TVs aren’t quite as big as they otherwise would be.
Is that a trade-off that you wish we had made instead? I think most Americans absolutely say the answer to that question is yes.
Is there data suggesting that Americans, if given the opportunity to pay more for a TV that was made in Michigan, for example, would do so?
I think you’re asking the wrong question. The question is not, “Would you pay more for a TV that was made in Michigan?” The question is, “Would you rebalance the economy in a direction that doesn’t place quite such a high priority on cheap consumer goods and places a higher priority on some of these other factors that are incredibly important to people?”
It seems pretty clear to me that there is a widespread understanding today that people are frustrated with the direction that we’ve moved on this and that they do want to see something change. Now, at American Compass, we’ve tried to ask the question a couple of different ways, and what we find whenever we do this is people say, yes, this is a trade-off they want to make. They really like that message. And so to the extent that you can poll those things, I think that is what the answer indicates.
Vox reporter Eric Levitz argues that some in your camp hope and believe that the return of manufacturing to the US will lead to higher marriage rates, maybe even higher birth rates, and more social stability. Is that your hope as well, that this is not just an economic revolution but a social one?
I guess I’d start by saying I don’t think it’s nostalgic to wish that we had a society and an economy where the typical man without a college degree can find a good stable job that would allow him to support a family. And I don’t think it’s nostalgic to say that we would like more people to be getting married and building stable families and raising kids. I think those are quite noble and worthy aspirations that should be at the center of our politics.
Across so many dimensions, whether it’s other measures of social well-being, life expectancy, various problems with addiction and so forth, what we are seeing is a divergence that is very closely tied to people’s economic fortunes and economic opportunities. And if you have a model of economic growth where young men ages 25 to 29 are earning the same wages after adjusting for inflation that they earned 50 years ago, I think it’s fair to say we need to take things in another direction.
