Buckle Up for Tariffs: Glory Days or Chasing a Mirage

Arnold: 00:00:00

Tariffs, subsidies and free markets. How is that going to impact you in the next several years based upon what the current administration is doing?

You're going to find out more about that on St. Louis in Tune. Welcome to St.

Louis in Tune and thank you for joining us for fresh perspectives on issues and events with experts, community, community leaders and everyday people who make a difference in shaping our society and world. I'm Arnold Stricker along with co host Mark Langston. Mark, it's good to see you. Haven't seen you for a while, sir.

Mark: 00:00:41

Yeah, it's nice to be back in the studio and yeah, it's just I've been dodging potholes for a long time. Seems that first it was ice on the roads, now it's, now it's potholes. What the heck?

Arnold: 00:00:54

Folks, we're glad that you've joined us today.

I want to thank our sponsor, better rate mortgage, betterratemortgage.com and you can listen to previous shows@stlintune.com please help us to continue to grow by leaving a review on our website, st.lintune.com, apple Podcasts or your preferred podcast platform. Our return to civility today is if you are in a large building that has elevators, this you can probably relate.

Hold the elevator door for those who are entering or exiting. Elevator doors don't have common sense or courtesy, but we do. Now some have that laser, Right. So you can stick your hand in there.

Mark: 00:01:31

You got to be in the right spot though, for the laser.

Arnold: 00:01:33

That's correct.

Mark: 00:01:33

If you're just using your hand, it's not. Sometimes you miss the laser.

Arnold: 00:01:37

Yeah. Or if people are gathering or you see them down at the end of the hall and you want me to hold the elevator.

Mark: 00:01:43

Oh, don't go there. Okay. I can't tell you how many times I've been running for the elevator and they just kind of look at you. Sorry.

Arnold: 00:01:52

Sometimes maybe you want to catch the next elevator.

Mark: 00:01:54

I know, right?

Arnold: 00:01:55

So hold that elevator for those who are entering or exiting.

Mark: 00:01:59

All right, that would. Hold on. We got the other one. Thank you. That's great.

Arnold: 00:02:06

We've heard a lot about tariffs recently in the news and I wanted to get some information out to listeners about tariffs and how they impact can impact us. Maybe in a positive, maybe in a negative way.

John Horn, who is currently professor of practice in economics in the Olin Business School at Washington University in St. Louis, is our guest today. He teaches MBA students microeconomics, macroeconomics and industry analysis.

He's an award winning teacher having been awarded the Reed Teaching prize by the MBA and professional MBA students at Olin and received a top 15% teaching award when he was an adjunct professor at the Robert H. Smith School of Business at the University of Maryland.

ith clients of Fortune Global: 1000

He's also a key contributor to developing new approaches to business unit and corporate strategy more broadly, topics such as competitive dynamics, research, reallocation, and macroeconomic impacts on firms.

He also assisted US Financial institutions with fair lending compliance as a consultant with Erst and Young and spent five years with the Brattle Group.

He's published with the McKinsey Quarterly, the Harvest Business Review, and has a PhD in economics from Harvard University and a bachelor's from the University of Michigan, and he's the author of Inside the Competitor's Mindset, which is published by MIT Press. John, thank you for joining us on St. Louis and Tune can I say holy.

John: 00:03:42

Thanks for having me.

Mark: 00:03:43

Holy smokes.

John: 00:03:44

Yeah.

Arnold: 00:03:44

And I wanted to read that like that because John has a large background and a very solid understanding of tariffs.

What we're going to talk about today and their impact on us positively and negatively, and that's the purpose of the conversation, is to really, I guess open the door on these things and let people know should they be scared of the boogeyman that's awaiting from the tariffs or should they embrace what's coming from tariffs. John, explain tariffs to us first of all, and the various kinds that countries may utilize.

John: 00:04:17

Yeah. So thanks for having me on the show. I appreciate it and for that kind introduction. Tariffs are just a fancy word for attacks.

They're attacks which a country imposes on anything that is imported into that country in most cases.

So say if France was to send something to the United States and the United States imposed a tariff, essentially it's a tax on top of the cost that the importer pays for that good.

From France, that tax tariff gets paid to the US Government just like other taxes with income tax, sales tax, et cetera, there are sometimes export taxes or export tariffs where if you say the United States wants to prevent a company in the US from exporting to France or to Spain, they might tax exports. But almost always tariffs are imposed on goods which are brought goods or services brought into the country that is imposing the tariff.

Mark: 00:05:22

It's an import the Importer I guess whoever's doing the importing like Walmart, I just grab that they're the ones that are paying that tax with that logistically.

John: 00:05:33

Yes, yes. And then the tax is imposed at the border.

So whoever is the first organization or individual etc who actually receives that good across the border customs border patrol says before we let you have that bottle of wine, that T shirt that whatever you've got to pay us a tax in order for us to release that those goods to you and the sort of simplest version of it, I'm just.

Mark: 00:06:00

Spitballing here, wouldn't you say that in order that is accepting those goods if it was me I'm going to pass that on to whoever's selling that import to so if I'm selling it.

John: 00:06:15

Yeah, go ahead. So this is where it gets tricky when you think about this from the perspective of who actually pays the tax.

So let's take just for example $10t shir and the government 25% tariff. That's the wireless on April 2nd. That means that when that the $10.50 tax the importer has a couple of choices.

So instead of selling it now I have to pay $10 250. That's one choice. Or the importer goes to the manufacturer.

Look, I used to buy this from you essentially I can still charge my customers 13 somewhere in between the the money money has to flow so that US Government the third profitability is the importer in France.

No, no, we're still going to charge you $10 in which case but some one of those three groups have to pay and what economics is the most obvious consumer down the road the consumer says look, there are a lot of shirts I can buy here in the US for $10.50 more.

There's another and so who actually ends up paying that and if you don't have to engage in the next transaction then you're not going to bury that tax.

Arnold: 00:09:13

And that could be a combination of the three. Correct. They could all eat a little of it.

John: 00:09:18

Exactly.

Mark: 00:09:19

Great, great point.

Arnold: 00:09:20

Now what are the macro benefits and draws of tariffs?

So you talked about with a great example of with a T shirt or the shirt France coming in and whether the manufacturer of it or the order or the recipient. How does this deal with the larger macroeconomics economics of our country and what does it do to other countries?

John: 00:09:43

So that's what we do know from taxes more broadly. Taxes create less of whatever economic activity is being taxed.

One of the reasons why I don't want you to take as much I attack airplane fight, whatever it is, I don't want activity, I tax it. Because we know general taxes reduce economic activity and economics demands that happens for the most part.

For the most part we're going to have less of something. The question of what that means and we'll start with, start with that perspective.

The question then is instead if that's still one of our shirts, are there shirt manufacturers in the United States and are there ship manufacturers in the United States Producers similar cost? Okay, we're just going to shift from French shirts in terms of economic output.

But the challenge with the current global situation, there are a lot of things they buy for in the rest of the world because those services are produced in the rest of the world, not in the United States. Some of them it, it takes 18 months to 2 years to build up the capability.

For some it could take years and years to build up the ability to produce those products at a cost effective manner.

And that's the question I think, I think is everyone trying to figure out is if we put 20, 20% tariffs across the board, there's going to be in rather major disruption because all at once and are there going to be pauses or delays to compensate for that or 25% across the board we're just going to have to deal with production.

Arnold: 00:12:22

Here in the US As I was reading historically, historically our country has, especially during the buildup of the country and the industrial revolution to get our manufacturing going.

And once we got it going, there was questions whether or not I get exactly sudden get widget come together and have the manufacturing plant and also have the personnel to manufacture the widget can't happen all of a sudden overnight. So in the history of using Terraform in the United States, how has it worked for us? How hasn't it worked for us?

John: 00:13:00

I think the one rationale that probably makes the most sense from an economic perspective is if you have an industry that is very competitive because it's not new and you want to protect that industry, can you compete on the global market?

Then that might be a situation where you say for the first five years to allow you to build up your expertise, we'll lower the tariffs and then 10 years you'll be a better world market that I think most economists say. Yeah, yeah. Because you don't do that, you're never going to get a learning curve for the five years you'll never start the challenge with.

A lot of times they're never removed after forever. And that caused other countries to get frustrated and angry and their own retaliatory make things illegal again.

And that's often what leads to tariffs going back and forth. If it gets really out of hand, it becomes a trade war where almost all trade gets shut down large portion.

This is one of the drivers massive countries global trade is basically shut down in the 20s. The tariffs that are put in place to allow the country to grow you reduce output.

That's okay in the developing your industry because you're reducing the output from the foreign countries to replace it with yours. Do we have enough capacity in the United States to produce all the solar panels, electronics and clothing?

Especially if we get to the point where other countries start imposing. So we can't. We don't need this.

Arnold: 00:15:32

Arnold Mark Langson of St. Louis in Tune. We are talking to John. He's professor of practice practice economics at the Oakland Business School at Washington University in St.

Louis. In keeping the tariff that's almost like a subsidy. Would you compare it that way?

It's just not an outright Is it a subsidy or am I am I looking at that incorrect correctly?

John: 00:15:55

If not no, it's not incorrect taxes. So I could. If we're thinking about producers, I can mark a dollar every product which makes his cost go up by a dollar.

Or I could say mark and you leave your cost the same every time. So would that be how I margin effects. But for the most part I can either foreign producers.

It should have about the same effect in terms of what happens to prices ultimately.

Arnold: 00:16:42

Now when you were talking about the shirt shirt thing, what rolled into my mind was when you start getting into this little mini trade war, this really really raises the ability of black markets to come onto the scene and have their own little subsidization going on and their own little free market going on. Does that happen frequently or what's the history of that kind of impact?

John: 00:17:11

It can. Especially if the tariffs are very tariffs that's talking about now would be across the board every country 25%.

But think about we know this certain types of wine, for example. You can see some of that happening.

I think the challenge now is hard for black market opponents and all the other stuff being discussed on a larger scale. But especially if it's across the board.

Arnold: 00:18:12

And you also mentioned something that was that was that triggered triggered my mind that we are in such a global economy now where many of the things that you know here in our studio I'm talking onto this microphone. I have headphones on. This may be manufactured in the United States microphone but some of the phones may be manufactured all around the world.

And then they're assembled here. So how does all of this discussion really impact the global economy?

John: 00:18:44

Yeah, the United States there elsewhere.

One, one example which has been talked about a lot, a lot is the automotive sector that, that most, most, most cars that are produced in the United States have either parts or assembly or sub assembly which is done in addition to the United States. And the challenge with the tariffs are not that it's, it doesn't at least on the surface like what they're proposing is just 25 and then etc. Etc.

Every time that crosses the border there's another 25 pair which gets put on top. So it's not just that imposed.

And the challenge how long earlier, how long is this really going to affect economy when you're thinking about whether to build a production plant. 25 year decision. You're not going to own a factory. It bore five years now the tariffs go away like you're stuck.

And so not sure how quickly firms are going to start producing in the US it's best for you know, we keep going back and forth. We stay here. I think that's a challenge that a lot of companies are facing even for service type of operations.

It's hard to move them around and just can't move a plant around and mass across just to take advantage of the condition.

Arnold: 00:21:16

And that has. Go ahead Martin.

Mark: 00:21:18

It just doesn't seem right. This does not not. I would hope the administration was thinking about this before they even approach this subject. But, but exactly what you're saying.

The administration should be out in four years and it could be a whole different ball game. And why am I gonna as a producer invest just exactly like John was saying. Invest in. It's not an investment 25 years.

Ronald Reagan: 00:21:43

Easily, easily.

Mark: 00:21:44

And, and once you're committed I don't know how you uncommit to that, to that. And I would love to see more important things produced in the United States.

But it seems to me that our society has gone away from like an industrial society and more into a technological society. That's what it seems like to me that we've been moving more that way instead of trying to.

And now we're trying to maybe go back to more industrial producing things like this. So I'm confused.

John: 00:22:10

Yeah, I think that's the challenge that, that people are trying to wrestle with that we have become as opposed to the thought was originally fine we can design the iPhone in California. Okay. But the what, what.

What people start to realize also is that if I don't have the design where the manufacturer is it's hard for me to figure out a better way to design its products because I can't tinker with the manufacturer in terms of designing. They're also trying to manufacture products themselves and realize, oh, there's a better way we can produce a product. They don't tell Apple that.

They just produce it themselves.

Yet there are concerns and situations where China is taking the designs from iPhone and building all the stuff themselves, which is that if I'm not actually wearing the manufacturer it makes it harder for me to design which then means the whole service part of the industry.

But on the other hand, if we decide to start manufacturing in the United States, the thought is always oh, we'll have 10, 10,000 workers in the factory in China US factory no, take the 10,000 workers from China, move that factory over here and we might. A lot of what makes production more cost effective is to use margin workers who can use automated equipment as opposed to manual equipment.

And that means sure, we can have the manufacturer come back, but that doesn't mean the job. And that's I think what a lot of people are administration is saying we'll produce here, but it's not the manufacturing.

Mark: 00:24:33

I have a little exit ramp here.

I think that Hemingway having this trade with other countries I think it helps spread capitalism, freedom, freedom growth for these other countries that are not as for as we are in the United States. We certainly have our struggles but I think it help some of these economies, some of the struggling too as I understand.

But I think this helps this helps these people. I think the terror is going to hurt hurt us as the United States and just trying to embrace the world get better and anyway anyway that's.

John: 00:25:13

That's. If you look at the last 20, 30 years, the number of people around the world the most I think has ever shrunk in the history of humankind.

The growth of globalization spreading of people out of her the challenge is as you start to get those people countries economics just that's what happens does it also creates challenges down the road. They're facing the problem now for them to keep being manufacturing.

So they're having a hard time reading the job feature for their population at the same time their population faster and a larger number in the United States and they're going to have a smaller portion of workers than the United States.

And so they're facing the same problems that we're facing in terms of how do we create population for the people coming in the very simplest model of trade. Why does anyone trade like why do I do mow my own.

Arnold: 00:26:53

Lawn.

John: 00:26:54

Why don't they get out there? They could do it. Why don't. Why don't they.

And struggling around they come to the realization the only reason any individuals engage in some kind of creator and it's the same countries but makes different individuals within the country better off.

And we also know that from the basics, which is some workers and some owners in the United States are much better off because of global trade and there are workers and some owners in the US and in theory the five and distributed people that got worse off and everyone's better off or at least no one worse off.

Economics tell you how much towns or regions which lost their manufacturing facility how are we going to invest in the next wave technology, et cetera. There's an active element from the winners and both parties essentially.

And I think that's why you see a lot of the anger from the areas of the global trade being so vocal. You promised all these wonderful things it would poverty, but what about us?

Arnold: 00:28:52

That's a good question and we're going to talk to John some more after our break. Arnold Stripper with Mark likes St. Louis and II don't go away because we've got a whole lot more about tariffs.

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We are talking with John Warren, professor of Practice Economic the Olin Business School at Washington University in St. Louis. John before we get back into our conversation about tariffs, I want to give you an outline of what my brain is thinking.

Global trade versus Fair trade. What are, what are, what are they? The Smooth act and some alternatives to using tariffs and the effectiveness.

But I guess my first question I Know you know, you like like game theory. And I know you know, you, you've done some war games. People think I guess, I guess war games are kind of shoot them up. Yeah, yeah.

That kind of video or something like that. Like that. But so two questions. Number one. Number one, do you do the New York Times game every day?

John: 00:30:53

Every day I do with my thoughts on yeah. Routine with him. Okay.

Arnold: 00:31:00

And secondly, explain war games because when I when I mentioned the front front of the conversation with you, I'm sure, I'm sure we're like is this Call to Duty? What is this?

John: 00:31:12

Yeah, yeah. Inspired by war games the military started 200 some years ago and the concept of war game military.

I'm going to take my army, take half of them fighting behave. You behave how to battle against them without.

We set up different types of rain, different types of situation challenge challenge how we should use our troops working more video games about these movies for business.

But instead of in a military war I have helicopters, I have a business instead of having enemy regulators instead of having warehouses which city which types of markets, et cetera, et cetera. So business working essentially it's a simulation where you set up a construct to simulate what the real world is going to look like for that.

And then you have someone from your organization role playing. What would you do with pricing, product and choice of which customers to go after. And we'll make our choices and we'll see how that plays out.

Like in a military war game, if your army loses, you don't do that. Helps you understand that choice to make. We should have a different business choice before we actually do that in the real world.

That's what business.

I was actually just reading an article this morning a week or two ago that are planned to be put in place tomorrow to see how countries respond macroeconomic economic outcomes, et cetera. It is is even being used by some groups to try to understand in terms of whether it's a trade war, whether we get a better outcome than that.

Arnold: 00:34:01

And that would provide some people with the ability to more prepare and be ready for something that they see is inevitable or maybe, maybe no I don't think we don't need to do that. That's a very varying strategies.

John: 00:34:16

Yeah.

The challenge with this situation for over 20 years biggest challenge with running a war companies is the most clients believe that they're mentioned earlier about a lot of my competitors or a lot of my clients would say their competitors the wrong decision. And I was always able to my clients explain why rational it's good for them to help your competitor.

And the real key which makes is having other players roleplay not only the other side place, but the objective the other side is trying to achieve. So one thing we're not sure yet is I don't think anyone is exactly sure of is what is the objective. Sometimes we want to have us.

Sometimes the objective seems to be, no, we want to just rebound. Sometimes feel like we want to balance our deficit, our debt by having these tariffs instead of income taxes.

And because it's not exactly clear, some people are arguing other countries will deals with us. That could be an objective. But that's the same objective until everything.

And I think even reading the debrief, it wasn't clear to me that they were playing the game under what I call old rules of government as opposed to the Trump rule. We're not exactly sure what the objective is. A lot of economists have pointed out that he wants. But he wants to have more exports.

And economically those two things don't work. If you have a really strong dollar more expensive, you actually import more.

Arnold: 00:36:45

And if you want to have a.

John: 00:36:46

Lot more exports, you got to have a weaker dollar. But that means you've got other challenges to face. And so, so it's. To me, the real uncertainty here is not will tariffs. It will happen.

I think the real thing. I'm still trying to. What's the ultimate objective? We knew that.

I think that to me is most risky because if you don't understand the other side's objective, it's hard to know how to play the game against them.

Mark: 00:37:34

Amen. Amen. I couldn't agree more. I think the uncertainty is. Is. And not having a clear path as to what's the objective here. We're going. On the other hand.

I'm just going to say this. On the other hand, if you're gonna, if you're. If you're gonna be negotiating like you said, maybe I want to negotiate those shirts to be cheaper. And.

But. But it's. It's.

John: 00:37:57

Yeah. I don't know what you're gonna do. Just. I just. And yeah.

Mark: 00:38:09

Yeah. There's no.

Arnold: 00:38:10

Yeah.

Mark: 00:38:10

I don't want to say there's no leadership, but there's no clear path, no real explanation. I don't see the target. I just. I don't.

John: 00:38:17

Yeah, yeah.

Mark: 00:38:17

And I understand change is tough. Change is tough. But come on. Come on.

John: 00:38:22

Yeah. Yeah. So one of the interesting things about the war game, it started really bad. They had a scoreboard how things are going. Right. Yellow.

And it was like.

Arnold: 00:38:42

By the end.

John: 00:38:42

Of the day and what wasn't the participants knew the game was ending at the end of the day there's no end to the game.

I don't know if the game is over games the other thing was for now the players but if there's a lot of blowback because of these that there would be a faster and quicker ship towards China as the negotiation partners and so that's again we don't know how China's going to play this game standing up. We're not going to do this to you come over anyway.

Will countries go be the with yourself playing on the playground someone just stomps around saying I'm gonna do what I want to do. Yeah you might with it for a while eventually all the kids just walking somewhere else and when do we get to that point is not there and.

Arnold: 00:40:10

That'S really what you're describing to me sounds like free market. Yeah yeah we're here we're ready to do your stuff for you.

John: 00:40:18

Yeah and that's what I say economics has economics economic but there's a lot of political stuff affects how that play out too.

Arnold: 00:40:28

2 Two more things related topic topic the smooth Hartley back during the depression that some economists say it had on depression before that that is just a continuation. What are your thoughts on that?

John: 00:40:46

Yeah there's debate about what my thought is what was so bad about and then even more tariffs up until that point.

That's a point around how to accommodate how to incorporate thinking but when the tariffs are 50% you don't know is it going to keep going Is it something we're doing which I think is different about those and I think that's everything.

Will other countries look give it a week claim victory and then the terrorists or will they all work by and that could lead to even more territory again or is it to bring back manufacturing what so that's the part that I think I think is with the analysis.

Mark: 00:42:23

Before you get to your second question John John I don't want to put you in a corner here but tariffs really really beneficial at all. They just don't seem like they are to me. It seems like it stirs up more of the pot and bad feelings and higher prices and the laundry laundry list.

It just does not seem I think even even Ronald Reagan Reagan addressed this back in time where he said tariffs were not good. Your thoughts?

John: 00:42:53

Yeah. Yeah it's interesting to see that the free trade in the 80s and 90s a very protectionist kind of policy.

I think the only real good art I can think of for tariffs is for if you're developing a new technology, if you're developing a new industries that need time to learn how to do it.

Arnold: 00:43:29

Not just me.

John: 00:43:29

It's time to build up capacity but I need to figure out how to make these things. And therefore we need some time to learn so that we can compete on the global market.

I could see an argument for like I said earlier, decreasing tariffs over time, putting chairs in place to help in some ways.

Beyond that, I think for the United States it's hard to argue that we are at a point where we're developing industries that need support from the rest of the world.

So it's harder for me to see how that's a good reason that free trade is good because for the most part again trade value and you're not going to trade with someone unless it creates value. But there will be winners and losers and you you have to have to work in society or else it's not going to create outcomes.

A lot of what we see now people getting very angry saying that's not fair.

Arnold: 00:44:59

Yeah, yeah.

And my last question is tough one in that what are the all the alternatives to using it Seems like that's really not a fair question to ask from my vantage point because there are so many factors that intertwined with each other not only locally, regionally, nationally, internationally, with business, with agriculture, with all kinds of things that it's hard to say from my vantage point that there is an alternative other than a subsidy. And then that's basically in a different way.

John: 00:45:32

Right.

And there are things like anyway, in fact it's interesting it's not really the arbiter or the organization which tells play the role of like a referee, you come and show us the agreement.

But their approach to this is say you have lower it once you have a and if you have something other than tariffs like quotas or subsidies or regulations or whatever it is converted to a tariff because then we can find the first two first two roles.

And the whole objective of the World Trade Organization is to let's create a situation where we can have beneficial trade that creates value for both sides. But then we can get back to the question of who's going to compensate the losers inside each country from the winners.

And that gets a really challenging political problem. I don't think there's an easy to get the benefit of global trade without instead of having character something else.

And you either get the benefit of globalization and have a bigger pie and figure out how to figure out how to flip that pie or you Say you still can eat and you're going to have the same relative amount but you're not getting more to eat. And that's a trade off which I get. We're not talking about that. The bigger picture what do we want?

And then let's figure out how to get there which is fair as opposed to do something.

Arnold: 00:47:34

We really appreciate you giving us today out of your schedule folks. We've been talking to John. He's professor of practice and economics at the Oakland Business School School at Washington University.

Thank you again greatly appreciate your time today insights about this and the time. It's really a detailed, really class in in a concise manner on our national international economic. Thank you very much.

John: 00:48:01

Thank you. Thank you for having me on.

Mark: 00:48:03

Thank you John, very much.

Arnold: 00:48:05

Have a great week.

Mark: 00:48:06

Yeah, good luck.

John: 00:48:07

You too.

Mark: 00:48:08

Good luck with the tariffs. Wow, Mark.

Arnold: 00:48:11

We do have a radio address that President Reagan did on free and fair trade that he gave us time to listen to that.

Ronald Reagan: 00:48:20

Okay.

Next week it's an important visit because while I expect relations with our good friend which overall remain excellent recently afraid will also be agenda as perhaps heard last week we placed new duties on some Japanese products in response to Japan's inability to enforce their trade agreement with us on electronic devices.

Now, now imposing restrictions of any of any kind are steps that I take and in a moment I'll mention reasons for this that over the long run such trade barriers hurt every American worker and consumer. But the Japanese semiconductors were a special case.

We had clear evidence that Japanese companies were engaging in unfair trade practices that violated between Japan and the United States. We expect our trading to live their agreements as I've often said commit free trade is also commit to fair trade.

In imposing these terrorists we were just trying to deal with problem not begin a trade war.

So next week I'll be giving minister message we want to continue to work properly on trade trade problems and want very very much to lift these trade trade restrictions as soon as evidence permits.

We want to do this because we feel both Japan the United States have an obligation to promote prosperity economic development that only free trade can bring. Now that message free trade is one I conveyed to Canada just a few weeks ago and it was normally received there.

Indeed, throughout the world there's a growing realization that the way to prosperity for all nations is rejected legislation and promote fair competition. Now there are historical reasons for this.

For those of us who live through the Great Depression the memory suffering searing and today many economic historians argue that high tight legislation called small tariff greatly deepened and prevented Economic recovery.

You see first when someone says let's impose tariffs foreign imports it looks like they're doing the creative thing by protecting American products and jobs. And jobs. And sometimes for a short time it works. But only for a short time.

What eventually occurs is first homegrown industry starts relying on government protection for high tariffs. They stop and stop making the innovative managed management technological changes they need to succeed in world work markets.

And then while all this is going on, something even worse, worse occurs. High terrorists inevitably lead to increase and the trade fierce trade wars.

The result is more and more tariffs, higher trade areas and less competition. So soon because the prices made artificially high by tariffs that subsidize inefficiency and poor management, people stop buying.

Then the worst happens. Markets shrink, shrink, collapse. Businesses and industries shut down and millions of people lose their jobs.

The memory of this occurring back in the 33rd made me determine when I came to Washington to spare the American people the protection legislation destroys. Destroys prosperity. Now it hasn't always been easy.

There are those, those on justice who want to go for the political advantage who risk for the sake sake of a short term appeal to some special interest group who Forget more than 5 billion American jobs are direct directly tied foreign. Foreign business and addition are tied into imports. Well, I've never forgotten jobs.

And on trade issues we've done well in certain select cases like the Japanese semiconductors. We've taken steps to stop unfair practices against American products. But we still maintain basic long term commitment to free trade and.

And economic growth.

So with my meeting with Prime Minister and the Venice Economic Summit coming up it's terribly important not to restrict the President's options in such trade foreign governments. Unfortunately, fortunately some in the Congress are trying to do exactly that.

I'll keep you with you informed on dangerous legislation because it's just another form actionism and I may need your help to stop it. Remember, remember America, jobs and growth are at stake. Until next week. Thanks for listening and God bless you.

Arnold: 00:53:21

What an interesting conversation we've had today with John Horn and listening to President Reagan, Reagan with his address really makes you wonder. Wonder.

Mark: 00:53:32

Yeah, yeah yeah, yeah. Are we full circle here? Why, why are we visiting this again and never learned in the past? I want to say one. Say one thing about politics.

I've never, never known the Republican system more of a. But they don't, they don't like tax. They're always taking tax. I'm a bit confused but I'm hoping I'll find clarity.

Arnold: 00:53:54

I think one of the key points that I got from our conversation with John was the fact that there is no target, there is no what is plan here? Why are we doing this? There are multiple explanations, but there is no definitive. This is why we're doing that, right? Well, that's all for this hour.

We thank you.

Listen, if you've enjoyed this episode, listen to additional shows, Consider leaving a review on our website, Apple Podcast, Podcast or your preferred podcast platform. Your feedback helps us reach more listeners and continue to grow.

Thanks to Bob for our theme music, our sponsor Better Rate Mortgage, our guest John Horn from Washington University and co host Langston and we thank you for being a part of our community of Curious Minds. St. Louis and Tune is a production of Motif Media Group and the US Radio Network.

Remember to Remember to seek and keep learning, learning Walk worthy and let your light shine for St. Louis in tune, I'm Arnold Stricker.

Mark: 00:55:08

SA.