Kevin Hassett

in order to produce political stability at home for them.

And so our intuition early on as we're thinking about what's the next step given the President's intuition about how tariffs can be an important part of optimal revenue policy,

is that if we put tariffs on, say, China, then their supply is really inelastic.

And by definition, it is the most inelastic thing in the world because they've been just throwing stuff at us year after year after year.

that then they would have to cut their prices to continue to sell enough stuff so that they could create enough jobs, they had the political stability that they wanted.

And I think if you look at the record, that's more or less been the case since the tariffs came on.

For the countries that have big persistent trade deficits with us, that they've ended up having to cut their import prices.

by so much that there's very little visible effect on inflation here in the U.S.

President Trump, you know, will decide what the end game is.

He'll look at the deals that are being presented to us and decide if the deal is good enough.

You saw, for example...

that we just had a big reduction in the tariff for Switzerland after a very acrimonious phone call between the president and the Swiss that led to the very high tariff rate.

And so I think that there's a negotiation underway.

I think for many countries the negotiation is finished, and for some countries there's still work to be done.

No, I think that what we'll be converging to is something like a border-adjusted business cash flow tax because we, in the big, beautiful bill,

One of the things we did is we expanded the various export subsidies for multinationals.

And so if you have a, this is inside baseball math, but if you have an export subsidy plus a tariff plus a payroll tax, then you basically have a border-adjusted business cash flow tax.

And so I think that in equilibrium, what we're seeing is that we're getting lots of revenue.

It's a few hundred billion already this year, and it's not causing a lot of harm.

GDP now is at 4%.