Preston Brashers
Appearances
The President's Daily Brief
PDB Situation Report | April 19th, 2025: How Long Can The Tariff War Last & A Ground Campaign Coming In Yemen?
What a border adjustment does is it basically acts like what these other countries, most of these other countries, they have a value added tax. And with a value added tax, what they're doing is they're saying it's kind of like a sales tax, but it's done based off of the value of the product.
The President's Daily Brief
PDB Situation Report | April 19th, 2025: How Long Can The Tariff War Last & A Ground Campaign Coming In Yemen?
So when you have these intermediate goods that are crossing the border, you would have a tax that applies when it comes in. And then if it's coming back out, you have a credit that offsets that. So what you're going to end up with is something that works a little bit more like a flat consumption tax.
The President's Daily Brief
PDB Situation Report | April 19th, 2025: How Long Can The Tariff War Last & A Ground Campaign Coming In Yemen?
So I think it's a feasible outcome that what could result from this is you could have, instead of that 10% across the board tariff, you could convert that into a 10% border adjustment and use that within the budget reconciliation process to advance some of President Trump's pro-growth tax cuts that he wants to advance.
The President's Daily Brief
PDB Situation Report | April 19th, 2025: How Long Can The Tariff War Last & A Ground Campaign Coming In Yemen?
And the advantage of doing that is you'd actually get to use the budget scoring from that. in a way that you wouldn't be able to do with tariffs because you're locking those into permanent law. And so, that would be something that they could use to advance some of President Trump's other priorities.
The President's Daily Brief
PDB Situation Report | April 19th, 2025: How Long Can The Tariff War Last & A Ground Campaign Coming In Yemen?
So, that's the direction that we'd like to see this go to that we think would be a really, I think, productive way to do this.
The President's Daily Brief
PDB Situation Report | April 19th, 2025: How Long Can The Tariff War Last & A Ground Campaign Coming In Yemen?
What I would say is kind of mentioned before that there's been sort of mixed messaging on some of this, like, Is this about reciprocity? Is this about we want to address the issues with China and make sure that we're decoupling from China? Or is this about we really want to make sure that we're pushing everything back to the United States and producing everything here and
The President's Daily Brief
PDB Situation Report | April 19th, 2025: How Long Can The Tariff War Last & A Ground Campaign Coming In Yemen?
producing and cutting off that global trade. And so I think for a moment there, there was a lot of, and maybe again, this was a negotiated tactic, I don't know. But I think there was a concern from a lot of people and as an economic analyst, I had a lot of uncertainty too as to what was going on. But there does seem to have been a signal that, and certainly they came out very strong and left this
The President's Daily Brief
PDB Situation Report | April 19th, 2025: How Long Can The Tariff War Last & A Ground Campaign Coming In Yemen?
very large incentive for countries to come to the negotiating table. And I think we've seen that many countries such as Japan right now, we know there's talks going on there. So there was a lot of uncertainty and I think countries were very concerned. And certainly I wouldn't want this to turn into something where we're cutting ourselves off
The President's Daily Brief
PDB Situation Report | April 19th, 2025: How Long Can The Tariff War Last & A Ground Campaign Coming In Yemen?
in a way that's going to box us out and push countries closer to China. So I think it was a good move for the president to announce the pause in the tariffs, try to get as many countries to the negotiating table as possible, work out some deals and secure some wins and really get to reduce trade barriers with our friends so that they're coming closer to us and not closer to China.
The President's Daily Brief
PDB Situation Report | April 19th, 2025: How Long Can The Tariff War Last & A Ground Campaign Coming In Yemen?
It's very difficult to play out exactly the timeline of when you'd feel that. I wouldn't anticipate it's going to be an across-the-board inflation that you would feel. It would be more something that there's certain snags in supply chains because there are things that are going through China. It does take a while. If you're a
The President's Daily Brief
PDB Situation Report | April 19th, 2025: How Long Can The Tariff War Last & A Ground Campaign Coming In Yemen?
If you're a multinational company and you now have this big incentive to try to find a way to produce outside of China or diversify where you're supplying from, that's going to take a little bit of time. And so I would anticipate, assuming these tariffs remain in place, that you would start to see it within a matter of months, there would be some effects.
The President's Daily Brief
PDB Situation Report | April 19th, 2025: How Long Can The Tariff War Last & A Ground Campaign Coming In Yemen?
I don't think it would be across the board. I think that markets would adjust if it is just focused on China. But there are going to be some things where, and I think that's where those exemptions came in, where they do have to be mindful that companies can't change overnight.
The President's Daily Brief
PDB Situation Report | April 19th, 2025: How Long Can The Tariff War Last & A Ground Campaign Coming In Yemen?
If you have manufacturing that's set up there, if you have just a widget to your, an input to your production that's coming out of China, it's going to take you a little while to figure out another way to source that.
The President's Daily Brief
PDB Situation Report | April 19th, 2025: How Long Can The Tariff War Last & A Ground Campaign Coming In Yemen?
That's a great question because there's an interesting poll that I saw that was released. It asked people whether they would want to go into manufacturing. And there was, I believe it was 20, 25% that said they would prefer to have a manufacturing job relative to their current job. I believe it was 20% was the number. And there were two different interpretations of that.
The President's Daily Brief
PDB Situation Report | April 19th, 2025: How Long Can The Tariff War Last & A Ground Campaign Coming In Yemen?
Some people were looking at that and saying, well, that means there's a lot of people, 20% of people, that's a lot of people. And there's an opportunity there for all these people to kind of move into manufacturing.
The President's Daily Brief
PDB Situation Report | April 19th, 2025: How Long Can The Tariff War Last & A Ground Campaign Coming In Yemen?
And then other people are looking at that and saying, well, that just shows that there's a lot of people that would prefer to work in, because manufacturing jobs are not necessarily always the most pleasant and best work environments. Some people might prefer to have a different type of job. I do think we maybe... It's an interesting question.
The President's Daily Brief
PDB Situation Report | April 19th, 2025: How Long Can The Tariff War Last & A Ground Campaign Coming In Yemen?
I think in many ways, part of the issue is not necessarily the trade side of it. I would actually point to maybe the fact that we are in some ways subsidizing certain, I guess, laptop class jobs. We push people into universities. We subsidize the university system.
The President's Daily Brief
PDB Situation Report | April 19th, 2025: How Long Can The Tariff War Last & A Ground Campaign Coming In Yemen?
And I think student loan, forgiveness, all these different things that really we've kind of as a society maybe taken too active of a role in trying to push people down a certain path and that path wasn't the manufacturing, that path wasn't industrial.
The President's Daily Brief
PDB Situation Report | April 19th, 2025: How Long Can The Tariff War Last & A Ground Campaign Coming In Yemen?
So I'm not necessarily one that has an overly romantic view of manufacturing, but at the same time, I don't think we should be discouraging people from that route. And I don't think we should be putting barriers in place such as regulations.
The President's Daily Brief
PDB Situation Report | April 19th, 2025: How Long Can The Tariff War Last & A Ground Campaign Coming In Yemen?
I think about some of the labor regulations and some of the environmental regulations that might make it difficult to have factories here in the United States. And so we offshore stuff to China where they produce things more... cheaply and produce more pollution and have all these other host of problems.
The President's Daily Brief
PDB Situation Report | April 19th, 2025: How Long Can The Tariff War Last & A Ground Campaign Coming In Yemen?
Yeah. So, I mean, tariffs are a form of tax, but they're tax on products that are crossing into the United States from other countries. And so, this has been part of the The way that the United States has raised revenues from the outset, it used to be a much larger part of the US revenues back before we had an income tax.
The President's Daily Brief
PDB Situation Report | April 19th, 2025: How Long Can The Tariff War Last & A Ground Campaign Coming In Yemen?
Since the income tax has come into existence, tariffs have become a much smaller portion of what we have. But tariffs can be, they're opposed on both intermediate goods, so you can talk about manufacturers that might have some inputs that they're buying from overseas. So, it can have some effect on domestic manufacturers as well.
The President's Daily Brief
PDB Situation Report | April 19th, 2025: How Long Can The Tariff War Last & A Ground Campaign Coming In Yemen?
But it also is going to hit consumer products, and obviously, we purchase a lot of consumer products from China. Think your smartphones, laptops. Although, it should be noted that President Trump The 225% tariffs, he's put some exemptions in place.
The President's Daily Brief
PDB Situation Report | April 19th, 2025: How Long Can The Tariff War Last & A Ground Campaign Coming In Yemen?
Some of these products, some of these intermediate goods, they're making consideration for some of these things that perhaps could have a deep and immediate impact. They're trying to be mindful about this, I think, but obviously this is a huge step that the administration has taken. They're not wasting any time and kind of trying to address these China issues.
The President's Daily Brief
PDB Situation Report | April 19th, 2025: How Long Can The Tariff War Last & A Ground Campaign Coming In Yemen?
The income tax was implemented in 1913. That was really where you started to see some movement away from tariffs for a period. The income tax ramped up, obviously, during World War I, but then you saw the 1920s that They moved towards reducing the income tax, but then President Hoover in the 1930s really wrapped up the tariffs again. So they've come and go a little bit.
The President's Daily Brief
PDB Situation Report | April 19th, 2025: How Long Can The Tariff War Last & A Ground Campaign Coming In Yemen?
The big difference really between now and what we're talking about 100 to 150 years ago is that the US government just raises a lot more money than it used to. So you used to be able to fund the government off of 2% or 3% of GDP. And so that was where you could run the government off of tariffs and a few excise taxes. Nowadays, that probably would be feasible. I'd love it if it was.
The President's Daily Brief
PDB Situation Report | April 19th, 2025: How Long Can The Tariff War Last & A Ground Campaign Coming In Yemen?
I'd love to get to a government that was so small that that you could, but unfortunately, probably we're going to have to have, yeah, it's going to be a while before we can think about getting rid of the income tax and replacing it altogether with tariffs. So, I think those are a little bit overstated claims as to being able to replace it altogether.
The President's Daily Brief
PDB Situation Report | April 19th, 2025: How Long Can The Tariff War Last & A Ground Campaign Coming In Yemen?
But tariffs, the level of tariffs today is significantly less than it was in earlier decades, even within the century, 50, 60 years ago, we've worked to reduce trade barriers and a lot of other countries have as well. So trade barriers are relatively low. There's been obviously a big push towards globalization, not just in the US, but other countries as well. That's kind of where we're at.
The President's Daily Brief
PDB Situation Report | April 19th, 2025: How Long Can The Tariff War Last & A Ground Campaign Coming In Yemen?
Maybe there's a little bit of buyer's remorse in some ways, especially with respect to China. A lot of people are questioning whether it was a good idea to let them into the WTO and open up trade relationships. I think a lot of what this is about probably is that China angle. It's one thing to have good relationships and open and free trade with our allies and free countries.
The President's Daily Brief
PDB Situation Report | April 19th, 2025: How Long Can The Tariff War Last & A Ground Campaign Coming In Yemen?
I think people have a very different mindset about it when it comes to China, though.
The President's Daily Brief
PDB Situation Report | April 19th, 2025: How Long Can The Tariff War Last & A Ground Campaign Coming In Yemen?
I think with anything, there's trade-offs. People should be realistic about those trade-offs. I'm an economist. Economics is all about trade-offs. There might be some economic pain that comes with it. You might see that some prices will go up as a result of tariffs, but if there's a consideration to national security and other things where we think that that's necessary.
The President's Daily Brief
PDB Situation Report | April 19th, 2025: How Long Can The Tariff War Last & A Ground Campaign Coming In Yemen?
I'm not an international relations expert. I defer to some extent to people that are on some of these things, but there's obviously a case to be made that certainly China has not been a good actor in a lot of cases. I talked to companies leaders of companies all the time that will talk about IP theft, dumping of products, things of that nature.
The President's Daily Brief
PDB Situation Report | April 19th, 2025: How Long Can The Tariff War Last & A Ground Campaign Coming In Yemen?
So certainly China has some unfair trade practices that the US should be concerned with. As a general matter, I'm not a fan of taxation, high taxes in general. I'd like to see trade barriers reduced, and hopefully this can be a way to get to reduce trade barriers with countries that are willing to work with us towards reducing theirs as well.
The President's Daily Brief
PDB Situation Report | April 19th, 2025: How Long Can The Tariff War Last & A Ground Campaign Coming In Yemen?
Yeah, it's a great question. And there's been a little bit of mixed messaging on this. I think the tariffs, the administration and others have spoken of tariffs and the use of tariffs in a lot of different ways. And I think, frankly, they're coming at it from a lot of different angles. They talked about reciprocal tariffs.
The President's Daily Brief
PDB Situation Report | April 19th, 2025: How Long Can The Tariff War Last & A Ground Campaign Coming In Yemen?
If you saw what we rolled out, that wasn't necessarily just reciprocal tariffs. They imposed the 10% across the board and they calculated what they call the reciprocal tariffs based off of this formula. It wasn't truly about reciprocity, it was more about trade deficits. And that's a different concept than necessarily what these countries tariffs and trade barriers are against the United States.
The President's Daily Brief
PDB Situation Report | April 19th, 2025: How Long Can The Tariff War Last & A Ground Campaign Coming In Yemen?
And so perhaps it was a negotiating tactic that you come in with this very aggressive tactic to get countries to come to the negotiating table very quickly. I would imagine that's part of what's going on here. But it wasn't simply reciprocal tariffs. Now, when it comes to the trade deficit, Trade deficits come from a lot of different things. It's not just from the trade barriers.
The President's Daily Brief
PDB Situation Report | April 19th, 2025: How Long Can The Tariff War Last & A Ground Campaign Coming In Yemen?
Trade barriers can be a part of that, and tariffs are just one form of trade barrier. There can be some others as well, and the administration has spoken to some of those things, such as currency manipulation, or you can think of, for example, in the European Union, if they put restrictions on
The President's Daily Brief
PDB Situation Report | April 19th, 2025: How Long Can The Tariff War Last & A Ground Campaign Coming In Yemen?
Just very tight regulations, for example, can be a form of a trade barrier if you're imposing these regulations in a way that it's designed to make sure that you're keeping sellers from other markets out of your country. So there's a lot of things that are at play here and it is extraordinarily complex.
The President's Daily Brief
PDB Situation Report | April 19th, 2025: How Long Can The Tariff War Last & A Ground Campaign Coming In Yemen?
I mean, even just talking about the tariffs, if you look at these schedules, they just go on forever, just product by product. And so it's enormously complex. Part of the issue, actually, when it comes to the US trade deficit, the US trade deficit is largely actually a result of the fact that in the United States, we are a nation of consumers.
The President's Daily Brief
PDB Situation Report | April 19th, 2025: How Long Can The Tariff War Last & A Ground Campaign Coming In Yemen?
And part of the reason that we're a nation of consumers is because, unfortunately, it comes from a matter of we're not saving enough money. That's both at the private level and the public level.
The President's Daily Brief
PDB Situation Report | April 19th, 2025: How Long Can The Tariff War Last & A Ground Campaign Coming In Yemen?
And so one of the things that contributes to the large trade deficits that we have is actually the massive budget deficit that we face, this $2 trillion budget deficit, whereas as a government, we're not paying for all the things that the government is spending money on. And this contributes in a large way to those trade deficits that that the administration is trying to address.
The President's Daily Brief
PDB Situation Report | April 19th, 2025: How Long Can The Tariff War Last & A Ground Campaign Coming In Yemen?
There's a lot at play here, and some of it's rhetoric perhaps, some of it's negotiating, and there are some real issues as well. It's a combination of a lot of things.
The President's Daily Brief
PDB Situation Report | April 19th, 2025: How Long Can The Tariff War Last & A Ground Campaign Coming In Yemen?
I don't have an exact number. That data I don't think would be publicly available this quickly. I would say that The amount of tariffs could potentially be substantial. I mean, just the level of tariffs with China, the level of the across the board tariffs. One of the things that we have looked at at the Heritage Foundation is a border adjustment.
The President's Daily Brief
PDB Situation Report | April 19th, 2025: How Long Can The Tariff War Last & A Ground Campaign Coming In Yemen?
It's not exactly a tariff, but it has some similarities. And you can get to a trillion dollars of revenue from a border adjustment at about a 10% rate. Before we go further, what is a border adjustment? What are we talking about? Yeah. So, a border adjustment would act very similar to a tariff. But a tariff, I mentioned how a tariff can capture intermediate goods, for example.
The President's Daily Brief
PDB Situation Report | April 19th, 2025: How Long Can The Tariff War Last & A Ground Campaign Coming In Yemen?
And so, what you can have is if you have, say, a car and you have parts that are being distributed across the border and then it's manufactured and assembled in different, you know, maybe the U.S. and then Canada and Mexico, and is crossing the border multiple times, that cascades and then you have this double taxation that happens.