Preston Brashers
speaker
45 appearances
1 recordings
1 series
first heard Apr 2025
last heard Apr 2025
Preston Brashers’s voice in public audio — every appearance, attributed to the second.
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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.
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.
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.
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 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 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.
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.
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.
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.
I think people have a very different mindset about it when it comes to China, though.
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.
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.
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.
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.
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.
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.
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
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.
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.
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.
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