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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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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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
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
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
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.
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
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.
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.
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.
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.
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.
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