Weeks before taking office, President-elect Donald J. Trump is doubling down on tariffs. Even if the threat to impose them proves to be just a negotiating tactic or bluster, it is also a gambit that has immediate consequences.Ana Swanson, who covers trade for The Times, discusses whether tariffs worked in Mr. Trump’s first term and how they compare with the alternative approach used by President Biden.Background reading: Mr. Trump’s threat to wield tariffs is already rocking business and diplomatic relationships.The president-elect picked Jamieson Greer, a lawyer and former Trump official, to serve as top trade negotiator, a position that will be crucial to Mr. Trump’s plans of rewriting the rules of trade in America’s favor.For more information on today’s episode, visit nytimes.com/thedaily. Transcripts of each episode will be made available by the next workday. Unlock full access to New York Times podcasts and explore everything from politics to pop culture. Subscribe today at nytimes.com/podcasts or on Apple Podcasts and Spotify.
Chapter 1: What are the implications of Trump's tariffs on American jobs?
Today, trade reporter Anna Swanson brings us a reality check on whether tariffs worked in Trump's first term and how they compare with the alternative approach used by President Biden. It's Monday, December 2nd. So, Ana, the world has spent the past few days absorbing Donald Trump's threat to impose enormous tariffs on America's three biggest trading partners.
25% tariffs on goods coming in from Mexico and Canada, 10% tariffs on goods coming in from China. And in doing so, Trump said very loudly and very clearly that his approach to protecting American jobs and American manufacturing is bad.
Yeah, and these are really large levels of tariffs. So this action is going to raise tariffs on some of America's closest allies like Canada and Mexico to levels that the country hasn't seen since the 1950s. Trump has tied this round of tariffs to goals for stopping immigration and drugs entering the United States.
But typically he sees tariffs as his primary tool for bringing manufacturing jobs back to the United States and helping the U.S. economy. And he has really extensive plans to impose them around the world with our trading partners in order to do that.
And that is a sharp contrast with the current President Biden, who really thinks that the way you keep jobs in the United States is by directly investing in American industry.
Right. Trump, tariffs, Biden, direct investment. And it seems like an interesting moment to be having this conversation with you because we have an incoming president who is articulating a plan for tariffs so vividly and forcefully while the sitting president is still applying the approach you just described. So that really gives us a chance to kind of evaluate them side by side.
How do you think about them?
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Chapter 2: How did Trump's tariff policy affect the steel industry?
Yeah, it's a really interesting moment in trade policy where we're shifting from one tool to the other. Trump sort of having a big stick, Biden maybe offering a carrot. So Biden is trying to incentivize companies to manufacture in the United States. And in order to do that, he's giving them money.
Got it. Let's explore each of these approaches one by one. And I think because he's about to become president and because he's articulating these huge tariff plans already, we should start with Trump. And, of course, we have a useful place to look to, which is his first term, which was filled with tariffs. So take us back to that first term and how that went and whether it worked.
Yeah. So I covered trade during President Trump's first term. It was a very wild time for trade policy. He put tariffs on all kinds of things. He put them on solar panels, washing machines, hundreds of billions of dollars of goods from China. But I think a helpful example for us to look at is his tariffs on steel.
So steel was an industry that the United States had been pretty dominant in until it was gradually outsourced to cheaper places like China. And so China began flooding the market with cheap steel. It now makes over half of the world's steel. And Trump thought that was unfair.
Steel is steel. You don't have steel, you don't have a country. Our industries have been targeted for years and years, decades, in fact, by unfair foreign trade practices leading to the shuttered plants and mills.
He also thought this was an issue of national security.
This is not merely an economic disaster, but it's a security disaster. We want to build our ships. We want to build our planes. We want to build our military equipment with steel, with aluminum from our countries.
that the United States needed to have its own steel mills in the case of war to be able to produce its own metals.
So in 2018... Today, I'm defending America's national security by placing tariffs on foreign imports of steel and aluminum.
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Chapter 3: What was the reaction of other countries to Trump's tariffs?
So it definitely worked. Demand for U.S. steel and aluminum grew, and U.S. steel factories started pumping out more metal. And there was a government study that showed that by 2021, U.S. steel production had increased by $1.5 billion a year.
Wow. So this very much does do what it's supposed to do, this blunt force of a trade tool. It does make America's steel production bigger and more profitable, it sounds like.
It did, but it also had a downside for other industries because there are a lot of industries in the United States that use steel and aluminum to make other things like cars or food packaging. Mm-hmm. So for those companies, they had to pay higher prices for the steel that they were buying to make into other products. And that ended up hurting them.
If you look at it from the perspective of car manufacturers, for example, you had the Ford CEO saying at one point that the metal tariffs had already cost the company a billion dollars in profit. Wow.
So the same study showed that as a result of those higher steel and aluminum tariffs, companies that use steel because they faced higher prices, their production actually went down by more than the production of the steel industry went up.
Which would seem to make it hard to consider an overall success. If the goal is to improve U.S. manufacturing and U.S. manufacturing overall decreases because of this, then that sounds a bit more like a failure than a success, depending on your goals.
Yeah. So you could say, you know, yes, it accomplished its national security goals. Yes, it helped the steel industry. But in terms of overall U.S. manufacturing, the impact in the years right after the tariff was negative. But As it turns out, the tariffs were politically popular.
So one study showed that people living in areas more affected by Trump's tariffs were more likely to vote for Trump in 2020. And I think that stems from the feeling that even if tariffs didn't actually benefit these people, they felt that at least Trump was trying to do something about U.S. manufacturing.
And so when Biden comes into office in 2020 and has his chance to create a trade policy, he keeps some of the Trump tariffs, but also decides to try something fundamentally different.
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Chapter 4: Did Trump's tariffs achieve their intended goals?
Right. Most of them are made, as we've said many times on the show, in Taiwan.
Yeah. Taiwan is a bit insecure because Taiwan is so close to mainland China and Taiwan, which China claims is its own and has threatened to invade.
Right. Which means that suddenly China could control most, if not all, of the manufacturing of computer chips that are pretty essential to American computers and technology.
Exactly. These chips were invented in America. Let's get that straight. They were invented in America.
And so in 2022, the Biden administration works with Congress to pass the CHIPS Act.
We used to make 40% of the world's chips. In the last several decades, we lost our edge. We're down to only producing 10%.
And that secures about $50 billion of funding to help increase the domestic manufacturing of chips and to invest in things like research and development.
We're going to make sure the supply chain for America begins in America. The supply chain begins in America.
Essentially, this over the longer run transforms the government into kind of this venture capital firm that is looking at chip companies around the United States and deciding which ones of them to invest in, which ones of them deserve more money to grow.
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Chapter 5: How does Biden's trade policy differ from Trump's?
So we're at this moment where the government really wants Intel to be expanding its factories and hiring new people. But instead, the company's had to announce 15,000 layoffs and has said it needed to delay the opening of a big factory in Ohio. Wow.
And we heard this very telling moment in our reporting where earlier this year at this gathering of tech executives and billionaires in Sun Valley, Idaho, Gina Raimondo, who's the Commerce Secretary, was meeting with chief executives from Microsoft and Google and other firms and encouraging them to order their chips from Intel's U.S. factories. And many of these companies have said no.
They're not convinced that Intel's technology is there yet.
Which I have to imagine gives the government some real pause when it thinks about just how much to invest in Intel. Because the whole point of this direct investment is to pick winners and losers. And it's not sounding at the moment like the rest of the tech world sees Intel as a winner or as a place it even wants to order computer chips from.
Yeah. So what should be a mutually beneficial partnership is proving to be quite tricky for the government. And the administration has tried to hedge its bets. It's been trying to give money to a lot of chip makers. And maybe surprisingly, the program's biggest success so far is actually this new plant in Arizona from a Taiwanese chip maker called TSMC.
Huh. So one of the biggest beneficiaries of this program so far is a company not owned by an American corporation, but by a Taiwanese corporation. Is the Biden administration okay with that, that some of these investments may end up favoring foreign-owned companies? Is the idea that a U.S. manufacturing job is a U.S.
manufacturing job even if the ownership is overseas, or is that a disappointment to the Biden people?
So I think they think it's a great thing that TSMC is here. This is the world's most advanced chip maker. And now the United States will have cutting edge chip manufacturing within its borders. It's still a little bit tricky because some of the U.S. governments say we still shouldn't trust a foreign headquartered company to make the most sophisticated military chips.
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Chapter 6: What direct investment strategies is Biden using for American manufacturing?
So, you know, that's why the U.S. government, after all of this, is still very interested in backing Intel as well.
Got it. So back to our original question, is this approach working? Just as we asked with Trump and tariffs, what can we say about whether or not this program and plan for direct investments to increase U.S. manufacturing under Biden has been effective?
Yeah. So it's a very long term project. These chip plants are huge. They take many years to construct and to open. But stepping back, we already see that factory construction is up a lot under President Biden. You see these chip and electric vehicle battery factories and other factories sprouting up around the United States.
The Biden administration is also pointing to 115,000 jobs created in the chip industry. A lot of these are construction jobs, but other high paying manufacturing jobs should be on the way in the coming years.
So slow moving, but overall, it sounds like, and please correct me if this characterization is wrong, a modest success.
Yeah, it's got some momentum, but it's going to take a while before we really feel its effects. And you've seen Trump also come out and criticize it as wasteful, saying you don't need to give wealthy companies all this money. You just need to put a big tariff on them and then they'll move their manufacturing back to the United States. Hmm.
So just to step way back and compare these two approaches, Is it possible or even fair, because I know how complicated these questions could be, to ask which of these is more effective at doing what it sets out to do?
It seems just on paper, based on everything you're saying, like the Biden approach just numerically has the edge here in creating overall more manufacturing jobs, admittedly at a pretty significant cost to the taxpayer than the Trump program. Is that right?
Yeah, I think that's right. Biden has spent a lot of money to start quite a few new factories, and that has created a relatively small number of jobs. And Trump spent very little money. He used tariffs instead. But that, you know, economists... think did not create a lot of new jobs overall.
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Chapter 7: Why are computer chips critical to U.S. manufacturing?
We appreciate it. Thanks for having me.
On Friday night, in a sign of just how much America's trading partners fear Trump's tariffs, the Prime Minister of Canada, Justin Trudeau, traveled to Mar-a-Lago. There, he sought to discourage Trump from following through with a 25% tariff against Canadian goods. Both Trump and Trudeau described the conversation as productive. We'll be right back. Here's what else you need to know today.
In an extraordinary use of his powers, President Biden has issued a full and unconditional pardon of his son, Hunter Biden, something that President Biden has repeatedly pledged he would not do. The pardon casts aside years of his son's legal troubles, including a federal conviction for illegally buying a gun and a guilty plea for tax evasion.
Biden said he issued the pardon because in his telling, the prosecutions of his son had been politically motivated and designed to hurt him politically. In a statement, Biden said, quote, enough is enough. And.
Over the weekend, Donald Trump said he wants to replace the current leader of the FBI with Kash Patel, a hardline critic of the bureau who has called for shutting down the agency's entire Washington headquarters and firing its leadership. Patel's radical views could make him a difficult pick to confirm in the U.S. Senate.
But Trump is intent on replacing FBI Director Christopher Wray, whom Trump himself appointed during his first term. Wray's 10-year term does not expire until 2027, so for Trump to replace him, Wray would either have to resign or be fired. Today's episode was produced by Shannon Lin, Ricky Nowetzki, and Rochelle Bonja.
It was edited by Lisa Chow and Maria Byrne, contains original music by Marian Lozano and Sophia Landman, and was engineered by Alyssa Moxley. Our theme music is by Jim Brunberg and Ben Lansford of Wonderly. That's it for The Daily. I'm Michael Barbaro. See you tomorrow.
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