Former president Trump had the following exchange with his former economic adviser Larry Kudlow the other day:
Kudlow:
Let me ask you, what's your thinking here? Would you want tariffs on foreign goods coming into the US, take those revenues and cut taxes on American goods and American families here? Would that be something in the second Trump term?
Trump:
Yeah, there's a couple of things. Number one, I think we should have a ring around the collar, as they say. I think when companies come in and they dump their products in the United States, they should pay automatically, let's say a 10% tax. That money would be used to pay off debt. It's a massive amount of money, even a 10%. It's not going to stop business because it's not that much, but it's enough that would really make a lot of money.
The other thing I want to have is a matching tax where if India charges us -- India is very big with the tariffs, okay. I mean, I saw it with Harley Davidson, I was saying how do you do in a place like India? Oh, no good sir. Why? They have 100% and 150% 200% tariffs. So I said so they can sell their Indian motorbike -- they actually make a bike, Indian motorbike -- they can sell that into our country with no tax, no tariff. But when you make a Harley, when you send it over there, because they were doing no business, I said, how come you don't do business with India? The tariff is so high that nobody wants it. But what they want us to do is they want us to go over and build a plant, and then you have no tariffs. I said, well, that's not good. That's not our deal. Okay, that's not our deal. And I came down very hard on them. But India is very big, Brazil is very big on tariffs. I mean, very, very big. And we had a couple of people like the Senator from a place called Pennsylvania that I love. But this guy was just horrendous. I said, let me ask you a question. If India's charging us 200%, and we're charging them nothing for products, can we charge them 100%? No, sir, that's not free trade. Can we charge them 50% No. 25? 10? Anything? No. I said what the hell is wrong? This is something wrong. You know who I'm talking about?
Kudlow:
I do.
Trump:
Every single thing we tried to get through, he would try and block. So if India's charging us too, so what I want to have is called retribution, you can call whatever you want. They charge us, we charge them.
Kudlow:
Reciprocity.
Trump:
You could call it many names. You call it equalization. If they charge us, we charge them. Very simple. Now two things will happen, one of two things. Either they'll wipe out the tax and so will we, or we'll take in a lot of money and that's okay, too. But eventually what they'll do is they'll stop doing it. But we don't do that. We have countries that charge 100 and 150 and 200%. And we charge them absolutely nothing. ...
Not surprisingly, these statements generated a lot of attention, although it was frustrating that they didn't come up in last night's GOP primary debate, in which Trump did not participate. This would have been a good opportunity to press the candidates on their trade policy views.
As for Trump's statements, I don't see them as that much different than what he has said previously. He is stuck in a 19th century mindset, when tariffs were the primary source of federal government revenue. While his latest statements remind me that I would worry about the direction of U.S. trade policy if he became president again, I would have been worried even without those statements, and I'd worry about other policy areas more.
He's also stuck in an outdated way of thinking about trade agreements as mostly about tariffs. I wonder if anyone has pointed out to him that trade agreements also require intellectual property protection, and without such requirements U.S. intellectual property (including his own) would be at much greater risk.
Finally, one thing that struck me as a bit funny is his use of the word "dump": "when companies come in and they dump their products in the United States, they should pay automatically, let's say a 10% tax." I can imagine many U.S. trade lawyers would be excited to have only a 10% anti-dumping tariff imposed on their client's products! But of course, Trump is probably just using the word "dump" to mean sell, rather than thinking about how to calculate normal value.
