00:00 Speaker A
Talk to me about your reporting in terms of I feel like the Smooth Holly Tariff Act has never been more popular, at least for my generation. How is that different than the tariffs we’re seeing right now in terms of it potentially being an economic indicator of a slowdown to come?
00:19 Speaker B
Yeah, and Madison, if you haven’t seen the movie Ferris Bueller’s Day Off, I recommend that you do go see it and then you would actually be able to answer the question, what is the Smooth Holly tariff act? For any historian who has looked at the Great Depression, they know that this was a dramatic increase in tariffs passed by the Congress, signed into law by Herbert Hoover in 1930. They know what came after that. There was a collapse in worldwide trade as other countries retaliated, and the United States and the world slid into depression. So pretty grim, kind of like, you know, template for the present, right? In fact, a little-known fact, Trump’s tariffs are actually much higher than the Smooth Holly tariff act. But as you, um, but the point I want to make here is it doesn’t necessarily mean we have to repeat the 1930s. It all depends on what comes after. The reason other countries retaliated in the 1930s was because the US was dug in on these tariffs and the entire atmosphere of cooperation disintegrated. If instead, we have negotiations and a sense that we can actually dial them back, I think the outcome will also be different.
02:22 Nancy Tengler
Craig, this is Nancy Tengler. I feel like all my economic education has come from reading you in the Wall Street Journal. So thanks for all your years of great reporting and editorializing. But I do want to ask you, so maybe this is one of the things that comes after, but we’re already hearing the administration float some help for farmers, and also a potential export tax credit where you get your money, your penalties back at the end of the year if you’re a manufacturing, a manufacturer. What do you make of that? Do you think those are real policy proposals and do you think that is one of the things that comes after that may make this more palatable?
03:54 Speaker B
Um, those are things well, I think you have to frame those as the administration shoring up their base. They’re very worried that Republicans and traditional Republican constituencies like farmers and so on will start to turn against the tariffs, put pressure on their own senators and congressmen to turn against the tariffs. They these steps might help politically, but they will have almost no effect economically. That’s because the scale of these tariffs is so enormous, and we’re talking about half a trillion dollars a year in added fees, primarily borne by Americans. And that dollar number, Nancy, doesn’t do justice to how distorting and damaging they are to the overall structure of the American economy, which has built supply chains and relationships for years around the assumption that the United States would be importing a lot of these products. So you can’t simply say, oh, well, we’re going to raise tariffs by a dollar, but we’ll cut income taxes by a dollar and it will all be good. No, it won’t be like that.