Scott Lincicome: How Much Will You Pay To 'Buy American'?

How much are you willing to pay to "buy American"? Just asking questions.

In April, President Donald Trump unilaterally unleashed a series of so-called reciprocal tariffs, using emergency powers to punish countries with a trade imbalance, meaning they export more to the U.S. than they import from the U.S.

Markets panicked, and Trump pulled back, setting a new deadline that he's now pushed back multiple times. It's now set to expire on August 1.

But those aren't the only tariffs Trump has implemented, and there are some signs they may be already driving up prices. The administration says the stock market is strong, tariffs are bringing in billions in revenue, and American manufacturing is back, baby. 

To help us figure out what tariffs might do to the U.S. economy, analyze how Trump is using trade as a foreign policy tool, and discuss the ultimate political aims of economic nationalism is Scott Lincicome. He's vice president of general economics at the Cato Institute and writes the Capitolism newsletter at The Dispatch.

Chapters:

00:00—What are the current tariff levels?

02:21—Examples of tariff carve-outs

14:20—Political dynamics of tariffs

19:01—Tariff impacts on consumers

33:32—Tariffs as a foreign policy tool

34:00—Can tariffs lead to freer trade?

36:24—How tariffs affect foreign exporters

37:21—Global trade agreements excluding the U.S.

38:27—Trump's Brazil tariff threats

40:34—Consumer goods and tariff costs

52:30—Tariffs and price increase

57:06—Treasury revenue from tariffs

59:58—Tax cuts vs. tariff hikes

01:01:14—Tariffs as a regressive tax

01:05:19—Are tariffs less harmful than feared?

01:16:03—Manufacturing and tariff challenges

01:19:45—Economic growth and tariff effects

 

Mentioned in the podcast:

Bureau of Labor Statistics Consumer Price Index for June 2025

Trading Economics: United States Core Inflation Rate

"Wholesale prices are flat in June, PPI shows, and point to muted effect of tariffs on inflation," by Jeffry Bartash at MarketWatch

"US customs duties top $100 billion for first time in a fiscal year," by David Lawder

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Transcript:

This is an AI-generated transcript. Check against the original before quoting.

Zach Weissmueller: How much are you willing to pay to buy American? Just Asking Questions. 

In April, Donald Trump unilaterally unleashed a series of so-called reciprocal tariffs using emergency powers to punish countries with a trade imbalance, meaning they export more to the U.S. than they import from the U.S. And markets panicked. Trump pulled back, set a new deadline that he's now pushed multiple times. It's now set to expire August 1st.

But those aren't the only tariffs Trump has implemented, and there are some signs they may already be driving up some prices. The administration, on the other hand, says the stock market's pretty strong and tariffs are bringing in billions of revenue. 

American manufacturing is coming back, baby.

So, to help us figure out what tariffs might actually do to the U.S. economy, analyze how Trump is using trade as a foreign policy tool, and discuss the ultimate political aims of economic nationalism is Scott Lincicome, VP of Economics and Trade at the Cato Institute and writer of the Capitolism Newsletter at The Dispatch.

Scott, thank you for coming on the show.

Scott Lincicome: My pleasure, thanks for having me.

Liz Wolfe: So what are the actual current tariff levels that we have with our major trading partners?

Scott Lincicome: Nobody knows.

Liz Wolfe: Least of all us.

Scott Lincicome: Well, in all seriousness, the reality is that I think you would be really hard-pressed to get a consensus from people who study this every day on the exact tariff levels that we have. And in fact, if you look at the various experts, whether it is the Tax Foundation or Yale Budget Lab, or the guys at Goldman Sachs and J.P. Morgan, they all have slightly different tariff rates for the average tariff that's in effect.

First of all, it changes constantly. Second, there are all sorts of carve-outs and exclusions and special rules. There's also—

Liz Wolfe: Hold on. Really fast, can you give us a few examples of what those might be?

Scott Lincicome: Of the carve-outs? Sure. So the big reciprocal tariffs had a huge carve-out for consumer electronics. They also have carve-outs for semiconductors and pharmaceuticals. The theory of the case there is the Trump administration has initiated separate investigations of those products under national security under a different law, Section 232, and so they're going to apply the 232 tariffs eventually to those things.

Trump has threatened 200 percent pharmaceutical tariffs and those things. So you have a lot of these carve-outs, but you also have additions. The steel and aluminum tariffs have what's called a derivatives rider. Which means that products that are made with a lot of steel and aluminum can also face tariffs based on the amount of steel and aluminum they have in them. You can petition the government to have your product included on this list of derivatives. Just recently, home appliances were included on the list. Suddenly, those appliances are getting hit with tariffs based on their steel and aluminum content.

If you combine that with some of the rules for automotive goods—what qualifies as a USMCA product and what doesn't—because Trump has these tariffs on fentanyl-related goods from Canada, Mexico, and China, but there's a carve-out for Canada and Mexico related to goods that comply with the trade agreement that Trump himself signed, the USMCA. Demonstrating that compliance—I had two customs lawyers giving me two different opinions on what's covered, how easy it is to cover. I get somewhat hilarious—I mean, morbidly hilarious—emails from customs law firms talking to clients, trying to get all of this paperwork straight. It's halcyon days—that means boom days—for the lawyers and accountants out there.

But it's really hard to nail all this down. This is frustrating for guys like me, but it's also economically important. The reality is that if you are in business—importing, exporting, whatever—if you're involved with this stuff and you don't know the exact tariff rate that applies today, tomorrow, you don't know what Trump's going to do next week with some new trade deal that he announces on Truth Social, planning your business is really hard.

Do you front-load and try to get all your product in before the tariffs change? Do you wait because you think Trump is going TACO out—Trump Always Chickens Out, right? So the tariffs are going to go away. Do you think there are going to be deals that make things better? So on and so on. All of that uncertainty means less economic activity, less investment, and the rest. So we can laugh about it, and it is kind of funny, but it also has real economic harms.

Liz Wolfe: If you're, say, a clothing company and you deal with textiles a lot and you get those textiles from China or Vietnam, Liberation Day was back in April. Now we're recording this in July, and another round of tariffs will allegedly go into effect on August 1st. The deals that Trump—you know, "90 deals in 90 days"—that Trump claimed he was going to do. What have these firms been doing? I mean, this is almost an entire quarter. How have they been making these decisions? What type of impact might this have? Like say I'm importing all these textiles—how am I making decisions right now?

Scott Lincicome: Yeah, so you have to distinguish in this case between the big firms and the small, because there are really two completely different tracks. For big firms, they're engaging in a lot of creative tariff avoidance schemes.

The most obvious one is they front-run the tariffs. When Trump got elected—and in fact, my newsletter tomorrow there's a great chart in there…You're going to see it—imports skyrocketed from November through February and into March. It was all importing companies—a lot of apparel and retail outlets, but also pharmaceutical companies and others—just bringing in as much of their product as they can. Getting it onshore and stocking it in warehouses to avoid tariffs.

The CEO of Levi's in the spring said that they had enough product in-country to get them all the way into the fall. So imagine giant warehouses full of jeans, like in the final scene in Raiders of the Lost Ark, right? It's just like these huge secret warehouses of jeans. But that's what a lot of giant companies did, and that's one of the reasons why we're not seeing tariffs show up so quickly in the price data—because a lot of companies built up these inventories.

Liz Wolfe: Just real fast, is that a huge gift to Trump that consumers aren't really necessarily fully seeing this right now?

Scott Lincicome: Yeah, yes and no. I mean, it's a gift to him in the sense that he can go out there—like he and J.D. Vance and others—and go, "Aha! The CPI has done nothing. Ergo, the economists, the elites, were wrong."

But again, if you actually read the economists who are talking about this stuff, everybody saw these inventory levels and these import levels rise. And they went, "Oh, ok, so we're not going to really see major price impact until the fall." Assuming that holds, then actually Trump's going to kind of get hoisted on this in the fall—to the extent Trump can actually get hoisted on anything—because you will see the price impact. It'll just be delayed.

So, going back to what the companies do: Big companies, they front-ran the tariffs, they adjust their supply chains. So instead of buying from China, you buy from Vietnam, or you buy from India, or you buy from Mexico and get that USMCA carve-out. So giant companies tend to have multiple suppliers and are pretty nimble. And again, armies of lawyers and accountants try to figure out how to do this.

They do other things. They utilize bonded warehouses and foreign trade zones. All this kind of really creative—One of my favorite examples: Delta Airlines is ripping U.S.-made engines out of its Europe-based jets and bringing them into the country and installing them into grounded U.S.-based planes instead of importing the entire Airbus plane from Europe to avoid tariffs, right? So this is what giant companies can do, and they are doing.

Little guys? They're screwed. 

Little guys tend to have one supplier. Oftentimes, especially in the case of contract manufacturing in China, it's their product. The contract manufacturer is basically a big 3D printer in China. They have their own merchandise sitting in their own warehouses in China, and they have no other options. They don't have the giant warehouses for inventory, and that's it.

I interviewed a guy in a long piece over at Cato. He has a small educational toy company out of Chicago—employs about 500 people. When those tariffs hit 140 percent, he just stopped importing. I asked him, "How long can you hold out?" This was, again, when the tariffs were 140 percent. He said, "I've got a couple months maybe, and then that's it. We don't have anything to sell." About 60 percent of his product came from China.

So for the little guys, that's what you're seeing. You're seeing in the news now small retailers—particularly e-commerce folks that are working out of Etsy and eBay and Amazon—they're shutting down. And I think those are the types of things we miss when we have these very academic, wonky discussions about what is the CPI reading or whatever—and I'm sure we'll get into that in a sec. But we miss the fact that there are a lot of mom-and-pop shops that aren't going to show up in the data and yet are suffering real and in some cases catastrophic harms because they woke up one day and Donald Trump decided that he was going to tax their stuff at 40 percent or whatever, even though, you know, when they ordered that product two months ago, it was perfectly legit and at zero.

Zach Weissmueller: I saw—I think this was linked in reading one of your articles prepping for this—this map that J.P. Morgan puts out that estimates the effect that tariffs have on these midsize—what they classified as midsize—firms, right? 

You can see when that April 2nd announcement—full universal tariffs—went into effect, kind of the darkening of the color there, like how sensitive these midsize firms really are to this stuff in a way that the big guys aren't. It kind of reminds me, in a weird way, parallel to the COVID era when we had lockdowns and it was the big-box stores that got exemptions or were just otherwise able to adapt in a way the small ones couldn't.

Scott Lincicome: Yeah, and that's actually another really important point. The big guys also have armies of lobbyists who can go to Washington—or the CEOs themselves, you know, good old Tim Apple can go sit and have dinner with Trump. And then boom, exemption for consumer electronics, right? The little guys—the toy guy I mentioned—he doesn't have that clout.

If you look at all of the lawsuits against the Trump tariffs, they are all small businesses; they're not the big guys. And I think that is a reflection of this economic reality. And I think a bit of the politics of it as well—that the big companies don't want to have targets on their backs.

Liz Wolfe: To that point—as you were talking about Tim Apple going to Washington—I was thinking about how Jeff Bezos sort of attempted to be the #resistance, at least when it comes to tariffs, and basically say, "Hey, we are going to have a policy where we attempt to convey to consumers that we're not just arbitrarily raising prices. Here's the impact that tariffs are having on each specific good. And we might not be able to do it fully across the board, but we'll at least be able to give consumers some sense of: we're not happy about passing these costs on to them, but we do have to, to some degree."

And then immediately got called into a meeting with Trump and with White House officials. And I mean, that policy of Amazon's—was what, changed within two hours? Two hours. It was something crazy. I'm beginning to be worried because I like this idea of these big firms being—you know, they have this political influence that they can exercise, but they also have a certain sturdiness that makes it so that normal consumers aren't necessarily going to feel this. They're a bulwark against normal consumers feeling this until later in the game. And yet the biggest player in the entire e-commerce game—Jeff Bezos—was kind of strong-armed into compliance. What do you make of that? Do you think we're just going to see more of that dynamic?

Scott Lincicome: I think so, unfortunately. There's a few things going on. First is basically political, right? You know the famous Michael Jordan quote, "Republicans buy shoes too." It applies. 

Tariffs are a political thing. 

If you look at the polling on tariffs, it is so depressing as a wonk because support for tariffs is so partisan now. Democrats now hate them, Republicans now love them. Ten years ago, it was exactly the opposite. And when Biden started talking up tariffs, then Democrats kind of changed their tune a little bit.

Well, what does that mean? So if you're a big retailer like Amazon or Walmart, and you're out there bad-mouthing tariffs, you're effectively insulting half of your customer base—or in Walmart's case, maybe more than half your customer base, right?

The other issue is, you will be attacked by, inarguably, the world's loudest person and his armies of fervent followers. So that's another thing to think about.

Then there's also an economic issue. Consumers don't like increased prices, regardless of how they come about. And as libertarians and wonky folks, we're like, "Oh no, this is the tax. It's not their fault. It's the government's passing that on." Individuals aren't that rational most of the time. And so companies don't like to telegraph price hikes—even if it's the government's fault—if their competitors aren't doing the same.

We're in a bit of a prisoner's dilemma on price hikes. That's why you combine all this together and—you know, we had this brief spurt of companies blaming tariffs for price hikes. And then all the shizzle hit the fan. Suddenly now, there are a lot of price hike announcements in the news, but they're blamed on "market conditions." 

CEOs don't mention tariffs in their investor calls.

It doesn't mean that the price hikes aren't happening, but they're avoiding that kind of target and blame. 

Zach Weissmueller: I mean, but that's why I agree with Liz. I liked that brief moment where there was a little bit of transparency. It's like when you live in a county and go to the store, you get the sales tax separated out. There's something nice about that from a libertarian perspective.

Scott Lincicome: I totally agree. And states have it for gas taxes, you know on the gas pump, there's a gas tax thing. I like it too.

I think there is an untapped market for tariff trackers—like a Chrome plug-in that looks back at a product's price history and says, "Well, on January 20th, this product cost this much. And today it costs this much. Draw your own conclusions."

Liz Wolfe: I've been doing this with Lululemon leggings. This is a very girly way of thinking about tariffs. I consider it my Lululemon Legging Price Index. Where I'm just tracking the price of this one particular sort of classic, iconic Lululemon style. They're already expensive pants, but holy cow, if they go up by 20 or 30 percent, not a single gal in all of New York City can afford them.

Zach Weissmueller: The dude version of that is the Nintendo Switch 2, I believe.

Scott Lincicome: Well, two things. First, Liz, you need to be buying the Costco knockoffs before Lulu sues them out of existence.

Liz Wolfe: This is service journalism. Thank you, Scott. 

Scott Lincicome: Second—maybe more on topic—I actually did the same thing because I was in the market for a car. My old beater was literally leaking out of the sunroof, and I couldn't even move the seat anymore. So I was price-tracking a certain car for a long time. I got to watch, depressingly, the price spike right after the auto tariffs were announced and there was this big rush. But I also got to see some of the consumer enthusiasm drop, and then the price kind of came back down. So there are things that, if you track this stuff, you can actually see the news in your own personal price track.

Liz Wolfe: My husband keeps getting mad at me because he thinks I'm online shopping, and I'm like, "No, no. I'm thinking about tariffs. Don't worry."

Zach Weissmueller: Research! So, you mentioned the way that now Democrats have started to talk about this. It's kind of flipped, and now Democrats are against tariffs. And they're suddenly, there's people—even Elizabeth Warren—talking this game of like, "Oh yeah, what we've been saying all along: When you tax a business, it gets passed on to the buyer."

We actually have a clip of her making that case. Can you roll that clip, John?

Elizabeth Warren (clip): 

"Some of his CEO buddies are already lining up to pass along costs to American families or to ask Trump for special exemptions for themselves. If this sounds to you like chaos, that's because it is.

And if you've turned on the news today, you can see just how badly it's going for our economy. What Trump is doing means that businesses will seize up and pull back on their investments. Americans' confidence in our economy will drop even lower. And companies are already talking about using this chaos as cover to raise their own prices even more so they protect their profits. But your costs go up. And now your next pair of shoes may not cost 50 bucks—it may cost 100."

Zach Weissmueller: So she's framing it in that very Elizabeth Warren–esque way—this is still kind of a conspiracy of the greedy corporations protecting their profits. But she is acknowledging that this is the effect. Do you see that as a positive development or a step in the right direction?

Scott Lincicome: Yeah, I do. In fact, I wrote a column talking about how Democrats are suddenly sounding like libertarians. Because the arguments that Liz Warren just made there are almost identical to the ones that free marketers make with respect to, say, corporate taxes. That it's not corporations paying the taxes—it's consumers and workers and investors.

So to hear her sounding libertarian-ish is nice. Now, I'm not crazy enough to think that Elizabeth Warren is now a dedicated supply-side free marketer. But it is good that that type of thinking—that second-order effects–type thinking about taxes and uncertainty and the rest—those discussions are happening on the left.

Warren, of course, is the populist, pretty far left. I think the even more optimistic thing is that moderate Democrats really seem to have had an awakening of sorts on this stuff. 

This is not just a partisan thing.

When I talk to self-identified Obama-neoliberal types, they're like, "This stuff is crazy." And they were like this when Biden was in office raising tariffs too. That's nice to see.

Zach Weissmueller: Hold on—so that implies there might actually be something more enduring beyond pure partisan flip. Because when I hear Warren talking about it, the way she frames it still leaves her room to just go back to the idea that it's just the greedy corporations. Like the whole "greedflation" thing that was going on during the Biden era.

Scott Lincicome: Yeah, I mean, I don't have a lot of hope for Senator Warren. But I do think there is a big chunk of the Democratic Party that has had an actual shift that is not just an anti-Trump reflex.

We do a lot of work on The Hill at Cato. I talk to a lot of staffers and a lot of members. I in fact asked this exact question. I said, "How much of this is really just anti-Trump stuff, and how much is it an actual change in either your personal policy views or your base?" Because the Democratic base is shifting a bit.

And the staffer said, "I gotta be honest—about half and half." But look, I'll take half.

I cut my teeth in trade policy during the late '90s and 2000s when Democratic Congress was 90–10 of pro-protectionist. You had a few, but Nancy Pelosi, Chuck Schumer—most folks in the Democratic caucus were anti-trade. FTAs back then were passed by Republicans with a handful of Democratic votes. It does seem there is a better split these days on that side.

Now, of course, the depressing side is on the Republican Party. You've seen the opposite. I don't think the Republicans in Congress are 90–10 against trade and pro-tariff. But as long as Trump's running the show, that doesn't matter much.

We have good outreach with Republican offices on the Hill about this stuff. But coming out publicly and voting against Trump… let's face it, we know.

Zach Weissmueller: That turns you into Thomas Massie and you just get a million Truth Social posts about your primary.

Scott Lincicome: Yeah, and you get primaried, and you're out of a job. And for what, right? Because when it comes to Congress, you always have to remember that Congress has already delegated so much tariff power to the president. Of course, Congress has the constitutional authority over tariffs and trade under Article I, Section 8 of the Constitution. But they gave it all to the president. Probably too much. And that's probably going to go to the Supreme Court.

So to get that power back—this is why you shouldn't delegate it in the first place—you need veto-proof majorities. For Republicans, the calculus is pretty straightforward. Unless you are an uber-principled guy like Rand Paul, I mean, what's the point of casting some random vote that goes nowhere and then losing your job in 2 or 4 years?

Liz Wolfe: Why exactly—I mean, this is pretty in the weeds—but why exactly did Congress abrogate their role here, and when did that happen?

Scott Lincicome: Yes. It happened about 75—or now 85—years ago. Basically, Smoot-Hawley, as we all know from Ferris Bueller's Day Off, was the last major tariff bill that Congress implemented, because Congress used to pass these tariff bills, and they were pretty corrupt messes.

If you're into this stuff, there are some great books that document just how seedy tariff politics was. It was really one of the original smoke-filled-room cronyism policy industries and created a lot of our modern lobbying systems today. Congress realized, following Smoot-Hawley and two world wars that had trade angles to them—not caused by trade, but had rival trading blocs and such—Congress realized they can't really be trusted with all this tariff power.

And there was a foreign policy interest in a generally more open and nondiscriminatory trading system, where countries weren't getting into rival trading blocs and cutting each other off, because that creates foreign policy problems—maybe even wars. 

So Congress delegated to the president two big powers: one, the ability to negotiate trade agreements; two, tariff powers.

Over a series of laws, as Congress was lowering tariffs, generally through trade agreements. They didn't want to take away the government's ability to raise tariffs for national security reasons or whatever. So they gave that power to the president. And we have, I believe, five/six laws on the books that are pretty darn open-ended when it comes to the president unilaterally imposing rather large and broad tariffs.

The biggest one is the one that's now being litigated—the one behind the reciprocal tariffs and the fentanyl tariffs—and that's the International Emergency Economic Powers Act (IEEPA), which doesn't even mention tariffs. But it's so broad that Trump has used it for all this stuff. I mean, it's like a tariff switch in the Oval Office. And until the courts say he can't do that or that the law is an unconstitutional delegation, we're stuck with it.

But even if the Supreme Court were to overrule it, we have to remember that there are other laws out there that he could use to eventually get to almost the same place.

Zach Weissmueller: Yes. So Trump is using these tariffs not only because he believes in the economics of tariffs and onshoring manufacturing, but as this foreign policy tool that you're describing there. One of the big developments in the negotiations, apparently, is that he wants to slap the EU with—I believe it was—a 30 percent tariff. The rationale for that was to get them to remove barriers that were both tariff and non-tariff policies and trade barriers. "You need to fix those Europe, otherwise you're getting a 30 percent tariff for creating imbalanced trade."

As a foreign policy objective, how legitimate do you see that as, and how realistic a demand is it from Trump?

Scott Lincicome: Yeah, I don't see much of a real foreign policy angle here. And I don't see eliminating trade balances with tariffs as an economically realistic thing. The reality is, most economists will tell you that the United States' trade balance is driven by big macroeconomic things—savings and investment overall. It's not driven by trade policy. Trade policy can affect it at the margins, but in general, the U.S. runs a trade deficit because Americans spend more than they save—including the federal government, by the way.

If you apply tariffs, you're going to reduce imports, but you're also going to reduce exports. At the end of the day, you end up in the same place. Economists are even more pessimistic about bilateral trade balances, especially because there are more than two countries in the world, and supply chains are pretty complicated. 

Tariffs aren't a good way to achieve that goal. But they are a painful weapon for Trump. 

Because yes, tariffs' first effects are for us, as American consumers, but they do also harm foreign exporters. If you jack up the effective price of an import, that foreign producer is going to lose sales in the importing market—either because there are just fewer people buying it, or because an American company is going to start gaining market share.

So Trump has this tool, and he likes to throw it around. And he likes to pretend that it's about foreign trade barriers and all this stuff, but the reality is it's increasingly clear that it is just an excuse for Trump to raise tariffs.

The deals with Vietnam—well, let's start with the UK. The United States barely got any sort of reductions in English trade barriers—whatever they might be, tariff or non-tariff. But at the same time, the United States didn't really give products from the UK much preference either. There's a little bit on aircraft and a little bit for autos, but nothing too major. Most of the tariffs Trump imposed unilaterally remain.

And now we have these new deals with Vietnam, supposedly—we still haven't seen that text—and Indonesia, supposedly. But in that case, the United States is maintaining tariffs of around 20 percent. Those governments are lowering some tariffs, but we don't know exactly what. Trump says they're going to zero, but we need to wait and see the details.

So what we're really getting out of these deals is not true free trade, as some in Trump's orbit have argued. We're just getting a mercantilist setup, where we get high U.S. barriers, slightly lower foreign barriers, and a still quite restricted trade overall.

That's the reality. 

My working thesis on all of this has, for a long time, been: Trump just likes tariffs. He thinks they're great. He thinks they're a great economic tool. He thinks they're a great way to get very powerful people to run to the White House and ask him for stuff. And he thinks they're a way to keep the Trump show running in the media. You put all that together, and it's a recipe for just constant tariff stuff.

Liz Wolfe: I'm like 90 percent in agreement there, and then 10 percent of me is just a contrarian—and/or I want to steelman the Trump-defender case. Which is like: is there a level at which the tariffs on U.S. goods that are coming into other countries could be reduced to a point where the fact that Trump has basically started all of these trade wars and escalated them…

Zach Weissmueller: Like "tariff our way to free trade," is what you're saying.

Liz Wolfe: Yeah, exactly. I don't think we've seen that so far. But we are actually—in some countries, I think Indonesia might have been a good example of this; that was in the news this week—seeing a little bit of a reduction. Is there a case to be made there?

Scott Lincicome: So yes and no. I do think it is worthwhile—and it's a point for Trump—that these tariff threats seem to have gotten these governments to reduce their trade barriers on U.S. exports.

Liz Wolfe: You have to re-examine the barriers that they were imposing.

Scott Lincicome: But this is, first of all, in a country like Vietnam—which has also apparently offered to lower its trade barriers. Vietnam wanted that for a long time. Vietnam was a member of the Trans-Pacific Partnership, which the United States used to be a member of, and which would have eliminated 99-plus percent of Vietnamese tariffs and non-tariff barriers on everything from the United States. And done in a much more comprehensive and coherent and transparent way.

Indonesia is a different case. It's a very tiny market. I guess prying it open—there are a lot of people there, and that's a good thing. But is it economically significant? Eh.

The bigger problem is that this is going to be bad for the United States. We are going to keep tariffs on—and very high tariffs on things from Vietnam and Indonesia and anywhere else. 

And import tariffs mean fewer exports. I know that's hard to wrap your head around, but a tax on imports is a tax on exports.

We call it Lerner symmetry. The basic idea is that—whether it's through higher input costs or currency changes or other wonky economic things—when you increase import tariffs, you tend to reduce exports. So even though these countries are lowering some barriers, because we're going to maintain high import barriers, we shouldn't expect a supercharged export industry.

Liz Wolfe: Also, another knock-on effect I keep thinking about is: how are foreign exporters changing their behavior vis-à-vis the U.S. and their future plans? That's another component that continues to bother me.

Scott Lincicome: That's another thing we have to consider in all of this. It's not just about the United States and the other country. It's about the other country and all the other countries. Because what you've seen over the last few years—because Biden wasn't a big free trader, he wasn't doing anything on trade agreements—what you've seen over the last few years is governments just doing free trade deals with each other and leaving the United States out of it.

I think that's going to be the endgame for all of this: the United States is going to have a pretty high unilateral tariff wall in place, and other governments and countries and their people are going to be trading more freely with each other and just leaving us out of it.

Liz Wolfe: That makes a lot of sense. So one of the weirdest developments so far in all of the tariff drama has been Trump's threats against Brazil—basically threatening Brazil with 50 percent tariffs for what he claims is a witch hunt domestically against Jair Bolsonaro and secret and unlawful censorship orders to U.S. social media platforms handed down by the Brazilian courts.

The U.S. has a trade surplus with Brazil. So this is just pure politics. This isn't even about the trade imbalance that Trump is so bothered by. To me, this feels like—Trump has already given us five, six different excuses for what he's trying, five or six different justifications for what he's trying to accomplish with tariffs—but to me, this looks a lot like punishing political adversaries and being pissed off by what's going on domestically inside of Brazil. What do you think about Trump using tariffs in this way? Is this a new front that's been opened up?

Scott Lincicome: Yeah, I mean, in one sense, I love it because it is just such an egregious and clear example of why the law under which all this is happening—the IEEPA—needs to be ruled unconstitutional and eliminated from our corpus.

The reality is that if the president of the United States can threaten 50 percent tariffs on Brazil for what are clearly their own domestic political issues, then the law under which he's doing all of this is just totally bogus, right? 

And it's just so indefensible. You're not going to find anybody—even someone who supports Trump—who's like, "Oh yeah, that's clearly a great use for tariffs."

I'm hoping the courts that are ruling on this stuff will—if they don't expressly pay attention to it—at least implicitly pay attention to it. That said, in the meantime, it's troubling, right? Could you imagine a situation where a foreign government tried something like this related to a U.S. court case? I mean, we would lose our minds—rightly—over this. Right? So that type of interference, using that type of economic coercion for something so nakedly personal and political, is really messed up.

Liz Wolfe: I also haven't looked too deeply into this, but I know one major Brazilian import to the U.S. is meat, for example. And so I'm curious about Trump and Tucker Carlson and all these right-wing types who are so pissed off by people switching to meat alternatives—it's like, well, you might've just jacked up the price of meat because you're worried about Brazilian courts attempting to hold Bolsonaro accountable for his attempted coup. Like, really consider…

Scott Lincicome: Yeah, and coffee—that's the one I'm worried about.