Economist explains Trump's tariff strategy

President-elect Donald Trump says he will enforce a 25% tariff on imports from Canada and Mexico alongside his proposed 60% tariffs on Chinese imports, sparking market volatility.
SMBC Nikko Securities America chief economist Joseph LaVorgna, who served as the National Economic Council chief economic during Trump's first term, joins Morning Brief Hosts Seana Smith and Brad Smith to discuss how Trump's second term in office will differ from his first four years.
LaVorgna says the proposed tariffs are "consistent with President-elect Trump's economic agenda, which is an integrated approach whereby you have tariffs that occur alongside low corporate tax rates, low regulations, a cutback in government spending, and abundant energy output, and essentially all those things work together to slow the offshoring to get more onshoring, more reindustrialization in the US economy and essentially build a much stronger base and tariffs are a key tool in using that agenda."
The economist adds, "I don't like when people just look at the tariffs in isolation. It's part of a total comprehensive process where everything is integrated, where companies want to come to the US because of low corporate tax rates, low regulation, cheap energy, and things that are just favorable to producing. I think that's the point in tariffs, [which] are the key tool to getting our trading partners to the table and also incentivizing companies from not leaving and, of course, foreign producers who would be tariffed effectively to come to the US."
Watch the video above for more about LaVorgna's expectations around the impact of Trump's tariff policies and his views on the Federal Reserve.

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[paulhenry]

Reading Trump’s tweet it seemed like he was linking his tariffs directly to illegal immigration. This didn’t seem economically based at all. I thought he was just threatening Mexico and Canada to fix his immigration problem the same way he fixed most issues that came up before. Blame someone else while never addressing the underlying problem.

[vititom]

This economists lives in Lalaland if he thinks that you can keep inflation low and increase tariffs. Where do these people get their degrees?

[peterd]

“Tariffs aren’t a tax, they’re a price adjustment”… so much double-speak you can tell he doesn’t even believe it.

[AlexClarkcompany]

We are facing new financial hurdles! Each day, we encounter challenges that have become normal. What once felt like a crisis is now our reality, and we need to adjust. With the economy in turmoil, how can we enhance our income? I can’t afford to lose my 380k in savings after all my effort

[DSLightning]

Darn, now we have to buy American... 🤔

[douglasgray]

Canada and Mexico should say and do nothing after the tariffs are imposed. All they have to do is sit back and watch the Americans tear themselves apart as inflation runs rampant after the price of everything rises by 25% ! Talk about punching yourself in the face, way to go Trump!

[camresearch]

The USA buys cheap Canadian Heavy crude oil 🛢 at close and sometimes even less than the cost of production and transportation. The US petrochemical industry has been setup for Heavy Crude that must be imported from Canada 60%, Venezuela and the Middle East. Light Crude from fracking is mostly exported at a good price.

[danbenz]

Increasing domestic oil production will have minimal effect on inflation since OPEC will scale back production. It will only be good for domestic producers’ profits.

[romanodaly]

This fool is not telling us the whole picture.

[SortaDopeIGuess]

Gotcha, it’s almost Always about Oil. Cutoff cheap Canadian oil and increase fracking.

[sergeysviridov]

America needs tens of millions more people of young productive age in order to move production back to USA. But Trump wants to kick millions out, Ouch !

[johnmcallan]

Does this mean that all these Trump Bibles and Trump sneakers manufactured in China are going to cost more. Oh Dear!

[toltec]

I hope these tariffs that the president imposing don't bite us on the butt like the Hawley-Smoot tariff did in the early 1930s, which made the Depression worse, according to economists.

[malcomlahey]

It's simple all import goods will cost 25 percent more .

[Thiggman-cswx]

If tariffs are so scary is that an unhealthy dependency on imports? Shouldn't tariffs cause consumers to buy less of the products in question because of the additional cost and wouldn't that make any competing products made domestically more enticing, encouraging businesses to produce domestically to save costs? If we Americans have no options due to dependency on other countries then isn't THAT what we should be addressing?

And isn't it a similar premise for immigration and labor? If there wasn't an entire underclass of cheap labor wouldn't we adapt and localize with smaller farms? And if Americans don't know how to supply to a demand, especially for our own food supply then isn't that a problem we should be addressing immediately? Again, are we not at a dangerous level of dependency that forces a desperation on our part and will make us the b+tch of other countries taking advantage?

Also, if a business can't afford labor costs then shouldn't that business shut down? Isn't that the healthiest thing to do? And if they can afford the labor costs required to entice American workers then shouldn't they be paying those wages? Really asking and if you want to let me know how smart you are by telling me how dumb I am just skip it.

[Phlakaton]

Bringing manufacturing and jobs back to the USA... uhhhh. Ok. I have a bridge to sell you. Source materials are not grown and cultivated here anymore if some ever were. What a wonderfully brilliant idea to tariff everyone! GENIUS. Energy reduction? I just laughed my arse off. Low regulation is killing this country. Good ol' rich boys world speak from this clown.

[onemilkyway]

Tariffs is to help trump own business .

[anchoredsoul]

Reindustrialization in 2024 will look very different with the integration of AI and machinery labor/automation. Increase in supply's or goods, decrease in labor to reduce expenses in providing a livable wage. I can also see more mergers of large companies as a survival tactic.

[bellascharfenstein]

it's going to take a very long time before manufacturers go to the US. how low do energy costs have to be and how high do company tax incentives have to be? And - where does the cost of labour fit into this? is this going to be low too?

[malizon]

Normies sleeping on NorvenAI. We literally have Elon and tate promoting us.