What Donald Trump's second term will mean for the US economy
Dec 7, 2024
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Oren Cass, founder and chief economist at American Compass, delves into Donald Trump's vision for a 'golden age of America.' He discusses the implications of record tariffs and mass deportations, arguing they could help American workers by tightening the labor market and raising wages. Cass counters concerns about inflation and global trade wars, insisting that strong tariffs are necessary to combat China's unfair trade practices. His insights challenge the conventional economic perspectives, offering a provocative viewpoint on an America-first economic agenda.
Trump's proposed mass deportations aim to tighten the labor market, potentially increasing wages and improving working conditions for American workers.
Significant tariffs on Chinese imports are positioned as essential to protect American jobs and encourage domestic manufacturing despite concerns about inflation and trade wars.
Deep dives
Trump's Economic Policies and Immigration Strategy
The discussion revolves around the anticipated economic policies of a Trump administration, particularly its aggressive stance on immigration and labor market policies. Trump aims to tighten the labor market by deporting undocumented immigrants, which is expected to increase the demand for American workers and thus incentivize better wages and working conditions. Oren Kass argues that illegal labor undercuts the productivity and wages of legal workers, so removing undocumented immigrants could compel employers to invest in their workforce and operational processes. This focus on domestic labor contrasts with the Biden administration’s priorities, which have leaned more towards climate change and student debt relief.
Implications of Tariff Implementation
Tariffs, particularly on Chinese goods, are positioned as a core strategy to protect American jobs and enhance manufacturing. Trump has proposed significant tariffs, including at least 60% on Chinese imports, to counter China's efforts to dominate various sectors of the economy. Kass supports the idea that these tariffs can effectively reverse the trend of deindustrialization that has affected the U.S., asserting that strong tariffs would make America less dependent on China and encourage domestic production. Critics, however, warn that these tariffs could ignite a global trade war and elevate consumer prices, raising concerns about economic consequences during a period of high inflation.
Corporate Accountability in Immigration
The conversation emphasizes the need for corporate accountability in employing legal labor and the effectiveness of E-Verify systems to reduce illegal immigration. Kass advocates for stricter enforcement of hiring practices, asserting that businesses should be required to use E-Verify to ensure they are hiring legally authorized workers. He highlights a bipartisan push in Congress to mandate E-Verify, stressing that failure to enforce these laws perpetuates the labor market imbalance and negative impacts on American workers. This issue underscores the broader challenge of illegal immigration and the need for policies that also focus on the behavior of employers, not just migrants.
Reassessing U.S. Trade Relations with China
Kass argues for a reevaluation of trade relations with China, claiming that previous policies allowed China to exploit the U.S. market at the expense of American workers. He proposes revoking China's most favored nation status to treat it as an economic pariah due to its disregard for fair trade practices. The discourse suggests that integration with China's economy has been detrimental, and a full decoupling could be necessary to safeguard U.S. interests and manufacturing capabilities. Kass believes that only through such measures can the U.S. rebuild its industrial base and ensure long-term economic sustainability.
Donald Trump has promised to fix what he calls a broken economy and usher in a “golden age of America.” He’s vowed to implement record tariffs, slash regulation, and deport millions of undocumented immigrants. But what will that mean practically for America’s economic future? On the GZERO World Podcast, Ian Bremmer is joined by Oren Cass, founder and chief economist at the conservative think tank American Compass, to discuss Trump’s economic agenda and why Cass believes it will help American workers and businesses in the long run. Mass deportations, he says, will lead to a tighter labor market that will force employers to raise wages and increase working conditions. He also argues that steep tariffs are the only way to level the playing field with China, which has “flouted any concept of a free market or fair trade” for decades. However, many economists warn that Trump’s plan will lead to rising inflation and a global trade war. So what’s the biggest argument for an America first economic agenda? Will it really lead to long-term benefits for workers? Oren Cass makes his case.