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Americano: was 'free trade' really working?

6 snips
Feb 24, 2025
Oren Cass, founder and chief economist of American Compass, shares his insights on tariffs and U.S. trade policy with Freddy Gray at the ARC conference. They discuss Trump's recent announcement of reciprocal tariffs and how it could reshape global trade dynamics. Cass challenges the longstanding consensus on free trade, questioning its effectiveness for American businesses, especially in competition with China. They explore the complexities of economic dominance and the need for a pragmatic approach to U.S.-China relations in a rapidly evolving landscape.
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INSIGHT

Reciprocal Tariffs as Negotiation

  • Reciprocal tariffs can be used as a negotiating tool, encouraging other countries to lower their tariffs.
  • This approach also signals a departure from the US's previous stance of accepting unbalanced trade relationships.
ANECDOTE

Reagan's Auto Quotas

  • Reagan, despite being seen as a free trader, implemented quotas on Japanese cars in the 1980s.
  • This led to Japanese automakers opening plants in the US and eventually making the Toyota Camry the "most American car."
INSIGHT

Auto Market Imbalance and China

  • The current global auto market setup doesn't make sense under typical economic theories, with the US importing but not exporting many vehicles.
  • China's high tariffs forced Tesla to open a plant in Shanghai, leading to IP transfer and increased competition for Tesla.
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