'Why Go Through All This?': Economist Hammers President Trump Over Tariffs

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Clifford Winston, Senior Fellow at the Brookings Institution, joined "Forbes Newsroom" to discuss President Donald Trump's tariffs.    Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more:  https://account.forbes.com/membership/?utm_source=youtube&utm_medium=display&utm_campaign=growth_non-sub_paid_subscribe_ytdescript   Stay Connected Forbes on Facebook: http://fb.com/forbes Forbes Video on Twitter: http://www.twitter.com/forbes Forbes Video on Instagram: http://instagram.com/forbes More From Forbes:  http://forbes.com

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00:00I'm curious as an economist. What do you think of tariffs being used as a negotiating tactic because people pundits?

00:08Republic some Republicans who are supporting Donald Trump. They're saying everything from he's putting America first

00:13He's showing our trading partners that America isn't going to be taken advantage of this is sending a message

00:19Change is tough, but buckle in in the long haul. This will be to our benefit. What do you say to those types of arguments?

00:26Again what are you trying to do? I mean you're using a negotiating tactic. What is your end goal?

00:32Right. I mean if your end goal again is what we're doing this to increase employment

00:39Okay, why not go for a policy?

00:43Which we know is a much more efficient way

00:47to increase employment like the investment tax credit and

00:51These are other things that can be done. Why go through all this?

00:55Right. I mean, it's only gonna annoy partners. Yes, there's there's this

01:00theoretical literature and economics about what the optimal tariff

01:04Thinking back and forth about people responding. But again, you look at practice, right?

01:10Look at the evidence, you know

01:12Is there really any compelling evidence that this actually works or does it generally backfire and hurt consumers?

01:20We Trump did this his first term

01:22We have evidence about what the effects are and they're not positive in terms of overall welfare for the economy

01:30Prices went up and it was very costly for any jobs that were created. There's also another risk

01:37Effectively what you're doing

01:39When you when you set up tax tariffs and you're protecting domestic

01:45firms

01:47They might raise their prices they may say look I'm an auto company I put in tariffs I don't have to compete as

01:55Intentionally as I used to with say Japanese automakers

02:00I think I'm gonna raise my prices and their positions are gonna go up. I might not necessarily help consumers

02:07Now in this case, this is now theory. This is what happened in the 1980s

02:12When we negotiated the voluntary expert

02:15Voluntary export restrictions with jet with the Japanese

02:21Government and this was before

02:24the Japanese

02:26Companies were here producing so much. That's exactly what happened

02:29The US automakers actually raised their places because their competitors were less affected because their prices were higher

02:36So these are the kinds of unanticipated effects that can happen

02:40But in any case we really have no evidence that any sort of strategic behavior is going to work in this area

02:47And it hasn't in the past

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