WEBVTT

00:01.966 --> 00:04.333 align:left position:20% line:77% size:70%
GEOFF BENNETT: The U.S.,
Canada and Mexico all agree to
delay the start of President

00:04.333 --> 00:09.333 align:left position:20% line:71% size:70%
Trump's tariffs and hold
off, at least for now,
on the possibility of a
trade war among allies.

00:11.366 --> 00:14.933 align:left position:10% line:77% size:80%
But the delay is only for a few
weeks, and, as of now, there
will be new tariffs taking

00:14.933 --> 00:19.933 align:left position:10% line:77% size:80%
effect tomorrow, 10 percent
on goods from China. That's
already on top of tariffs on

00:21.766 --> 00:23.933 align:left position:20% line:77% size:70%
Chinese products and
materials dating back to
President Trump's first term.

00:23.933 --> 00:28.200 align:left position:10% line:77% size:80%
AMNA NAWAZ: President Trump also
called the new tariffs on China
a -- quote -- "opening salvo."

00:28.200 --> 00:33.200 align:left position:10% line:77% size:80%
And he spoke this weekend about
his plans to issue new punitive
tariffs against another ally,

00:35.100 --> 00:37.700 align:left position:10% line:77% size:80%
the European Union. These
threats and the prospects
of a trade war lead

00:37.700 --> 00:41.933 align:left position:20% line:77% size:70%
to a number of questions
about how tariffs have
been used in the past,

00:41.933 --> 00:45.366 align:left position:10% line:83% size:80%
what effect they have had, and
their potential impacts now.

00:45.366 --> 00:50.333 align:left position:10% line:83% size:80%
Economics correspondent Paul
Solman takes a closer look.

00:52.500 --> 00:55.466 align:left position:10% line:77% size:80%
PAUL SOLMAN: Tariffs, taxes on
imports to the U.S. collected
at 328 ports of entry across

00:57.600 --> 01:01.033 align:left position:10% line:77% size:80%
the country. Here's a look at
some of the reasons President
Trump gives to hike them.

01:01.033 --> 01:03.366 align:left position:10% line:77% size:80%
DONALD TRUMP, President of
the United States: Instead
of taxing our citizens

01:03.366 --> 01:08.033 align:left position:10% line:71% size:80%
to enrich other countries,
we will tariff and tax
foreign countries to
enrich our citizens.

01:10.733 --> 01:15.733 align:left position:20% line:71% size:70%
PAUL SOLMAN: Reason
one, to raise money from
foreigners, instead of
taxing Americans. President

01:17.833 --> 01:21.000 align:left position:10% line:77% size:80%
Trump insists tariffs were once
the great revenue source for the
United States, and it's true.

01:22.633 --> 01:24.766 align:left position:20% line:77% size:70%
DOUGLAS IRWIN, Dartmouth
College: Right up
until the Civil War,

01:24.766 --> 01:27.933 align:left position:10% line:77% size:80%
tariffs raised 90 percent of
the revenue for the federal
government. But the federal

01:27.933 --> 01:32.900 align:left position:10% line:71% size:80%
government was very small.
Spending was like 2 to 3
percent of GDP. So there
wasn't much to fund,

01:32.900 --> 01:36.333 align:left position:20% line:77% size:70%
except for the debt and
the current expenditures,
and the tariff did it.

01:36.333 --> 01:41.333 align:left position:20% line:71% size:70%
PAUL SOLMAN: Today,
government spending is
almost a quarter of GDP. How
much do tariffs bring in?

01:43.733 --> 01:45.966 align:left position:20% line:71% size:70%
DOUGLAS IRWIN: Today,
it's only about 2 percent
of federal revenue comes
from the tariff. It's just

01:45.966 --> 01:50.633 align:left position:10% line:77% size:80%
been swamped by corporate taxes,
income taxes, Social Security
taxes and things of that sort.

01:52.066 --> 01:53.666 align:left position:10% line:83% size:80%
PAUL SOLMAN: But the point
is to replace those taxes.

01:53.666 --> 01:57.033 align:left position:20% line:83% size:70%
So how much more money
can hire tariffs raise?

01:57.033 --> 02:00.766 align:left position:20% line:71% size:70%
KIMBERLY CLAUSING, UCLA
School of Law: If you
look at total federal
revenues in a typical year,

02:00.766 --> 02:04.733 align:left position:10% line:83% size:80%
they're over $4 trillion.
Almost $3 trillion of

02:04.733 --> 02:09.433 align:left position:10% line:77% size:80%
that is a combination of the
individual income tax and
the corporate income tax,

02:09.433 --> 02:13.466 align:left position:10% line:77% size:80%
whereas we think the maximum
you could get out of tariffs,
if you really pushed them

02:13.466 --> 02:17.200 align:left position:10% line:77% size:80%
to the highest level you could
go, would be in the neighborhood
of $800 billion, right?

02:17.200 --> 02:22.200 align:left position:20% line:71% size:70%
So that's not going to
come anywhere near what
you need to even replace
the individual income tax,

02:24.000 --> 02:27.333 align:left position:20% line:77% size:70%
let alone the corporate
tax, payroll taxes and other
types of tax on income.

02:27.333 --> 02:32.333 align:left position:20% line:71% size:70%
PAUL SOLMAN: A second
reason, tariffs to protect
American industry from
foreign competition,

02:34.100 --> 02:37.166 align:left position:20% line:77% size:70%
a la the future 25th
president of the United
States, William McKinley.

02:37.166 --> 02:40.033 align:left position:20% line:71% size:70%
DOUGLAS IRWIN: So,
William McKinley, as chair
of the House Ways and
Means Committee, ushered

02:40.033 --> 02:45.033 align:left position:10% line:71% size:80%
through a piece of legislation
that became known as
the McKinley tariff. It
was passed in 1890. And

02:47.333 --> 02:49.700 align:left position:20% line:71% size:70%
it had revenue effects.
It was designed to protect
domestic industry from
foreign competition.

02:49.700 --> 02:52.733 align:left position:10% line:83% size:80%
And, in particular, he, as
representing the state of Ohio,

02:52.733 --> 02:57.233 align:left position:10% line:77% size:80%
was interested in helping
out the steel industry, which
was located in his district.

02:57.233 --> 03:01.966 align:left position:20% line:71% size:70%
PAUL SOLMAN: President
Trump has promised to help
out various industries
nowadays, citing McKinley.

03:01.966 --> 03:06.966 align:left position:20% line:71% size:70%
DONALD TRUMP: President
McKinley made our country
very rich through tariffs
and through talent.

03:08.800 --> 03:12.633 align:left position:20% line:77% size:70%
PAUL SOLMAN: However,
when McKinley became
president in 1897:

03:12.633 --> 03:15.933 align:left position:10% line:77% size:80%
DOUGLAS IRWIN: The wasn't this
massive boom. We had, like,
sort of a mini-depression in

03:15.933 --> 03:20.400 align:left position:10% line:77% size:80%
1893 that lasted for several
years. And as president
now, McKinley said,

03:20.400 --> 03:24.200 align:left position:20% line:77% size:70%
gee, if we could export
manufactured goods and
farm goods to the world,

03:24.200 --> 03:27.500 align:left position:10% line:83% size:80%
we could pull out of this
recession and do much better.

03:27.500 --> 03:31.233 align:left position:20% line:77% size:70%
And he changed tack. In
fact, he said the age
of exclusion is past.

03:31.233 --> 03:34.733 align:left position:20% line:77% size:70%
He also said commercial
wars weren't productive.
And so he was a much more

03:34.733 --> 03:39.300 align:left position:10% line:83% size:80%
outward-oriented president than
he was as a member of Congress.

03:39.300 --> 03:41.300 align:left position:10% line:83% size:80%
PAUL SOLMAN: Plus, there's
a problem with tariffs,

03:41.300 --> 03:46.300 align:left position:10% line:77% size:80%
countertariffs, which both
Mexico and Canada threatened
before today's delay.

03:48.266 --> 03:50.166 align:left position:20% line:77% size:70%
JUSTIN TRUDEAU, Canadian
Prime Minister: Canada will be
responding to the U.S. trade

03:50.166 --> 03:54.633 align:left position:20% line:77% size:70%
action with 25 percent
tariffs against $155 billion
worth of American goods,

03:57.966 --> 04:02.933 align:left position:20% line:77% size:70%
such as American beer,
wine, and bourbon,
fruits and fruit juices,

04:04.800 --> 04:08.333 align:left position:20% line:77% size:70%
including orange juice,
along with vegetables,
perfume, clothing, and shoes.

04:10.200 --> 04:14.866 align:left position:10% line:77% size:80%
It will include major consumer
products like household
appliances, furniture,

04:14.866 --> 04:19.866 align:left position:20% line:71% size:70%
and sports equipment,
and materials like lumber
and plastics, along
with much, much more.

04:22.900 --> 04:27.666 align:left position:20% line:77% size:70%
PAUL SOLMAN: Which would
make our goods more expensive
and thus hurt our exports.

04:27.666 --> 04:31.666 align:left position:10% line:83% size:80%
And that raises the question,
who pays for tariffs anyway?

04:31.666 --> 04:34.500 align:left position:20% line:83% size:70%
According to research on
the last Trump tariffs:

04:34.500 --> 04:37.800 align:left position:20% line:71% size:70%
AMIT KHANDELWAL, Yale
University: So what we
found in the 2018-2019
tariffs is that,

04:37.800 --> 04:41.000 align:left position:10% line:83% size:80%
when the U.S. imposed tariffs
on predominantly Chinese goods,

04:41.000 --> 04:46.000 align:left position:20% line:71% size:70%
the U.S. economy and
U.S. importers bore the
full incidence of those
tariffs. And some of

04:47.500 --> 04:50.566 align:left position:10% line:83% size:80%
those costs would then trickle
down and come back to consumers.

04:50.566 --> 04:54.700 align:left position:10% line:77% size:80%
PAUL SOLMAN: Prices went up
less than half-a-percent.
But the first Trump

04:54.700 --> 04:59.700 align:left position:10% line:77% size:80%
tariffs were just 15 percent
on about 15 percent of U.S.
imports, not much. And,

05:01.866 --> 05:05.800 align:left position:10% line:77% size:80%
of course, the more and higher
the tariffs, the more expensive
for importers and consumers.

05:07.066 --> 05:09.600 align:left position:20% line:83% size:70%
Moreover, they don't
hit everyone equally.

05:09.600 --> 05:11.566 align:left position:10% line:83% size:80%
DOUGLAS IRWIN: The tariff
is a very regressive tax.

05:11.566 --> 05:14.800 align:left position:10% line:77% size:80%
It hits lower-income households
more than higher-income
households. So if we were

05:14.800 --> 05:19.500 align:left position:10% line:77% size:80%
to attempt to try to cut the
income tax or replace the
income tax with a tariff,

05:19.500 --> 05:24.300 align:left position:10% line:77% size:80%
we'd be going from a fairly
progressive tax system to a
very regressive tax system.

05:24.300 --> 05:28.000 align:left position:10% line:77% size:80%
PAUL SOLMAN: Muscling other
countries may be working,
as Colombia's about-face

05:28.000 --> 05:33.000 align:left position:20% line:77% size:70%
on accepting deportees
suggests when Trump threatened
tariffs on Colombia.

05:34.100 --> 05:37.033 align:left position:30% line:83% size:60%
As to protecting
American manufacturing:

05:37.033 --> 05:39.500 align:left position:10% line:83% size:80%
DOUGLAS IRWIN: Well, here, it's
a double-edged sword. We'd help

05:39.500 --> 05:43.400 align:left position:10% line:77% size:80%
some industries, but we'd
hurt others. Economists
see trade-offs, rather than

05:43.400 --> 05:47.900 align:left position:10% line:77% size:80%
sort of net creation of jobs
and expansion of manufacturing,
as a result of tariffs.

05:47.900 --> 05:52.400 align:left position:20% line:77% size:70%
PAUL SOLMAN: What impact
will the new tariffs actually
have? We will soon find out.

05:52.400 --> 05:54.000 align:left position:20% line:83% size:70%
For the "PBS News
Hour," Paul Solman.