AILSA CHANG, HOST:
A little disturbance, a period of transition, a detox period - these are all phrases that President Trump and his administration have used to describe the economy as the stock market has plunged in response to an onslaught of tariffs. But President Trump is adamant that his tariffs will ultimately bring revenue, jobs and factories to the U.S. So the question is, is this short-term pain in exchange for long-term gain or are these just the early signs of a recession? To help us answer that question, we're joined now by economist Matt Slaughter. He's the dean at the Tuck School of Business at Dartmouth. Welcome.
MATT SLAUGHTER: Thank you. Pleasure to be here.
CHANG: Pleasure to have you. So can you just first try to spell out what is President Trump's explanation, as you understand it, for what is happening in the economy right now, and where does he say the economy is headed?
SLAUGHTER: Sure. I think the metaphor of short-term pain is the president articulating that his attempt to try to restructure the American economy will generate costs and disruptions in the short term. I think what's being missed, however, is that the more accurate forecast is that what the United States is setting itself up for is not just short-term pain, but long-term pain, as well.
CHANG: Well, I was just going to ask you because President Trump is trying to assure people that any disturbance that's felt right now is only temporary. Is it only temporary? It sounds like you don't think it is temporary.
SLAUGHTER: It is unlikely to be temporary. The breadth and depth of the tariffs that are being posed and the possible additional policies that might restrict international investment in immigration, those are going to damage the United States not just in the short term, but in the long term, as well. I think a fundamental reason that President Trump was elected and then reelected was his astute understanding that globalization has not benefited every single worker and company and community. But what is being missed is that for decades, all those connections to the global economy through trade and investment and immigration have really spurred gains for scores of millions of Americans.
CHANG: Well, one specific goal that Trump has mentioned is that he wants to rebuild U.S. manufacturing. Do you think his tariff plan can ultimately truly accomplish that?
SLAUGHTER: I worry that it won't. If you look at the data, the strongest companies in the United States in manufacturing and in services, as well, they tend to be the globally connected companies, the ones that through importing intermediate inputs and exporting their products to the rest of the world, and those tend to be the more productive, the more innovative companies, and the ones that ultimately end up paying higher wages and generate better jobs, which is rightly what the president is focusing on.
CHANG: But is there an argument to be made that these tariffs can still help a little bit, like the head of the United Auto Workers, Shawn Fain, who's been a big critic of Donald Trump, he's actually come out in favor of these tariffs. Like, here he is on ABC's "This Week."
(SOUNDBITE OF TV SHOW, "THIS WEEK")
SHAWN FAIN: Tariffs are an attempt to stop the bleeding from the hemorrhaging of jobs in America for the last 33 years.
CHANG: Is Fain wrong to think that these higher tariffs will help the U.S. auto workers whom he represents?
SLAUGHTER: No. He's not necessarily wrong that auto workers in particular, parts of the auto industry, may benefit from higher tariffs that limit the competition that certain companies face from imports coming in from the rest of the world. But what's essential in understanding of the overall U.S. economy is the kinds of tariffs that are being posed almost always generate greater harm in other companies. So, for example, in recent days, the United States has dramatically escalated our tariffs on imports of steel and aluminum. Well, the data show very clearly, there's somewhere 30-50 jobs in steel-using industries in America. For every job there is in the steel producing. And so the aggregate impact on U.S. manufacturing tends to be quite harmful.
CHANG: And we should note, like the president did not rule out a possible recession. Do you think a recession is likely?
SLAUGHTER: It's getting more likely by the day. The wider and broader and higher these tariff barriers go up, the more likely it is that businesses in America are going to suffer losses in profits. They're going to be less productive. There's going to be jobs lost. And it's very clear that American consumers, smartly and rightly, are recognizing the likelihood that the prices that they pay for goods and services are going to go up.
CHANG: Matthew Slaughter is an economist and the dean at the Tuck School of Business at Dartmouth. Thank you very much for your time today.
SLAUGHTER: Thank you. Transcript provided by NPR, Copyright NPR.
NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.
