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It is a Bloomberg BusinessWeek, that is Carol Masser, I'm Tim Stenebeck live from the Bloomberg Interactive Brokers studio in New York. Let's talk tariffs, Carol, because President Elect Donald Trump's threats of tariffs on Canadian and Mexican imports might be merely tough talk to the two largest US trading partners for the North American auto industry and especially American producers, though import taxes like the kindies espousing would bring quote
considerable pain. That's among the conclusions in this new report from Bloomberg Economics Nicole Gordon Caratelli, who writes quote, by threatening Canada and Mexico with tariffs, Trump is threatening to significantly disrupt the US auto sector.
Yeah, this is a big thing, Joseph Thorndike, or might be, depending on exactly what gets done. Joseph Thorndyke is director of the Tax History Project at Tax Analysts, which calls itself a nonpartisan, nonprofit publisher of news and commentary about federal, state, and international tax issues, which the organization does under the brand tax Notes. Joseph joining us on this Tuesday from False Church, Virginia. Jose good to have you here with us.
Walk us through what some of the implications we could see from potential tariffs in the Trump administration. How are you seeing it? What are you hearing from clients? What are their concerns?
I mean, there are a lot of possibilities here, and that probably more unknowns than there are knowns, because you know, Donald Trump is notoriously a little bit loose about the specifics when he talks about things, so it's hard to know exactly what he has. In mind that the kind of tariffs that he's talking about is across the board tariffs, so say ten twenty five percent, the number of moves around these have the likelihood to be really disruptive. And those,
you know, those sorts of tariffs are unusual. First of all, they have like a flat ray tarraff across all products, and it's not at all clear that he would do something like that, even as some of his advisors have suggested that, you know, he wouldn't impose a tariff on on items which don't really have a domestic manufacturing equivalent. But it seems likely that these tariffs, but they you know, they might be a negotiating ploy to extract good deals
with other countries. Certainly the deal maker, Donald Trump, has said that. But they think they should be taken reasonably seriously because Trump has been talking about them forever as long as he's actually been in politics. So I think this strikes fear into the hearts of lots of people, including a lot of businesses who stand to see their supply chains disrupted by this.
You would, you know, how do you look at this over at the tax history project, at tax analysts? Do you look at tariffs as a tax?
Absolutely?
In fact, for a long time, they were really pretty much the only tax that the United States had, so up until the Civil War, really the only thing going most of the time except during wars, and even in the after the Civil War, they're still providing sixty percent of total revenue up until you know, nineteen thirteen or so. Because this is the way that the founders of the country thought we would raise most of our revenue. The problem is that doesn't work very well at.
A couple of moments.
It doesn't work very well during wars, which have a tendency to disrupt trade.
And it tends to not work all that.
Well politically in the sense that tariffs are consumption taxes paid by the consumers of products, and that tends to be unpopular at various points. That was true during the Civil War, it was true in nineteen thirteen, and it's actually how we got the income tax.
You know, I do think about this a lot, and like you say, a blanket tariff on I mean, some would argue, right that targeted tariffs makes sense, whether you're trying to protect a growing industry, whether it's national security issues, like, there's a lot of things that I guess would make sense. But you do wonder about just throwing it on everything.
You know, in an environment where we just brought inflation down a lot over the last year, but there are still concerns of inflation being a little bit sticky here and maybe going up again. I mean, a blanket tariff would change a lot of.
Things absolutely, And you know, tariffs used to all be targeted. So we've forgotten this because since the nineteen thirties or so, Congress has more or less abdicated responsibility over tariffs. They've passed a series of laws which would let the president make most of the granular decisions. But before that, it was Congress who was voting on really every single item that was going to be tariffed. You know, the whole tariff would go up, the steel tariff would go down.
There were are over whether there should be a breakfast table tariff relief, in which, you know, items that people eat at their breakfast table, like sugar, should be reduced. Congress was really engaged in that granular work of deciding
which products exactly should pay which sorts of tariffs. That was incredibly dysfunctional, I mean to be completely honest, because Congress did a lot of log rolling, right like one member would say, Okay, we'll protect your sugar industry if you'll protect our steel industry, and that's just made for really high tariffs.
Do you think we're I mean, I don't want to say we're, but I think do you think do you think that given the research that you've done at the Tax History Project, and tax analysts and tax notes. Do you think Americans understand the implications of tariffs, like who pays for them?
I think that that's asking a lot for voters, right, So we all want voters to be perfectly informed about the incidents of taxes. But that's just ridiculous, right, They've never been that. I think it's very easy to pitch tariffs as something that someone else is going to pay, and Donald Trump does that all the time. He says other countries are going to pay these but in reality, that's just not the way it works. Almost all the time, almost all the time that those tariffs get passed along
to consumers, even for domestically produced goods. Like let's say that we're putting a tariff on imported cars. Domestic producers of cars will say, hey, well we can raise our prices to equal the tariff price or maybe just a little bit below.
So that's the irony here, is that.
It lowers I mean, it raises the prices not just of imported goods, but of domestic goods too.
You know, when we talk about tax policy in general, right, it gets us to do things. You get a tax credit, you buy an ev you get a tax credit because of your mortgage a mortgage deduction. Well you maybe think, okay, buying a home isn't so bad, like I do, think about that, you know, So you know, is there a net net in terms of tariff policy that you think is actually good for the US economy, good for US growth, versus that which is not.
It seems reasonable that a certain that certain numbers of a certain number of tariffs that are sort of targeted and specific are reasonable for certain things, for products or industries that are important to national security, for instance, And that's the way tariffs have been used in the past
for the most part. Again, what we're trying to draw a distinction here is between that sort of targeted tariff, which is trying to achieve a specific goal like protecting a crucial industry or even protecting jobs in certain industries, and these sort of blanket tariffs on everything that's important. And again, policymakers have a tough job. Actually we should always remember that that they have to weigh against different goals against one another.
So you can protect jobs by.
Raising tariffs on industries that face foreign competition, and those industries will be protected, but consumers will then pay more what's better, what's more important. I mean, that's a political decision and has to be made, but it's at least i'd say better to make it on a sort of individual basis rather than a blanket basis saying like in all cases it's better to protect an American industry.
Just not always true.
I don't think certainly that's not the way voters have viewed it. And I think that's something to really come back to, is that when we had really high tariffs in like the nineteenth century, they were deeply unpopular and they actually produced the modern income tax. We would not have a modern income tax if we hadn't had high tariffs first.
And that modern income tax has been has come down in many tax brackets over the years. Speaking of that, I'm wondering if you have done any analysis about at the time at the organization about how much would be raised through tariffs versus if the twenty seventeen Tax Cuts and Jobs Act were to be extended.
Well, you know, lots of people have tried to estimate this how much these tariffs are going to bring in. Again, it's a little hard because the details are pretty sketchy, but there are a lot of credible estimates out there that say that these tariffs are going to bring in the Trump is talking about are going to bring in something like two point eight trillion dollars over ten years, which sounds like a lot of money.
Accept that prope.
Also promises to extend the twenty seventeen tax cuts, and that's going to cost about four trillion dollars, so and compared to the income tax, two point eight trillion.
Dollars is not a lot.
Actually, over that same ten year period, the income tax is going to raise thirty four trillion dollars. So they these high terriffs will raise a lot of money. But they're not they're not some magic They're not going to pay for all the tax cuts. They're not going to pay for new tax cuts like the tax on tips or the salt exemption, well anything like that.
Like you say, you know, devil in the details and more to be known in terms of what the administration does. Joseph Thorndike, director of the Tax History Project at Tax Analysts. This is Bloomberg.
I don't know if you caught this yesterday. I know Carol did because she was probably watching Bloomberg tvor listening to.
Bloomberg Radio kind of always am Yeah.
On Monday, President like Donald Trump threatened to fire federal employees who don't come back to the office. He said he would go to court to challenge a Biden administration labor contract that locked in remote work arrangements for thousands of federal employees.
Here's what he said.
Yeah, if people don't come back to work, come back into the office, they're going to be dismissed. This was at a press conference yesterday in Palm Beach.
All right, we are so curious what our next guest has to say about this and more. Laura Gasner Auning. She has spent more than two decades in human resources helping create AmeriCorps, and has written two books, including Limitless, How to Ignore Everybody, Carve your own path, and Live your best life. She joins us from Boston on this Tuesday. Laura, nice to have you here on Bloomberg Business Week. We want to start with that. You know, it's so interesting
coming off the pandemic. It was amazing how much work, including all of us or many of us who did broadcast from our homes TV and radio, how much we could get done in terms of work while the global pandemic was happening. There was a real rethink saying, wait a minute, we have flexibility as workers. Well, lo and behold. Here we are in twenty twenty four and everybody, including
the president elect, is rethinking this. How do you see the way forward when it comes to be in the office versus working at home.
So I spent twenty years in executive search, and for fifteen of those years I ran my own company, which was a remote company, like back.
Before COVID was remote cool.
I'm very pro remote work, and at the same time, I think being in the office is super important. Frankly, we all learned during the pandemic that we could do our work from home, but managers didn't learn how to manage us when we were at home, and so a lot of us have seen stagnation in our careers. We've seen stagnation in our growth, both personal and professional, because
we haven't been in the office. The tools that we use to log in from our cubicle are the same tools that we use to log in from our living rooms, but the management tools they kind of remain the same, and so a lot of bosses they don't see you working, they don't see you working, and so I think the path forward is going to be at least in some way hybrid. There's going to be at least some return to work, and probably more and more returning to work over time.
Do you think that we'll go ahead?
Got?
But so you're saying it's a manager's problem.
Well, I think if the managers are the ones who are making a decision about your career, then it's all of our problems.
Do you think the federal government employees should have a similar policy as to other employees employers? I mean, I know that it is hard. It is a challenge for the federal government to find employees when competing with the private sector. The pay is definitely not as good and you're working for the government, I mean in their stability, but there's also frustration that comes with that. Do you think it's so I what do you think I do?
And it's interesting because I did actually work for the federal government, as you mentioned, having created AmeriCorps, being part of the team early in my career. So I would challenge one of the things that you said, which is that it's not as competitive because the pay isn't as good. I know from the time that I was in executive search that pay is something that attracts people to their jobs, absolutely, but they are also things like what's the mission of
the organization? Am I inspired by the leader? How broad are the skills I'm going to learn, How deep is the impact I'm going to make, how prestigious will look on my resume? Where's the job located, what's the commute like? What kinds of benefits will I get? How stable is the job? So there are lots of things that excite and inspire and engage people in the work that they do, and money is one of them. But at any age and at any life stage, it's not the primary one
all the time. And in fact, we did an assessment, a survey that we have ten thousand responses from seventy four different countries from before, during, and now as we've come out of the pandemic, every possible demographic, in every possible industry, and I'll tell you that thirty six point seven percent say money is the most important factor that lets them know whether or not they are happy and fulfilled in their job. But that means there's a whole lot of people for whom money is not the.
Most important thing.
So it may be that people who are working for the federal government have other things that are more interesting and exciting to them.
All right, let's get to something that we kind of tease, and this is revenge quitting. I'm asking about you know, what's going on in the labor market. We've got a FED meeting FED decision tomorrow. The number of vacancies per unemployed worker. It's a ratio that the FED watches closely. Was little change at one point one, in line with pre pandemic levels. That it's peak in twenty twenty two, the ratio is two to one. I mean, we watch things like job openings and the quit rate to god
and get an idea of where we are. Who's got the upper edge? Is it companies or is it workers? Right now? How do you see that environment.
We're in a pretty low and we're in a pretty low unemployment rate right now, so it really is the employees market. I saw some studies the other day that said that half of all workers are thinking about looking for a new job in twenty twenty five, and at least a third of them are already looking. So they're using this holiday period to network and to have conversations with people their nearest and dearest to just talk about what might be next for them.
So I think that we're going to see a lot of change in the new year.
And the revenge quitting, I mean, you know, some of it comes down to companies saying that the people have to go back to work, and employees thinking, well, I've been just as productive, and so once they start looking around, right, should you quit the before you have the next job? I would say no, I think that's a bad idea, But there are pros and cons that.
Of course.
But for those people who are revenge quitting out of emotion, right out of spite, maybe they didn't get the bonus they wanted, or they didn't get enough of the bonus that they were expecting.
Maybe they're being asked to go back to work.
Maybe their boss didn't recognize them enough in this past year. They don't feel like they were really seen for what they for what they brought to the to the organization. Those people are revenge quitting, and as they start to look around, they may realize that the grass isn't as green on the other side, because maybe some of those companies are also asking their employees to come back or having the same issues with some of their toxic culture.
So when you're ticked off and you do revenge quitting, you might want to you know, slow down and kind of think, right, Like, I mean, you're saying that somebody who does this, maybe you understand why, but nonetheless they might be doing so and finding that wait, they might not get a job so quickly.
On the other side, absolutely, I mean, so I think we have to really remember that. You know, if you're going to spend an hour or two hours interviewing a candidate, you're probably going to spend five to six to seven or ten referencing them.
So who are you going to reference?
Who are you going to call the previous employer? And you know, if you burn that bridge, you're kind of sins yourself.
Along the way.
I didn't know that people spent That's how long it took to do this, like for you know, on the HR side, to actually find a candidate to check references. I mean that's pretty remarkable.
Hey, what about the.
Economy and to what extent people rage quitting or jumping from job to job depends on the labor market out there. What is what is your experience told you about how this might not happen if there aren't jobs available.
I think it has more to do with people's optimism and the news that they're following. So, you know, it used to be that we would all get the same economic numbers, and now, depending on what news you're listening to, you're hearing different takes on the economy. So if you're hearing news that says everything's optimistic and the economy is going to grow, you may be more likely to quit because you think there's going to be a ton of
opportunities out there. If you're listening to news that's saying we're all in trouble and everything is falling apart, you might want to hold on to your job because you're a little bit more worried about this. So it's really interesting to think about whether it's the economy people are listening to or which version of the economy they're listening to right now.
Hey, I do wonder, Laura. We spend a lot of time every day, certainly today, talking about the new administration and the types of polies policies that might come down from Donald Trump and his team, and whether it's taxes, tariffs, whether it's electric vehicles, whether it's power. I mean, there's just so many things that could potentially be impacted. So when you think about policies that might be coming, we talk a lot about maybe less regulatory oversight, less regulations
and rules for corporations. Does that mean do you anticipate that in a Trump White House that we're going to see companies and businesses more in charge with the upper hand versus labor and employees.
I absolutely do.
And I think we're going to see a lot of growth in certain industries. So certainly construction, I think green jobs, I think energy on either side, I think we're going to see that.
Certainly in food distribution.
We're going to see differences in the regulatory environment for food as well.
Healthcare is going to change.
So every industry that's had regulation that's been weighing down on it, that's cost that it has to deal with dealing with all the regulation, And if they don't have to deal with that, that's all going to go into building and growing and scaling, and that's going to translate to labor and more jobs.
Well, are you so sure it's the net though, is more jobs. I'm just also wondering about automation, right and AI That's one of the big discussions we've been having about what kind of replacement that does of actually humans in terms of doing jobs. And I just wonder, again, if we have a pro business administration. Yes, it can be good for business, right, and that ultimately means jobs, but it can also mean that executives and management are
kind of leading the way versus the actual workers. And I just wonder if you see any aspect of that.
Yeah, I mean, I.
Think AI machine learning engineering jobs will grow. I think cybersecurity analyst jobs will grow, cloud engineering, robotics engineering. I think that there's going to be a lot of we need to you know, automation officers.
I think there are there are going.
To have to be people that are going to have to put the automation into place. And I think we'll see a lot of growth obviously in in in executives and profit margins and salary payouts, but I think we're going to need to see a lot of growth in the the you know, threat detection, penetration, testing, managing cloud systems, building, programming,
troubleshooting robots. So in order for us to get to this future world of automation, we need a lot of people who are going to be doing the programming and the coding in order to get us there.
So where should where should we not be spending energy? Then if those are the places that are going to grow, what's what's going to What are the areas that will contract?
Uh?
Probably the federal government is that contraction.
Is that a dose thing or is that an AI thing?
It's probably more of a doge thing than an AI thing. I think that's going to be more sort of broad swath cutting of programs, and we're going to see at the federal level and then also at the state level. So I see I joked around and said federal government, but all the federal government program funding that then is funding into the state commissions that are running some of
those programs. And we'll probably see a lot of help in human services areas being cut, a lot of the sort of the safety net programs that are going to be being cut.
Interesting stuff. Hey, listen, thank you so much, really appreciate it. I have a great holiday and happy New year. Laura Gasner adding she's a workplace expert joining us from Boston. As we mentioned, spent more than two decades in HR, have created AmeriCorps, written a couple of books really talking about people thinking about their jobs, maybe looking for a new job, revenge, quitting done.
She dropped out of law school to join an Arkansas governor's presidential campaign early in her career. She's still a lot Bill Clinton found her way to AmeriCorps.
And then helps right, yeah, create that during the administration.
Pretty interesting staff, very cool, yeah,