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I will not mince words. This is a required read for anybody inside the Beltway this morning. It is a book from a time ago. Paul, you walked around because you were cool, because Douglaserwin had a book with a sailboat on the cover as a light blue book was against the tide, and it was absolutely definitive. I read every word of it, and we're thrilled that Professor Irwin could join us in Dartmouth today. Let me just get
out of the way. Dougarr won a cup of coffee with a president this morning as he prepares the State of the Union. What would be your counsel to President Trump.
I don't think you'd want to hear anything i'd have to say. I'd say the Supreme Court gave him a hit, him a favor by trying to put these tariffs on pause. But of course presidents just reimposed the similar tariffs using different authority. So it was a very important decision. It was a very historic one, but just shunted the president to using different statutory authorities to levy tariffs, and he's going to move forward with them.
Will we see a legal battle of these new tariffs, Claudius sum it's away from her remit, which is monetary economics. But Professor Irwin, do you just assume further legal battles about ten percent or fifteen percent, one twenty whatever, two thirty this.
Yeah, a lot of numbers are being thrown around in terms of the statutes. Yeah, so the new terroffs, which are ten percent, he's promised fifteen percent, but they haven't issued the executive order on that quite yet. Those will probably be subject to legal challenge, and that's because the statute allows for the president to impose tariffs in the cases of a balance of payments, deficit, or disequilibrium, and it's not clear that in an era of floating exchange grates,
whether it's actually a thing exists anymore. Now. The other side is that the terrofts can only be in effect for one hundred and fifty days and then require congressional approval. So there's a lot of uncertainty about how this is going to play out over the next couple months.
Professor I guess most of are viewing and listening to the audience what they know about teriffs. They've learned over the last six seven eight years, which is just massive tariffs on all types of countries, all types of products across the board. But typically, how are tariffs historically used and how can they be most useful?
Well, that's really why this administration marks such a sharp break from what we've seen in terms of historical experience. You know, you've probably mentioned smooth Holly on the air over the past couple of years before that actually smoothly itself. Congress determined tariffs. It's part of the legislative power of tax It's in Article one, section eight of the Constitution.
It was basically Congress's decision what to do. Then powers began delegated, began being delegated to the president and we entered the era after World War Two of the president negotiating trade rooms to reduce tariffs. And the tariffs have been sort of on a one way path down since World War Two. And that's when a Trump and also when the start and that the same authority starts being used to increase terrance once again across different products, across different countries in all manner of way.
Worldwide and across the nation. This morning, Douglas Irwin of Dartmouth College, he is our definitive expert on trade. Only standing with him is Barry Keen Green of Berkeley. We'll get Professor Ike agreen on in a bid out with his new book, Paul Sweeney with Professor Irwin.
Professor. We had the New York Fed come out with a report, I guess a week or so ago that said, you know, ninety percent ish of the tariffs have been born by the American economy, either importers, companies, and even consumers. Obviously, the White House pushing back on that. Who who pays really at the end of the day for tariffs.
Well, the importer in the US actually writes the check, but then they pass it on to whoever they're selling the products too, and it sort of goes along the value chain. That Federal reserve, that FED study, it's been sort of erupted that finding that ninety percent of the tariffs get passed through to domestic purchasers, either final consumers or businesses along the way. That's been confirmed by you know,
at least half a dozen other studies. So study after study has sort of consistently shown that both for the Trump first term tariffs as well as these most recent ones.
Medline Marshall has a fabulous video out at the Wall Street Journal. I put it out about a week ago, folks. I'll redo that with the academic input of Douglas Irwin. Doug Ears three hours of trade policy, revenue, restriction, reciprocity. We're not going to acquisit the end of the interview, but Professor Erwin, they're very chronological, and what I find interesting is the restriction using high tariffs to restrict the
imports of McKinley in post Civil War America. I mean, they were all shown the door in the voting in eighteen ninety. The Republicans, including McKinley, basically lost their jobs. Do you anticipate that in November a McKinley eighteen ninety kind of vote by America.
Well, that's a very interesting historical observation, and you're right it does have some residents for today. So I mentioned the new statutory authority that the president's levy these tariffs. After one hundred and fifty days, he might have to ask Congress to re up those tariffs. Does Congress want to vote for higher tariffs in the summer before midterm elections, when Republicans are already divided over trade policy. I don't
think so. So it leads into the affordability ARECTA and prices, and so I think tariffs could be toxic come this fall.
What should China do? There's a lot of the press today about how China responds. I guess the president is going to maybe Doug Irwin's going to carry the president's luggage to chick could do that, I can see it. He could stay in Hong Kong and Shanghai rather at the Peace Hotel where Henry Kissinger stayed. Yep, I mean it could do that, Professor Irwin. If you to go to China with the president, how do you discuss this with Beijing and how do they respond?
Well? I think what Beijing is looking for is stability in the bilateral relationship, and that's exactly what we don't have at the moment.
Now.
We do have special tariffs on China under a different provision of trade law, and those can be subject to negotiation. But we're sort of in this uneasy truce with Beijing about they're not going to restrict rare earths and we're not going to impose further tariffs. How we move out of that remains to be seen, and it really depends
on what the administration has in mind. And then Beijing, I think, is holding its cards close to his chest and probably won't do much until it sees what the administration wants.
Professor. One of the I guess the results of the Supreme Court decision last week is maybe some companies, some individuals may want to get some rebates of the tariffs that they've incurred in. Just today, FedEx sues the United States to get full refund of emergency tariffs after Supreme Court ruling. Do we have any idea how that process would work.
We have no idea at the moment. So the administration has promised that there will be rebates, but they could be slow walked, and that's why I think we'll see lawsuits to try to accelerate the process. It could take
months or even years. Doesn't necessarily have to take that long, but it's clear the administration is reluctant to give up that revenue and no processes identified at least as far as I know, about what the process will be to adjudicate all those claims for the revenue that is amounting to tens of billions of dollars to going back to American businesses that imported foreign goods.
Come on, Blache, Flower is gonna say, Dougger and David, but Dartmouth just print more debt. I mean, do we need that revenue? I mean I haven't seen a clear case that we must must, must have the revenue. The first of your.
Three rs, well, you're right that the Trump administration has used all three of those ours, and revenue has been important one. And they certainly made the case for the teriffs on the revenue grounds. But they're legally obligated I think to turn it back. But the question is it's not a matter of government have the money, but can they go back through the records and isolate those who those firms that actually paid the tariffs in the first place.
The continuum of your Against the Tide, folks, I can't emphasize enough. It was like Daniel Jurgen's Surprise. Even if you didn't read it, you walked around with it because it was cool. You had to be cool. So Doug Irwin's Against the Tides. The absolute foundation of your book is Robert Solo. Technology, Technology comes to the rescue? Is America expands and that do you just assume our international trade tensions, Doug Irwin will get fixed by further technology leadership in America.
I think the two are inter related. I think that the US leadership in technology and other matters gets disrupted with all these trade frictions across countries and the tariffs that are going up and down and can change on a whim. So trade disrupts that process of spreading technology
around the world. It inhibits our ability to export to other countries because there's implicit retaliation against the US, and it disrupts all the business relationships that are needed to provide the funds for more R and D. So it's not good for our technological development. But at the same time, technology does march to its own dramma to some extent and will continue to move forward regardless of what is happening on the trade front.
Professors, is it reasonable to assume that this Supreme Court decision may embold in Congress to try to reassert some of its authority over tariff policy.
Well, it certainly was a wake up call, and some of the justices really did call out Congress and not so many words, saying you have to step up. It's really your responsibility on the Constitution to adjudicate and oversee trade policy. Question is whether they'll do it under this administration. I think act with great trepidation in trying to pull back some of the powers it's delegated to the president.
But I think there is a medium term agenda for future Congresses and future administrations to write rethink US trade law and ensure that we don't go through the mess in the model that we've gone through over the past year.
Professor, is the concept of free trade? Is that still relevant in today's global economy?
I think it always remains relevant to some extent. Now, free trade doesn't mean absolutely no barriers and no interventions whatsoever, but I think we do have to distinguish and former Vice President Mike Pence has sort of made this clear that between you know, what he's called for is free trade with free nations, and we have to think about trade as part of our alliance system, as a way of working with allies and then separating out those countries
that are adversaries and we don't want to treat them the same in terms of our trade policy because that's an extension of our foreign policy.
Oh that's a really good point here. We're going to have to leave here in a big Professor Irwin, off of your wonderful article and essay, I should say in the Economist here in the last a couple of days, can you explain while we're going after Canada and not China. I mean, I know that I still call him Governor Kearney from the Bank of England, Mark Kearney, good morning and everyone up in Ottawa, Doug Irwin. Why are we going after Canada when we have true adversaries that we're trading with.
That's a great question. Unfortunately, I'm giving a talk in Canada about two weeks, so I have to think this through for our Canadian friends.
Careful, you may lose your teeth.
Yes, high sticking off the cocktail the Dartmouth hockey team about how they prevent such things happen from happening. But you know, I don't know whether it's a personal relationship that Donald Trump didn't forage with Justin Trudeau, whether there's some real estate deals that went bad in the past, whether some other aggrieved parties within the administration that speaking
to the President ill of Canada. But I agree with you in some sense, it just doesn't make sense that here We've had peaceful, cooperative relations with this great neighbor to the north of US for so many decades, and yet we're jeopardizing that with these trade wars.
One final question, I mentioned Davenport, Iowa, the first district of Iowa, where the congresswoman is fighting for her life. What is your counsel to Republican House of Representative types on the precipice of losing their seats, what should they do on trade?
Well, I think they really have to speak their constituents about how in certain ways they differ from the president. Once again, in the Midwest farm states, they've been hammered with foreign retaliation against our agricultural exports. So American farmers are really suffering, and so they have to offer some sort of promise that there's a better days ahead in terms of the ability of the US farmers to export to other countries, and we're just not seeing it under this administration.
Where in God's day is the update to Against the Tide?
Yeah, exactly are you slacking off?
Douggerwin? When do we get the next three chapters of Against the Tide?
I'm not sure, but I've got another book called Free Trade under Fire. If there's any time free trade has been under fire that one's due for a revision.
Very good, Douglas Irwin, thank you so much, just wonderful, generous of your time. This morning, he is at Dartmouth