>> Sreenivasan:TO HELP US SORT
OUT WHAT IS HAPPENING IN THIS
BACK AND FORTH BATTLE AND WHAT
IT WILL MEAN TO AMERICAN
CONSUMERS AND THE WORLD ECONOMY,
WE'RE JOINED NOW BY SHARYN
O'HALLORAN, PROFESSOR OF
POLITICAL ECONOMICS AND
INTERNATIONAL PUBLIC AFFAIRS AT
COLUMBIA UNIVERSITY.
SO, WE ARE ON THE VERGE OF A
TRADE WAR HERE.
TO PUT THIS IN PERSPECTIVE, THE
AMERICAN ECONOMY IS, WHAT, $20
TRILLION?
SO EVEN IF WE'RE TALKING ABOUT
$100 BILLION, $50 BILLION, THIS
IS RELATIVELY SMALL-- THIS ISN'T
GOING TO COLLAPSE OUR ENTIRE
ECONOMY, BUT WHAT ARE THE
CONSEQUENCES AS THIS ESCALATES?
>> WELL, ALREADY WE'RE STARTING
TO SEE A NUMBER OF DIFFERENT
PARTS OF THE ECONOMY THAT ARE
BEING AFFECTED.
FIRST OF ALL, WE'LL HAVE SOME OF
THE END CONSUMERS THAT ARE GOING
TO BE AFFECTED THAT ARE GOING TO
BE DIRECTLY USING A VARIETY OF
DIFFERENT PRODUCTS, WHETHER THEY
USE STEEL AND SO ON.
BUT MOSTLY, RIGHT NOW, WITH
STEEL AND ALUMINUM, WE'RE GOING
TO BE SEEING THE INTERMEDIARY
USERS-- THE AUTO INDUSTRY THAT
USES STEEL OR ALUMINUM-- IN
THEIR PRODUCTION PROCESS.
THAT'S GOING TO LEAD TO INCREASE
IN PRICES, OBVIOUSLY.
THAT'S GOING TO IMPACT THE DAILY
CONSUMER, YOU AND ME, WHO BUY A
CAR, OR WANT TO.
AND THEN IT COULD LEAD TO
INCREASING INFLATION, WHICH
COULD LEAD THE FED TO TAKE,
OBVIOUSLY, A MORE AGGRESSIVE
STANCE IN SETTING RATES, WHICH
COULD HAVE IMPACTS IN THE
OVERALL GROWTH OF THE ECONOMY.
THIS, OF COURSE, IS GOING TO LET
BUSINESSPEOPLE BE UPSET ABOUT
PROFITS AND WHERE THEY ARE AND
THEIR WILLINGNESS TO INVEST, SO
THAT WILL HAVE IMPACTS ON JOBS
AND JOB PROSPERITIES.
>> Sreenivasan: THERE WAS AN
EXAMPLE OF WASHING MACHINES
WHERE WE SET A TARIFF ON EARLIER
AND NOW I THINK SOMEWHERE AROUND
17% PRICE INCREASES FOR WASHING
MACHINES IF YOU GO TO THE
APPLIANCE STORE.
TALK A LITTLE BIT ABOUT HOW
INTERCONNECTED THE WORLD IS
TODAY.
A LOT OF THE PRODUCTS THAT WE
SEE ON OUR STORE SHELVES, EVEN
IF THEY MIGHT BE ASSEMBLED IN
CHINA, MIGHT BE SORT OF MADE
HERE.
>> THAT'S CORRECT.
>> Sreenivasan: YOU KNOW, AND
THERE ARE PARTS COMING FROM ALL
OVER THE WORLD.
>> SO WE ARE MOST-- MOST
MANUFACTURERS ARE REALLY
WORLD-CLASS MANAGERS OF GLOBAL
SUPPLY CHAINS.
THINK OF NIKE, THINK OF APPLE.
AND EVEN IT IF THEY MAKE THE
MAJORITY OF THE PRODUCTS HERE,
THEY'RE REALLY ASSEMBLING MANY
OF THE PRODUCTS FROM ALL OVER
THE WORLD.
AND THOSE PRODUCTS COME IN BITS
AND PIECES TO THEN BE--
QUOTE, UNQUOTE-- MADE IN
AMERICA.
AND THAT'S JUST HOW YOU KEEP
COSTS DOWN, HOW YOU WORK WITH
COMPARATIVE ADVANTAGE, AND HOW
YOU WORK WITH ECONOMIES OF
SCALE.
THESE ARE GOOD THINGS.
THIS IS WHY LIVING STANDARDS
HAVE INCREASED.
THESE ARE WHY MORE PEOPLE CAN
AFFORD MANY OF THOSE OTHER
LUXURIES THAT 50, 100 YEARS AGO,
WERE NOT EVEN FEASIBLE.
>> Sreenivasan: THERE'S THIS
CONSTANT DRUM BEAT FROM THE
ADMINISTRATION THAT SAYS ONE OF
THE REASONS THAT WE'RE DOING
THIS IS TO TRY TO PUT THE
PRESSURE ON CHINA FOR
INTELLECTUAL PROPERTY CONCERNS
THAT BUSINESS HAVE, THE KINDS OF
MONEY THAT WE CAN INVEST IN THE
COUNTRY, RIGHT.
AND THEN REALLY THE OTHER COMMON
REFRAIN IS TO BRING JOBS BACK TO
THE UNITED STATES.
SO, TELL ME THE CONNECTION OF IF
WE HAVE THESE TRADE-- YOU KNOW,
IMBALANCES CORRECTED, IF WE SLAP
MORE TARIFFS ON CHINA AND THE
E.U., DOES THAT AUTOMATICALLY
MEAN THAT THOSE JOBS,
MANUFACTURING JOBS, OR
OTHERWISE, COME BACK TO THE
UNITED STATES?
>> NO, THEY DON'T.
MANY CASES THEY DON'T EXIST IN
THE FORM THAT THEY USED TO
BEFORE.
>> Sreenivasan: BECAUSE ROBOTS
ARE DOING IT.
>> MANY OF THEM ARE.
THEY'RE ROBOTS, THEY'RE
AUTOMATED.
AND YOU SAY, "OH THEY MOVED TO
MEXICO."
WELL, THEY USED TO MOVE TO
MEXICO, THEN THEY MOVED TO
CHINA, NOW THEY'RE IN VIETNAM.
SO, IT'S JUST WHERE YOU LOOK FOR
ECONOMIES OF SCALE, CHEAP LABOR,
AND AUTOMATION.
AND THOSE ARE MOVING THE SUPPLY
CHAIN AROUND.
SO, THAT'S ONE THING.
SECOND, THAT'S NOT OUR
COMPARATIVE ADVANTAGE.
AMERICANS ARE VERY GOOD AT
HIGH-END SPECIALTIES.
AND, SO EVEN WHEN WE TALK ABOUT
BRINGING BACK STEEL.
WE'RE NOT DOING MASS ROLLED-OUT
STEEL.
WE'RE DOING MORE OF THE HIGH-END
SPECIALTY STEEL STRUCTURES THAT
GO INTO, SAY, BUILDINGS, BUT
THAT'S NOT JUST ROLLED SHEETS.
SO WE HAVE TO BE CAREFUL ABOUT
WHAT WE'RE TALKING ABOUT.
THE TARIFF IN ITSELF IS NOT
GOING TO LEAD TO THOSE JOBS
COMING BACK.
AND WE HAVE TO REALIZE THAT'S
NOT THE TOOL THAT WE NEED TO BE
LOOKING AT.
SO, THE TARIFF IS NOT THE TOOL.
BUT WHAT WE HAVE TO CONCERN
OURSELVES WITH ARE ISSUES AROUND
NON-TARIFF BARRIERS, AND THAT
GOES TO THE POLICIES AROUND THE
TRANSFER OF TECHNOLOGY.
THERE BOTH THE E.U. AND THE U.S.
ARE TRYING TO LEVEL THE PLAYING
FIELD, RIGHT.
AND THAT IS AN APPROPRIATE
CONCERN AND A POLICY FOR THE
W.T.O. TO TAKE UP, AND THERE
HAVE BEEN A SERIES OF COMPLAINTS
GOING IN THERE, SO THAT WE CAN
HAVE GREATER INVESTMENT IN THERE
WITHOUT HAVING TO LOSE OUR
PROPERTY RIGHTS OVER THAT
TECHNOLOGY.
WE DON'T ASK THAT FROM CHINA.
SO WHY SHOULD THEY ASK THAT FROM
US?
>> Sreenivasan: SURE.
>> SO THAT'S THE DEBATE THERE.
>> Sreenivasan: ALL RIGHT, A
LOT OF THESE THINGS WILL BE
UNTANGLED OVER THE NEXT FEW
WEEKS.
SHARYN O'HALLORAN FROM COLUMBIA
UNIVERSITY, THANKS SO MUCH FOR
JOINING US.
>> OKAY.
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