LEILA FADEL, HOST:
Former President Donald Trump made a lot of economic promises in Tuesday's debate about what he would do in a second term.
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DONALD TRUMP: I created one of the greatest economies in the history of our country. I'll do it again and even better.
FADEL: So what's his plan to do that? I asked Michael Strain. He's an economist with the American Enterprise Institute, a center-right think tank.
I want to start with tariffs 'cause that's a word we hear a lot from Donald Trump when it comes to economic policies, and he called himself at one point the tariff man. And part of his plan is to impose new tariffs, up to 60%, on foreign goods, goods specifically from China. And he says they're a solution to a lot of things - the protection of American factories, making sure domestic goods aren't undercut by cheaper foreign goods, a way to make foreign governments bend when they're not being cooperative. So do tariffs do all these things? And if the goal is to grow the U.S. economy, do they help? Do they do that?
MICHAEL STRAIN: No, they don't do that, and they don't do that for two reasons. One is that a lot of domestic manufacturers in the United States import intermediate goods that they use to produce their final goods. And so when you put a tariff on imports, as President Trump did when he was in the White House and as he would like to do if he's reelected, you're raising the costs of production. By raising those costs, you're making domestic firms less competitive.
The second factor is that when the United States imposes substantial tariffs on imports from other nations, those other nations don't just, you know, sit on their hands and accept that outcome. They impose tariffs on U.S. exports. And so this kind of tit-for-tat trade war ends up hurting the ability of U.S. firms to export goods.
FADEL: But President Biden also imposed tariffs.
STRAIN: He did, and he kept in place President Trump's tariff regime. And it was bad economics, and it hurt our businesses and hurt our households.
FADEL: So inflation is the big issue for Americans, and that was a central issue in the debate. Trump talked about how expensive everything is at the grocery store for folks. Of course, he blamed Biden's administration for the inflation. Is that accurate, and is Trump's plan the answer?
STRAIN: So I think President Trump is right that the policies of the Biden administration contributed significantly to a four-decade-high consumer price inflation. The American Rescue Plan was just way too big. It stimulated the economy in a way that was unhelpful because the underlying productive capacity of the economy could not meet the demand for goods and services that the stimulus created.
Now, that wasn't the only factor, of course. There have been very important supply-side factors that have pushed up prices for Americans. Russia's brutal invasion of Ukraine led to significant supply-side restrictions that increased the prices that consumers face. So it's been a complicated situation, but President Trump does not have a plan to bring down prices.
FADEL: During the debate on Tuesday, we heard Trump talk a lot about immigration, specifically the downsides of immigration. His plan is to carry out these mass deportations, and he says that will help the economy bring back jobs, specifically Black and Latino jobs, he claimed. In your view, what will this actually do?
STRAIN: The right way to think about this is hundreds of thousands, maybe even millions of workers being deported in the first year or two of his time in office. That would be extremely disruptive to the businesses that employ those workers. In certain parts of the country and in certain industries, it could create labor shortages. And what you would see, I think, is a spike in wages. And, you know, what happens when wages spike? Well, businesses try to pass on that increase in costs to consumers, and so you see consumer prices go up as well.
FADEL: Michael Strain is director of economic policy studies at the American Enterprise Institute, a center-right think tank. Thank you for your time.
STRAIN: Thanks so much for having me. Transcript provided by NPR, Copyright NPR.
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