Team,
This is Part 1 of my recent interview with the tenacious Miranda Devine.
Miranda is the host of Pod Force One, one of the top-rated podcasts on Apple.
She is also the author of two bestselling books about Joe and Hunter Biden: Laptop from Hell and The Big Guy.
During the podcast, we discuss the recent Supreme Court ruling on IEEPA tariffs and China cheating the world. My books Death By China and Crouching Tiger, as well as my documentary Death By China, are also mentioned. The Death by China documentary, narrated by Martin Sheen, was a top selection on Netflix for years, and you can now watch it for free on YouTube.
As I state in the podcast, the IEEPA tariff ruling significantly strengthens virtually every other power that the President has been using and can use for tariffs, including tariff powers under sections 232, 301, and 338. As we move forward with those powers, the President has already put in place section 122 tariffs.
I love to read your comments, and please be sure to share this far and wide.
Peter
TRANSCRIPT
MIRANDA DEVINE: We are very lucky to be talking to you now, just a few days after the Supreme Court struck a blow to your tariffs, really, that you and Donald Trump designed and that were up until now doing so well. And I know you have a Plan B. What is it?
DR. NAVARRO: We don’t see this as having struck a heavy blow, and we believe that this will actually be a very good thing for the Trump tariff policy, because if you analyze the decision, Miranda, it was very narrow in scope. It did one thing and one thing only. It struck down the use of tariffs under the International Economic Emergency Powers Act, IEEPA. So it struck down the IEEPA tariffs in a very narrow way. It didn’t resolve any major questions. And in the process of striking it down, it actually significantly strengthened virtually every other power that the President has been using and can use for tariffs in the future. So, let me just unpack that a little bit. Right now, President Trump is using section 301 for country-specific tariffs. Those are the ones that we imposed, for example, on China back in 2018. And what the U.S. Trade Representative Jamieson Greer is going to be doing and has been doing is steadily adding countries to the 301 investigation. So, that will give us great power to address the problems on a country-by-country basis. So, that will not allow any country to use the striking down of the IEEPA tariffs as a reason to back off from the negotiating table.
DEVINE: Just one question, though. Why did you not use those 301 or whatever number tariffs that you’re talking about? Why did you not use them first? Why use the emergency powers?
DR. NAVARRO: We believe that the law is on our side, was on our side when we used the IEEPA tariffs. It’s a very flexible tool, and we believe that the Supreme Court, there was a good chance of its supporting it. Look, the President thinks, as do I and everybody else on the trade team, that this decision was a bad one. It basically came to the conclusion that these tariffs are taxes, and because of that they struck it down, because Congress has the authority to tax. Well, we don’t see it that way. We didn’t argue it that way. Judge—Justice Kavanaugh, which I think is—he was the smartest one in the room on this, wrote a very eloquent dissent describing how the court was wrong based on the law and based on 200 years of history. So, I think the strategy was perfectly fine. We knew going in that there was a possibility that they would be struck down.
In the meantime, we developed Plan B, but as part of our thinking, I mean, look, again, I want to get back to this point. It’s what the Supreme Court did and did not do. It did strike down the IEEPA tariffs, the emergency tariffs. It did not strike down 232, 301, 122, 338, all the different powers that the President has been delegated by Congress and can use, and we will be using. And the decision itself, because those powers were referenced repeatedly by a number of justices, have been strengthened. So, when we go to court the next time—they always drag us into court—we have the Supreme Court on our side. So, there’s 301 for the countries, 232 for specific commodities. They’re run through the Commerce Department, 301s through the Trade Rep, 232s, we already have them on steel and aluminum, critical minerals, pharmaceuticals. We’re having other investigations on a wide variety of other things. So, we’re going to have that covered. And in the meantime, as we move forward with those powers, the President has put Section 122, which is 150-day global tariff of 15 percent.
DEVINE: So, does that mean, you know, that there are going to be refunds that America’s going to have to pay?
DR. NAVARRO: I can’t do better than the Boss on this one. I mean, he was just, like, unbelievable. It’s like the court, they take so long—so long—to make this decision and they don’t give us any guidance or say anything at all about refunds. And what that is going to entail is years—years of litigation. But I think the important point, Miranda, to understand is that what we saw is how much money tariffs can actually collect. And the importance is how that helps our fiscal situation in the United States. And we learned through that process that the foreigners pay the tariffs, not American consumers. That seems to be a point of dispute with various studies that have been put out, but the data doesn’t reflect the studies. It’s, like, absurd. So, we’re no strangers to bad studies trying to undermine the tariffs and saying consumers pay for them. There’s no evidence in the inflation data of that.
DEVINE: And, was that, I mean, you’re a student of tariffs. You’ve been—as Donald Trump. I mean, Donald Trump I think has been hot on tariffs since the 1980s. And was that something that you anticipated that there would be, contrary to all the experts, there would be no inflation effect?
DR. NAVARRO: Of course. If you just go back in a time machine, when I was in the first Administration, I was there all four years—one of only three people who actually was in the Trump Administration from the campaign to the end—we said going into 2018, when we started putting the tariffs in, the 301s and the 232s on steel and aluminum, that foreigners would bear the largest portion of the burden of the tariffs for the simple reason is that countries like China or Germany are highly dependent on our economy. They’re export-driven, so they can’t afford to lose our business. So, what do they do? They lower their prices, they change things around. It’s a complex adjustment process, but in the end they eat the tariffs. We don’t. And, actually, a good economic theory on this that people ignore in the international trade literature verify this.
So, what happens in 2018, we put tariffs on, and for the next couple of years everybody’s saying there’s going to be a recession, inflation, stagflation, this, that, and the other thing. And all we get is low inflation, robust growth, and a beautiful Trump economy. So, fast forward to this Administration, when we put the tariffs in, we got the same identical people, the same think tanks, the Heritages [Heritage Foundation], the Catos [Cato Institute], the same newspapers, the same trade associations, the Goldman Sachs of this world. It’s like, ‘Oh, it’s going to cause inflation.’ And all we have to do is go back and say, ‘Hey, you were wrong the first time. Why are you going to be right this time?' And guess what, you haven’t been right.’ So, this is the debate. This is why having a podcast like yours is good, because I just want to remind people that they said the same crap the last time, and it was BS then, but they’re saying [it] now, and it’s BS now.
DEVINE: So, have you ever seen the President waver? He seemed pretty angry the other day after the Supreme Court brought down that decision. He talked about foreign influence on the court. Do you know what he was talking about? Was he talking about China?
DR. NAVARRO: Miranda, there’s a whole diaspora of globalism out there that puts political pressures in many, many ways on our institutions, whether it’s the Supreme Court, Congress, or the White House itself. We know they’re there. China’s a big deal, but there’s also, it’s like the corporate types who offshore want to sell in that have tremendous political power, that lobby and everything like that. I mean, being in the White House, you see these people come by, like, every day. They say, ‘Don’t do the tariffs.’ And then, when you do the tariffs, they say, ‘Well, do them on everybody else. Give us an exclusion or exemption.’ This, that, and the other thing. So, it’s very powerful.
DEVINE: Like, who? Like Apple? Like Tim Cook, Mark Zuckerberg? Who?
PETER NAVARRO: Individuals, certainly, yeah. But they’ve got the institution behind them. I mean, Tim Cook, I mean he’s the king of evading tariffs, and we let him get away with it in the first term because he promised he would basically bring his iPhone production here or out of China, and he lied through his teeth, and he’s doing it again. Yeah, that’s quite par for the course.
DEVINE: And is manufacturing being brought home significantly? You mentioned iPhone. I think Tim Cook’s opened some sort of a factory here. Is that happening across the board?
DR. NAVARRO: Not with Apple. I mean, they’re going to India and to me that’s not a whole lot better than being in China. But that’s the exception, I think, that proves the rule. I mean, we have, Miranda, I mean, this is like mindboggling: We had 18 trillion dollars of new investment pledged since the tariffs and because of the tariffs. I mean, as President Trump has said, it’s like, you don’t pay the tariffs if you produce here.
DEVINE: But what’s the timeline on that? Because I know, you know, the EU promised I think a trillion dollars worth of investment but, you know, has any of that happened, and what’s the timeline? Are they just going to wait out President Trump?
DR. NAVARRO: Yeah, we’ve had a lot of investment that’s come in. I mean, Japan’s really probably at the head of that pack right now. There’s all sorts of projects going on. EU is problematic because people think about it as the European Union. It’s not really a union. It’s a collection of countries that have different interests economically with respect to trade. And it’s very hard for them to make decisions. I mean, you talk about China, Miranda, it’s like, if you look behind the curtain in the EU, it’s like Germany’s highly export-dependent on China. So it doesn’t want to crack down on them. Greece, I mean China owns their ports. Spain gets a lot of money. I mean, the UK, which is not in the European Union per se but, I mean, it’s like a float. It’s just awash in foreign money. And you’re seeing, as a result of that, the Brits do kind of things that we’re kind of looking at, like, what’s going on here?
DEVINE: Yeah.
DR. NAVARRO: But at the end of the day, that’s why tariffs are important. Because if we don’t get cooperation in deals, they get tariffs. Let me say that again. If we don’t get cooperation and great deals from the other people, they get tariffs. And that’s why this decision was important, not because it struck down one tariff power, but because it strengthened all the other ones. So, this is a work in progress, but I think what we’ve clearly learned from President Trump, his courageous decision to basically impose tariffs as he has, is that they actually work. And the manufacturing thing, like another one of the talking points, the spins, is that the manufacturing’s not coming. We said it would come, it’s not coming Well, but the data now doesn’t reflect that either. What we’re seeing in the data is the green shoots of manufacturing. I mean I’ve described all along the adjustment process. You put the tariffs in, but Rome wasn’t built in a day and a factory wasn’t built in a month.
DEVINE: So, have you got examples of factories that are being built? Like, are there car manufacturers or what sort of things are being brought home?
DR. NAVARRO: I mean, there’s the first new aluminum foundry built. We lost two foundries in the last term. We’ve got steel mills popping all over the place. We’ve got chip production that’s getting towards the construction stage. I mean, it’s just a myriad of things, and it’s showing up. It’s showing up in the Federal Reserve industrial production data. It’s showing up in the durable goods data, and it’s finally showing up in one of my favorite economic indicators, Miranda. It’s called the ISM Manufacturing Index, the Institute of Supply Management Manufacturing Index. And it’s a zero to 100 index, or what they call a diffusion index. And when it’s below 50, then manufacturing is in decline. When it’s above 50, manufacturing is expanding. And it’s been, I think since August of 2022, during the Biden regime, that that index fell below 50. I mean, Biden was just killing our manufacturing—
DEVINE: Yeah.
DR. NAVARRO: —and when we got in, that thing, like, was stubbornly lagging below 50 for many, many months, even as some of these other manufacturing indicators said, no, things are good. Finally, in the last time around, it jumped five points well into above-50 territory.
DEVINE: That is fantastic. So Made in the USA is back. And I wanted to explore that a little more because I think that’s how your interest in tariffs started. You were a professor in California, and tell us about how you started noticing the effect of China coming into the WTO, the World Trade Organization, thanks to Joe Biden, in large part, in 2001. Tell me how you experienced that with your students.
DR. NAVARRO: So we’ll go back in the time capsule, mid-nineties, I’m a macroeconomics professor at a business school in the University of California system. And I’m writing books about these economic indicators. We’re talking, and my whole thing was forecasting the economy and the stock market because, if you can do one, you can do the other, basically. And so, that was it. Just looking at the big picture every day around the world, ‘it’s going to be a recession,’ ‘what’s the inflation rate going to be?’ All that stuff. And about 2003, two years after China joined the World Trade Organization, I noticed that more and more of my students, my masters MBA students in the fully-employed program, were losing their jobs. And I’m thinking, this is weird. I mean, I’m in Orange County, which is one of the most robust counties and places in the country for employment, and it’s like boggling my mind.
But it turns out that a lot of the jobs in Orange County were Pac Rim-facing, Pacific Rim-facing-and-dependent. And as China started invading our markets and drawing more and more of our corporations offshore, not just manufacturing but supply chains, it was affecting the employment prospects. I didn’t know that until I looked into it, so—but I started a research project called the China Price Project. I had all my students for, like, a year working on this stuff. What came out of that was I think the first major economic study of how China was using a mercantilist model to exploit the world, including the United States. And the insight of that China Price Project, in the articles and eventually books I would write about it, was it cut down the myth that China was succeeding simply because of cheap labor. It was much more complex than that.
And in that original study, I had many of the things that we would subsequently identify and talk about in the Trump Administration. The intellectual property theft is a big deal. The government subsidies. The lacks [of] environmental and labor regulations, which would give them an advantage. The currency manipulation. I had this whole model. I did a production cost analysis. And, because of that, then I went and did some more research and out of that came what would be eventually a trilogy of China books, The Coming China Wars in 2006. That’s the one that caught President Trump’s eye back before he was President. And he said it was one of his top 10 books. I found that out, and that’s when we began communicating. I followed that up with the 2011 Death by China book and movie. The movie’s on YouTube free by the way, Death by China. And then, in 2015, I did the third book, Crouching Tiger, which went from the economics to showing how the American people basically are funding the entire military budget of the Chinese through our trade deficit. The numbers are, like, they’re almost identical. Weird. So—
DEVINE: Can I interrupt for one second? Just—
DR. NAVARRO: Yeah, absolutely.
DEVINE: Could you explain, just, with China and their predatory practices, what is ‘mercantilist’? What does that mean, and why did China’s entry into the World Trade Organization create a problem for America and hollow out our manufacturing?
DR. NAVARRO: Well, it created a problem not just for America. It created a problem for the world. Prior to China joining the WTO, it didn’t have what they call PNTR [Permanent Normal Trade Relations]. It wasn’t allowed to have access to our markets in an unfettered way or markets around the world under the World Trade Organization system. And curiously enough, it would be Bill Clinton, a Democrat, who would push for China’s entry into the World Trade [Organization]. It was a total, total betrayal of the Democrat base because that base at the time, which President Trump would subsequently capture, was like blue-collar working folks, union and non-union in factories. And Clinton, if you go to my Death By China movie, there’s some beautiful quotes of Clinton about, ‘It’s going to be a one-way street. We’re just going to sell to them, and everything’s going to be great.’ And it was just the opposite. They cheat. Mercantilism is cheating. It goes back to the doctrine in the 1500s, 1600s, where the whole goal of trade from a country level was to collect as much of the gold around the world as you possibly could, which meant selling stuff but not buying anything from people and doing it in a way where you cheat. So, it’s all about cheating. Mercantilism is a model based on running large trade surpluses with the rest of the world, thinking you’re going to get wealthy.
DEVINE: Joe Biden was very much involved in pushing his Senate colleagues, many of whom were reluctant to, you know, allow China into the World Trade Organization. I understand he was very influential with Bill Clinton as well, and he used to say things like, ‘China won’t eat our lunch.’ In your travels, did you find any evidence or, even circumstantially, or is it your opinion that Joe Biden was somehow compromised by China? Because we saw, you know, during his vice presidency, his family received tens of millions of dollars from Chinese state-owned organizations, and he, himself, as president, went soft on China and unwound some of the measures that you and the Trump Administration first time around brought against China, most particularly about the sort of anti-spying program in universities. It was inexplicable. He unwound that.
DR. NAVARRO: Well, Miranda, your work on this is kind of the gold standard. I mean, you’ve looked at all of this. What I can tell you, and what I wrote about, back in Death by China back in 2011, is that China, one of their strategies, basically, is to identify elites early in countries, not just America, but in countries around the world. They want to identify academic elites, they want to identify the emerging political possible stars, and they want to identify the corporate types. And what they do with the academics is they give you, like, a professorship and an honorary position at one of their universities, shower you in a bunch of money, and you essentially become a ‘friend’ of them. I saw that a lot in the UC [University of California] system. With politicians, trips, speaking opportunities, money, investment opportunities. And that’s what happened with Biden. But it happens to way too many politicians around the world.
