'Chaotic tariff regime': Economist says Americans will feel the costs but not benefits MSNBC

President Trump's efforts to remake the global economy entered a new phase today as U.S. import taxes, otherwise known as tariffs, reached their highest level since the Great Depression. Joining us now, NBC News senior business correspondent Christine Romans and University of Michigan professor of economics and public policy Justin Wolfers. Welcome back from vacation, Justin. Christine, how are the markets reacting to this? Well, you've got stocks down a little bit today but really it's been a resilient reaction overall to what has been an absolute remaking of the global trade world order, right? And so there are plenty of people out there who think that markets just have been a little bit too blasé about what the potential implications could be. But look, you've got six months of this drama back and forth about tariffs and then now about, you know, a number of hours since these tariffs, these biggest tariffs have really been in effect here. So I think the bigger, the bigger note, you'll notice it more on your grocery bill probably in the near term than your retirement fund, honestly. Is it looking likely that the markets will continue to soften the blow or absorb this? It's unclear. You know, there's a lot of investment because of A.I. There's a lot of energy in the tech sector that might be masking other unease. We have seen some companies like the big the big automakers that have they've said they're taking billion dollar hits because of tariffs. At some point, they'll try to maybe start passing that on to consumers. And maybe that's what investors are looking forward to. They're looking ahead to maybe lower interest rates down the road and maybe these companies starting to share the hit they're taking from tariffs and not maybe taking in the corporate earnings alone. And that is the point that so many people are paying attention to. When are we all going to be paying for this? Justin, Treasury Secretary Scott Besant defended the tariff policies today on Morning Joe. He touted the return of trillions of dollars in investments in domestic manufacturing. Let's listen. We are trying to rebalance trade in America's favor. President Trump has said and I've said we want to bring back the high precision manufacturing jobs. We want to get rid of these big deficits that we have with countries that have created these big surpluses and the gutted gutted our manufacturing base base. Ryan had been terrible for American workers. So, Justin, will investments from Apple and other main companies bring back American manufacturing? And what's the timeline if so? Well, Ariel, I've got great news for you, which is I'm willing to announce right now on MSNBC that my family is going to invest one hundred and one billion dollars in the United States. Tim Cook, it was just one hundred billion. But you have it just as much in writing for me that it'll be one hundred and one billion from my family and my kids. They want to bring back toy manufacturing. So Oliver and Matilda have each said that they're going to invest themselves another two hundred billion dollars in bringing toys back to America. So it's not just all of this is what you're saying. I'm saying that MSNBC is delivering manufacturing jobs for Americans. OK, but answer the question. How long could it be if we're going to bring jobs back to America? You see Apple investing. How long could it be till we see the benefits of that? So here's the thing. If I'm going to invest money in America, it's going to be based on my expectations of the future profitability of doing business in America. If tariffs work, it's by raising that future expectation. So that means what I would have what the White House would have to do is convince executives not that tariffs are going to be high tomorrow or the next day, but the tariffs are going to be high in 10 years time or in 20 years time or 30 years time, or at least after the cement has set in my manufacturing plant. And the problem is that this is a president who raises tariffs on Monday and reduces them on Tuesday. So the reality is that having a chaotic tariff regime that's unpredictable. And here's another point. Normally, what you do with a trade deal is you put it through Congress, which makes it very hard to reverse. This president hasn't done that. So the next president can literally, with the stroke of a pen, with an executive order, undo all of these tariffs. As a result of that, there is not a manufacturing plant in America that's going to get built on the back of these tariffs. What that means for families at home is we're going to get all the costs of these tariffs. We're going to get higher inflation and pay higher prices at the store. But we're not going to get the benefits because they're not reliable. No one's going to be bringing jobs back home. Yeah. And the president facing legal challenges to these tariffs right now, we should remind our viewers. Christine Besant was essentially saying that the wage growth is going to offset the inflation we may see potentially relating to tariffs. Is that realistic? Look, they have been consistent that this is going to make America so rich and it's going to be so good for everybody. And that that consumer culture that we've lived on for the past 40 years of cheap, globalized goods, we don't need that. We're going to go through this transition phase and everyone's going to be richer and all their money problems are going to be over. That has been that has been the line from the White House for some time. I will say there there are billions of dollars of tariff revenue that are coming into the coffers, but they don't even remotely match what Americans pay in their income taxes. That was one of the early promises. Remember, they said, oh, maybe these tariffs are going to allow us not to have to pay income taxes that we're going to let foreign governments are going to pay this. That's not shaping up to be what is happening here. So you've got like the worst predictions of a recession that hasn't happened. And these best predictions of, you know, you're not going to pay taxes eventually over this. That hasn't happened either. We're in somewhere in the middle here trying to figure out what this new world order is going to look like. And Justin, to that end, if billions of dollars are, in fact, flowing into the United States, I know you're skeptical about that. Who would be benefiting from that? Where's the money going? Oh, so if we get taxed, so the tariffs are simple tariffs or tax. When you raise tax rates, you get more tax revenue. That's absolutely occurring. And so what's happening right now is we have just had the largest tax rise in history that has not been passed by Congress. So that's going to be a little less money for most families to spend. But it does mean that the enormous budget hole that came out of the big, beautiful bill will be a little bit smaller as a result. What about the money that's coming from these deals, like the one with the EU that they had pledged to us? What about the money there? When that comes into the coffers, where is it going? Let's go with the word if here. So let me tell you the one I know a lot more about. I just came back from two weeks in Japan and I was talking to a variety of very senior government officials, none of whom I can name on the record. And let me tell you, the Japan deal involves what the center's described as being hundreds of billions of dollars coming in and 90 percent of the profits going to the United States. And there is no one in Japan who understands the deal remotely in those terms. More than that, you'll notice that this is a trade deal where we haven't seen a single word in writing. And I think there's probably a pretty big reason for that. The Japanese were happy to leave this deal unwritten so that Trump and Besant could tell whatever stories they want to tell about it while not actually making the Japanese live up to any of this. And so there's a lot of strategic ambiguity here, the ambiguity being let's let the president boast about what he wants, but we don't actually have to deliver. And I think we're seeing the same thing in the European deal and a range of others as well. You were nodding there, Christine. You know, the president has talked about how these countries can buy down their tariff rate. You know, talking about the art of the deal, like if you you give us 500 billion or 100 billion or 200 billion, you can you can have a lower tariff rate. But the details on those investments are pretty scarce. Timelines for those just the lack of paper on so many of these the deals and then the investments. There's just so many, so many questions. I'd love to see more paper on all of this. It's almost like a down payment. Exactly. Exactly. Do you expect more of these deals, whether we can call them deals or agreements? They're still working on China and Mexico. Those are really big, important partners for the US. So those are still to be done. There are these sectoral tariffs. You heard the president talk about 100 percent tariffs on semiconductors unless you're building in the US and then pharmaceuticals. I'm waiting more on pharmaceuticals. That's a big one, because I think I think this is 25 percent or less of the drugs we consume in this country are made in this country. So that is a really, really big one. And so many people are reliant on those drugs made out of the country. Thank you so much, Christine Romans and Justin Wolfers, who apparently was working on vacation as well.