The following is a lightly edited transcript of the June 3o episode of the Daily Blast podcast. Listen to it here.
Greg Sargent: This is The Daily Blast from The New Republic, produced and presented by the DSR network. I’m your host, Greg Sargent.
On many fronts at once, it’s suddenly sinking in how badly President Donald Trump’s policies are screwing over his own voters. Trump just lost his temper with Canada and launched a new trade war with that country that could hurt working-class voters, his people very much included. Whatever happens with that, the tariffs are continuing across the board. This comes as it’s becoming clearer by the day how badly Trump’s big budget bill will hammer Trump voters. And Trump himself recently admitted that his mass deportations are hurting farmers, a major GOP constituency, and hurting the economy to boot. So we’re checking in with economist Jared Bernstein, who has a new piece on his Substack arguing that the data is pointing to a softening economy—which means everything is poised to get worse. Jared is going to help us make sense of where we are on all this. Thanks for coming on, man.
Jared Bernstein: Thanks for inviting me, Greg.
Sargent: So The New York Times had this amazing piece the other day tallying up how badly the budget bill is going to hit working people. The House version will cut food benefits by hundreds of billions of dollars and it would knock over 10 million people off health care rolls. That’s going to hit a huge chunk of the working poor across this country. Can you talk about that?
Bernstein: Yeah. There have been lots of calculations trying to assess the damage here. There’s never been a budget bill that redistributes income more aggressively from the bottom to the top. This is Robin Hood in reverse on massive doses of steroids. They’re literally taking money from poor people and giving it to rich people. And anyone who knows anything about what it’s like to try to get by.… And [when] we talk about an affordability crisis—trust me—that’s a crisis for the bottom 20 percent, not for the top 0.1 percent. If you just combine the negative impact on the incomes of low-income people from this bill with the tariffs—which also disproportionately fall on middle- and low-income people because more of their consumption basket, more of what they buy falls under that import tax—this tax and service cut regime is incredibly punishing to low-income people.
One other point: It is consistently argued that Republicans won’t raise taxes. They signed a pledge, they’ll never raise taxes. And sure enough, they cut taxes all over the place. Well, they’ve belied that claim. They’ve raised taxes aggressively. Trump has done it, but they’ve stood by through the import taxes. That’s a tax. And as I said, it falls disproportionately on the most vulnerable.
Sargent: OK, so let’s talk about Trump’s eruption at Canada. On Truth Social, he suddenly ranted that Canada is putting a digital tax on American technology. He then said, “[W]e are hereby terminating ALL discussions on Trade with Canada, effective immediately. We will let Canada know the Tariff that they will be paying to do business with the United States of America within the next seven day period.” Now, when Trump starts using the word “hereby,” you know you’re in trouble. Trump is going to hit Canada with new tariffs. Jared, what does this mean? What does a ramped-up trade war with Canada look like?
Bernstein: Canada is an important trading partner, particularly when it comes to energy. So here’s something that I haven’t heard emphasized enough. Canada provides the Midwest—the U.S. Midwest—with 100 percent of that region’s crude oil imports. So not every barrel of oil that they refine in the Midwest comes from Canada—but if it’s imported, it comes from Canada. And in fact, the vast majority of all crude oil processed in the Midwest is from Canada. We are very large energy trading partners with Canada. We also export over $400 billion of our own exports to Canada. And I suspect they’re going to put on reciprocal tariffs, and that’s going to hurt American companies that send food up there, automobiles, machine tools. So this is going to hurt employment and it’s going to raise prices, particularly, I believe, in the Midwest.
Sargent: Right. And we’re talking about a lot of Trump voters here in the auto industry and agriculture and so forth, right?
Bernstein: Yeah. I think the important thing when it comes to Trump voters and tariffs is to remember the following: Tariffs are import taxes, and they are regressive import taxes. They fall disproportionately on people in the bottom half. And just pulling back the lens a bit, if you think about the kinds of promises that Trump made to voters, particularly voters who are being hit by this affordability crisis that has been very much in the news lately, especially with Mamdani’s win in New York, tariffs very much hit Trump’s voter base because tariffs or import taxes—that’s what they are—are a highly regressive tax. They disproportionately fall on middle- and low-income people. These import taxes will eventually show up as higher price tags for much of what these folks purchase, whether it’s energy or whether it’s the kind of goods that energy is an input for [like] plastics, a lot of the things you see at the shelves at Target or Walmart. These are definitely going to be hitting middle- and low-income people, many of whom in this part of the country in particular were Trump voters.
Sargent: Just to pull back a little bit as well, one of the paradoxes of the trade debate is that tariffs code as pro-worker because they constitute a president seeming to act and use his power to protect Americans, right? But of course, in a globalized world, working people are hurt by lot of different types of trade barriers. Can you talk about the communication challenge here? This stuff codes in a very pro-worker way—tariffs do—but the paradox is that that’s not how it actually works. How do we get our point across here?
Bernstein: Well, first of all, let me just add a little bit of substance on tariffs and who they hit and don’t hit. It actually is possible to design pro-worker tariffs. They have to be very narrow. You have to say, Here’s a factory or a sector that’s getting hit by unfair trade. It happens all the time, but it has to be at the level of [Grade 4] rubber tires or chicken parts or something very specific. And then you can administer a tariff where a country is engaged in unfair dumping—that means selling under the market price in order to capture market share. There’s a long history of tariffs working that way. This isn’t that. This is a sweeping set of tariffs that’s going to hit hard the very people who are already having a real stressful time trying to make ends meet. And so it flies in the face of promises that candidate Trump made to lower costs, to lower interest rates, to lower the cost of housing.
Canada is a good example of that, by the way. A lot of housing materials come here from Canada. And you have builders already telling that the existing tariffs with Canada is making building more expensive. So that’s not making housing less expensive. That makes building housing more expensive.
Sargent: It’s really interesting you say that. I think one of the surprises of the tariff debate has been that people get how tariffs actually work. I think the press has actually done a decent job of informing people on it, especially the local press. There are always these clips of auto dealers talking about how the tariffs are driving up their prices from local news circulating on social and so forth. So tariffs may code as pro-worker in MAGA speak, but the public’s seeing through that. And I think that’s one of the pleasant surprises of this debate. And it indicates that the public’s a little bit more economically literate than Trump and MAGA were hoping.
Bernstein: Well, let me say a couple of things about that. You’re exactly right and the polling supports what you just said. If you go back and poll tariffs before this latest trade war, they actually polled very well for precisely the reason you said. Run that same poll now and you get a completely different result. And I think the reason is not just that maybe people have more economic sense that we give them credit for, but it’s really the media. The media has done a uniquely … to me, having been on the other side of that, almost a weirdly good job of explaining these price effects.
Now, I want to be clear about one thing because it’s important: It actually takes a while for the price effects of tariffs to work their way from the ports to the shelves. When an import comes into this country, whether it’s a T-shirt or a washing machine, the immediate payment there—the tariff payment, the import tax payment—is from the importer. That’s the U.S. company. This stuff about other countries eating the tariffs is BS. The U.S. importer pays the tariff. And then eventually some portion of that tariff—I think it’s well north of half—finds its way to the shelf. And we’re just now starting to see that. Actually, if you look at the overall price indexes, they’ve been pretty tame. But if you dig in under the hood, and you could actually see that this morning in one of the reports, we’re starting to see pressure from goods prices. And that’s exactly what you’d expect.
Sargent: Fascinating. Well, just to go into some of the communications challenges here a little bit more, to go back to Trump’s big budget bill, these types of spending cuts are another thing that Republicans are trying to code as pro-worker, just as they’re trying to do on tariffs. And sometimes they have success at fooling people on that because, in the popular imagination, the safety net is associated with helping people who aren’t working. Republicans have spent a half century trying to code things that way: Ronald Reagan with “welfare queen,” Paul Ryan calling the safety net a hammock that lulls people into dependency. But the changes in the economy in recent years have meant that these programs are deeply woven into the lives of the working poor.
Bernstein: You cannot live—that is, survive—in this country on social benefits alone. They are too low—too miserly, if you will—to feed yourself [or] your family, to house yourself. You have to work in order to get by. Now, there’s no question that health coverage and nutritional support are essential parts of the lives of many low-income people, but they can’t live on that alone. Food stamps literally is a couple of dollars per meal. So this notion that you can somehow live in Paul Ryan’s hammock or be housed on the kinds of benefits we provide is completely false. And that’s why the vast majority of working-age low-income people work, because many have to. What we’re doing here is actually making it harder for them to work. It has been shown in many really, I think, high-quality studies that if you take health care coverage away from somebody, they’re actually less able to stay in the workforce. So this is really some upside-down stuff.
Sargent: Sure is. And speaking of upside down, Trump recently had this tweet in which he openly admitted that mass deportations are hurting the economy and farmers—again, one of his core constituencies. He admitted straight-out that migrant workers in the agriculture and hospitality sectors are good workers and admitted that when those people are removed, American workers don’t flow in to replace them. This directly undermines Trump and MAGA’s core argument, which is zero-sum: Any migrant workers gain is an American workers loss. Trump admitted that that’s not the case, yet the efforts to deport migrant workers are ramping up. Stephen Miller is ordering ICE to scour Home Depot parking lots to find someone, anyone, as many people as possible to deport. What do you make of all that?
Bernstein: Well, first of all, let me point out that Trump, as a hotelier, has to know this. Anyone who runs that kind of a business knows that. And in a minute of honesty, I guess, he admitted what everybody knows. And when I say everybody, I mean everyone who ever goes to the store—especially in a coastal area, but even in the middle of the country. And of course, you’re talking about agriculture. So this is a very well-known issue. And I think what a lot of people heard when they heard “deporting criminals” was gang members or people who were guilty of crimes, not people who were here undocumented and working to try to get by and, as you suggested, [are] very important parts of the labor force and the economy.
And in fact, if you ask people what they think about deporting those folks, many of whom they know because they handle their dry cleaning, they’re against it. So one theme that’s constant throughout our conversation, I don’t think we’ve used this word yet, is unpopular. It is. You can’t underestimate how unpopular almost everything we’ve talked about so far is with people who don’t work in the White House or are paid to think otherwise. This budget bill is massively unpopular. It’s unpopular with investors who are worried about its deficit impact. I’m not saying that.… Obviously rich people long for those tax cuts, so I don’t want to overstate my case. But it’s highly unpopular with obviously middle- and low-income people who see themselves as getting hit.
The tariffs couldn’t be more unpopular. They get criticized from The Wall Street Journal all the way over to MSNBC. And the deportation agenda, deporting undocumented people who are integral parts of the economy and of the community—that’s also highly unpopular. So it is a bit mind-boggling to me. I obviously came up in political economics. I worked for a lot of politicians. It is not really that common to just keep doing things that most people really dislike. But that is what’s happening here.
Sargent: It certainly is. Well, just to tie this all together, we’ve got these three big policies which are really going to screw working people in a major way: tariffs, potentially ramped-up trade war with Canada; mass deportations, which Trump himself admitted is screwing over farm country; and this big budget bill, which is destroying the safety net for the working poor. So overall, putting it all together, is the class known as the working class going to be worse off at the end of this? And what does it look like? How do you sum up what’s going to happen to that mass of people in this country?
Bernstein: In fact, the really important relatively new think tank, The Budget Lab, has done exactly what you just asked for. They summed it up. They summed up the impact of the tariffs and the service cuts. They even netted out any tax gains from both the big bill and the tariffs. And what they found is that incomes fall not just at the bottom but from all the way at the bottom to the 80th percentile. Now, once you get up to 80 and 90, they’re flat. They don’t fall very much. But at the bottom, you’re talking about thousands of dollars of losses. At the middle, you’re talking about, I think, around $1,500 or so. You don’t see gains until you get up to the 90th percentile.
So that’s an exercise in exactly what you just asked for. The cumulative effect of the tariffs and the budget bill is to make 80 percent of households less well-off. As someone who’s been observing politics and budgets and international trade for many decades, I’ve never seen anything like this where a budget bill combined with tariffs [and] deportation is taking a strong economy that this administration inherited and cutting it off at the knees. [It’s] lowering incomes for at least 80 percent of households, making life more expensive—exactly the opposite of what people thought they were voting—for tens of millions of people. And that’s why all of these actions are so fundamentally unpopular. Yet the administration just continues to push ahead.
Sargent: That’s really an extraordinary summary. Jared Bernstein, thanks so much for talking to us, man. It’s always a pleasure.
Bernstein: My pleasure, Greg.
The post Transcript: Trump Is Screwing His Voters in “Mind-Boggling” New Scam appeared first on New Republic.
