The Good, the Bad, and the Ugly of Trump’s Bloomberg Interview

Donald Trump gave a long interview to Bloomberg, published on Tuesday. It covered a wide range of topics, some of which Trump is strong on and some of which could use some work. For the purposes of this post, I’m interested in his economic views, which made up a good chunk of the interview. Other issues he talked about won’t be mentioned.

Here’s the lowdown:

The Good

• Electric vehicles. Trump said he is not opposed to the technology in general, “but you can’t have 100% of your cars electric.” He talked about their limited range, high prices, and high weight compared with gas-powered cars. He also mentioned the government’s failure at installing charging stations and the lack of consumer demand for EVs, despite all the subsidies. “So I mean, these are problems that have big problems,” he said. Yes.
• Tax cuts. Trump is clearly proud of the Tax Cuts and Jobs Act of 2017, which was his biggest legislative accomplishment. A small handful of commentators have tried to create a narrative of Republicans shying away from tax cuts, but there is no evidence for it in Trump’s interview.
• Corporate-tax rate. Trump said he wanted to lower the corporate-tax rate, which the TCJA cut from 35 percent to 21 percent, down to 20 percent or 15 percent. “Fifteen would get us down to being about the lowest,” he said. That’s true of major developed economies. The U.S. rate went from being the highest in the OECD at 35 percent to being middle of the pack at 21 percent (it’s a few points higher if you include the average state corporate-tax rate). The corporate tax is one of the most destructive for economic growth because it punishes business investment, which leads to lower wages for workers and higher prices for consumers. Corporations don’t pay taxes; people do.
• Central-bank independence. Trump said he would allow Jerome Powell to finish his term as Federal Reserve governor, set to expire in 2028. His term as chairman expires in 2026. Central bankers should not be directly answerable to politicians because we do not want the business cycle to be politically determined. Politicians want easy money in election years, even if economic circumstances do not call for it. Trump was sensitive to that concern as well, saying “maybe they will [cut interest rates] prior to the election, prior to November 5, even though it’s something that they know they shouldn’t be doing.” Whether he would say the same if he were the incumbent is a separate question, but at least he isn’t seeking revenge on Powell or greater control over the Fed’s decisions.
• Political consequences of inflation. Trump correctly said that “inflation is a country buster.” Inflation slowly degrades a nation and encourages all sorts of other forms of disorder as people lose faith in their ability to purchase things they need. Keeping inflation low and stable was a major success of U.S. policy from the mid 1980s through the early 2020s. It must be restored.
• Inflation Reduction Act. Trump said Biden’s law “increased inflation and not decreased.” It didn’t increase inflation, but it had nothing to do with inflation, as progressives immediately admitted after it was passed. Trump correctly said the law did not need to be passed and the spending it created has been damaging.
• Energy abundance. “The advantage we have all over almost every country including the very large ones is that we have more energy than anybody,” Trump said. That’s correct, and the U.S. must embrace that abundance rather than limit it with excessive regulation. Trump’s first administration pursued solid energy policies, and a second one would likely do more of the same.
• Intermittency of wind and solar power. Trump rightly raised the alarm about how wind and solar power don’t work when the wind doesn’t blow or the sun doesn’t shine, and how solar power takes up massive tracts of land. Entirely replacing the current electricity-generation system with wind and solar would not work. Trump also mentioned the problems with the high costs of building and maintaining wind turbines.
• Immigration. Trump maintained the traditional Republican position on immigration: legal good, illegal bad. “I want them to come in. I want a lot of people to come in, but they have to come in legally,” he said in response to a question about the shortage of workers in the U.S. He also said many questionable things about immigration, such as that Venezuela is sending criminals here on purpose and that immigrants reduce wages for Americans. But he’s right that illegal immigration needs to be curtailed and legal immigration needs to be improved to reestablish the rule of law.
• Housing regulations. Trump said that “50% of the housing costs today and in certain areas like, you know, a lot of these crazy places is environmental, is bookkeeping, is all of those restrictions.” That’s probably an overestimate, but it is a major cost factor and one that government should reduce. He also said, “Zoning is like . . . it’s a killer.” Government stands in the way of so much potential housing construction in the U.S., and Trump is correct to want to reduce regulations. Biden’s housing policies have been terrible, and Trump has a real chance to make a major difference if he is elected. One other thing he didn’t mention but should have: lumber tariffs.

The Bad

• Currency. Trump complained about the strength of the dollar relative to the Chinese yuan. “I think we’re in a very bad position,” he said. He didn’t exactly say what he would like to do about it, besides referencing the use of tariffs as a threat against China. For more on why it would be a bad idea to weaken the dollar, see this piece by Patrick Horan of the Mercatus Center.
• “Liquid gold.” Trump has used that phrase before to describe U.S. oil resources, and while they are certainly valuable and should be tapped, they are not the cure-all Trump seems to think they are. In the past he has said he thinks the U.S. can pay down the national debt with oil. It won’t work.
• Stock-market performance and polling. Trump said he thinks the markets do well when his poll numbers do well. There’s no evidence for this, and we should not want there to be evidence for this. If stock-market performance is ever determined by who is president or, even worse, who is leading in polls to become president, that’s the end of a free country. The stock market has done well at various points under Democrats and Republicans, and we should want it to do that because Democrats are going to win about half the time.
• U.S. tariffs’ economic history. Trump said that “Smoot-Hawley was after the Depression started.” That’s true, but it doesn’t mean the tariffs worked or that they didn’t make the Great Depression worse. The Smoot-Hawley tariff was partly responsible for sending Republicans into the electoral wilderness for years afterward. Instead, Trump pointed to William McKinley, who supported tariffs and thereby “made this country rich.” He sounds like he is imbibing too much from Robert Lighthizer, the pro-tariff trade representative from his presidency. For a better economic history of tariffs in the United States, read this piece by Erik Matson.
• Economic theory of tariffs. “Tariffs do two things. . . . Economically, it’s great. And man, is it good for negotiation,” Trump said. Economically, they are not great. They raise costs for Americans, fail to achieve their policy aims, and create opportunities for political corruption with special-interest carve-outs. Trump gleefully recounted his phone calls with Apple CEO Tim Cook about getting tariff relief; we should not want businessmen who have the president’s phone number to get better treatment from the government. It can be true that tariffs are useful negotiating tools, but those negotiation should be aimed at getting other countries to lower their trade restrictions. Today, neither party is pursuing new free-trade agreements, even though doing so would be in the U.S. national interest and would help the U.S. outcompete China. For some ideas on how to pursue free-trade agreements today, check out this piece by Kent Lassman and Ryan Young of the Competitive Enterprise Institute.
• Taiwan relationship. Trump said, “We’re no different than an insurance company. Taiwan doesn’t give us anything.” We are different from an insurance company. He also said, “They took all of our chip business.” Trump’s zero-sum view of economics between countries is not helpful. Taiwan is a strong economic partner of the United States, and it proves that the Chinese Communist Party’s claims about how Chinese people need communism to succeed are wrong. The preservation of a free, wealthy, democratic Taiwan is in the U.S. national interest, and the Taiwan Relations Act says the U.S. must make available to Taiwan weapons to defend itself. If Trump wants to change the law, he’d need congressional buy-in that would likely not be forthcoming, and Congress would be right to rebuff him. Trump made a big deal of the fact that Taiwan is thousands of miles from the U.S. and would be difficult to defend. The U.S. is currently undervaluing the possibility of a Chinese takeover of Taiwan without a full invasion.
• Farmer bailouts. Trump bragged about the $28 billion bailout his administration gave to American farmers who were hurt by his China tariffs. “I gave the farmers $28 billion. They got $28 billion because China took advantage of our farmers. I gave it to them. Hence I won Iowa and every other place,” Trump said. It’s safe to say he probably would have won Iowa regardless, and it’s not good to have an economy in which one of the top export industries, agriculture, is dependent on government handouts because of government policy. Rather than doubling down on it, the U.S. should end agriculture socialism; click here to read more.
• Technology companies. “I think that they have become too big, too powerful,” Trump said. At the same time, Trump also said, “I don’t want to destroy them. I want them to thrive.” When pressed as to what specifically he wanted to do, whether it would involve antitrust enforcement, Trump was ambiguous. He shouldn’t be. As I argued in the last print issue of National Review, technology companies are the types of companies we should expect to succeed given U.S. law, taxes, and regulations on businesses. Take the boot of the federal government off the neck of other sectors, and they’ll succeed like the tech companies. That would reduce the relative power of the tech companies without making them, or the country, poorer.
• Trade deficit with China. Trump said, “When I first came in, it was close to $600 billion” and, had it not been for Covid, “we would have been net neutral with China.” Neither of these things is true. The U.S. trade deficit with China was $347 billion in 2016, the year before Trump took office, and $343 billion in 2019, the year before Covid, as Bloomberg notes.
• Trade deficit with the EU. Trump views the EU as an adversary of the U.S. the same way China is regarding trade. “But European Union—you know, nobody thinks this. It’s like China,” he said. This is not a helpful way to view U.S. alliances, which should be an advantage over China, not another source of conflict.

The Ugly

(In this section, I include some stuff he said that didn’t make any sense. It was ugly in the sense that it was poorly expressed, to the point where it wasn’t clear whether it was good or bad.)

• Energy and inflation. Trump said, “Inflation was caused by energy.” He proceeded to ramble a little about drilling in the Arctic National Wildlife Refuge in Alaska and about how Biden stopped that with bad regulations. That was bad, but inflation was caused, as it always is, by monetary policy and fiscal policy.
• Oil prices and the Ukraine war. “The whole Ukraine thing was horrible—caused by oil too, because, you know, when oil gets up to $100 a barrel instead of $40 a barrel, he can prosecute a war. At $40 a barrel whether he listened to me and he does and he did, he would have never gotten in. I don’t care what it was about. And now we had the double incentive, a very expensive oil. He’s the only one that made money during the war, because he did. At those numbers that money was staggering. And to a large extent that war drove the prices up. So in one case, you want to have low energy prices, but in another case, you want to end a war but you can’t end a war at $100 because at $100, his incentives to end it is not great. So we have a whole set of macro issues that are also micro issues, they go into micro issues. And the end, the end of the result is the world is a mess.” The world is a mess, as is that train of thought. The U.S. is the largest oil producer, but it does not have price-making power in the global oil market. Oil prices were elevated from 2011 to 2014, and Putin invaded Crimea at the end of that period, not the beginning. The brief spike in world oil prices in 2022 was not the cause of the invasion this time around.
• Coke and Diet Coke. “Cokes and Diet Cokes. One thing I’ll say about a Diet Coke, I have never seen anyone thin have a Diet Coke. No, it’s always Diet Coke. And I say it sort of in a friendly way. But people drink a Diet Coke, I have never seen a thin person drink it. I’ve just never seen it. These guys come in and they order regular Cokes and they’re thin. So, I don’t know what’s going on with it?” I don’t know, either, but this is a funny bit.
• Favorite politicians. “Cornel West and Jill Stein, I love them as politicians. They are among my favorite politicians.” They shouldn’t be; they’re socialists.
• TikTok. Trump has flagrantly flip-flopped on whether TikTok should be banned. He claimed in the interview that he didn’t say it should be banned when he was president, but he did, in 2020, as Bloomberg notes. Now he says it should not be banned, to preserve competition in the social-media industry.