Will Trump's tariffs make America expensive again?

ABC Listen, podcasts, radio, news, music, and more.

Hi, it's Sam Hawley here from ABC News Daily.

It shocked Silicon Valley and set tech stocks tumbling.

When a little-known Chinese company, DeepSeek, launched its own artificial intelligence chat bot, the sector panicked.

Find our episode on what DeepSeek has managed to pull off on the ABC Listen app.

And there's a new episode out each weekday morning.

This podcast is recorded on the lands of the Awabakal, Darug, and Iora people.

Is there a simple cheat code that could fix the American economy?

So we said, well, what would you do?

What can you do?

So easy.

I drop a 25% tax on China.

This idea seems pretty simple.

Just put a tax on foreign countries.

And you know, I said to somebody that is really the messenger.

The messenger is important.

I could have one man say,

we're going to tax you 25%.

And I could say another,

listen, you motherfuckers.

We're going to tax you 25%.

I mean, Americans pay tax.

So why shouldn't those mother, those people pay tax to America?

Foreign companies want to make stuff at home and sell it in America, they can, but they have to pay this tax.

U.S.

President Donald Trump is a big fan of this idea.

He thinks this would solve America's foreign debt problem.

One year of this tax and we don't owe them anything.

Plus, it would bring back manufacturing jobs to America as companies try to avoid the taxes.

Oh, you know what?

They're going to make cars here.

And it can be used as a tool to make other countries do what you want them to, like crack down on immigration.

So we need help from Mexico.

If Mexico doesn't give the help, that's okay.

We're going to tariff their cars coming into the United States.

Trump has been attached to this idea of a tax.

A tariff or whatever you call it.

Okay, let's call it a tariff because that's what it is.

Trump has been attached to this idea for decades.

During his first term in office, he played around a lot with tariffs, but never threw that 25% tariff on all Chinese goods.

Now, as his second term begins, he's going all the way, throwing a tariff not only on China, but on Canada and Mexico as well.

We're thinking in terms of 25% on Mexico and Canada.

Oh, and also the European Union.

We have a $350 billion deficit with the European Union.

They treat us very, very badly, so they're going to be in for tariffs.

He's even talked about imposing a universal tariff on all goods imported into America.

This, he says, will make America rich again,

stop drugs coming into the country and balance the federal budget.

Now, America and most Western countries have had extremely low tariffs for about 80 years.

Nobody really remembers what it was like when they were high.

This makes it hard for the economists who oppose Trump's plans, which is virtually all of the economists, to argue against him.

But there's one American ally that has a more recent history of high tariffs and memories of what that's like to live with.

Tariff protection has been the generally accepted policy in Australia for nearly half a century now.

While most Western countries dropped their tariffs after World War II, Australia kept them in place into the 1990s.

So, what was that like?

And what could it mean for America and the global economy if Donald Trump does something similar?

Today, the new US President has pinned his economic policy on tariffs.

He's relying on it to do all sorts of things, and he says it will not raise the cost of living for the people who elected him.

But is that even possible?

I'm Matt Bevan, and this is If You're Listening.

So, let's go back to a time when Australia was a tariff-rimmed fortress.

In mid-1974, we were preparing to introduce colour television, and only 20 years after Americans got it.

Experience shows that colour is like a lot of other things.

Once you've had it, you can't do without it.

Once you've seen bits of Wimbledon or Raccoon Welch in colour, it's very hard to go back from flesh to halftone.

ABC reporter Peter Luck went out into George Street in Sydney to ask people a simple question.

If colour television sets cost $1,000, would you buy one?

I'd like it.

Very doubtful.

It's a thousand.

Probably not if it was a thousand dollars, no.

Literally nobody was keen.

But this wasn't a hypothetical.

Prime Minister Gough Whitlam had made an election promise to introduce colour TV, but the expectation was that the cheapest set available would cost consumers around $1,000, the equivalent of about nine weeks' pay.

It's like paying $12,000 in today's money for a 22-inch TV.

This was more than twice as much as it costs to buy one in New York, London or Vancouver.

I wouldn't even buy one for five 600.

I lived in Canada for a while.

I could get one there for about 350 Canadian.

It created a problem for the government.

They'd promised something that nobody was going to be able to afford.

I don't think the average person nowadays could afford it, really.

How do you feel?

So what was going on here?

Why were they so expensive?

Well, you could find the answer around the corner from where Peter Luck was accosting Sydneysiders.

Not on George Street, but on York Street at AWA Tower.

Few Australian companies can claim to have survived as long as AWA.

The people who brought us the wireless and TV have been Australia's major electronics firm since 1913.

AWA's headquarters was, from the late 30s to the late 50s, the tallest building in Australia.

The company inside thrived with the help of the Australian government, which thought having a domestic electronics industry was a good idea.

Your 2025 capitalist brain might be asking why AWA needed help if their radios and TVs were good, then surely people would buy them.

Well, in manufacturing, the more you make of a thing, the cheaper the cost per item gets.

And in the 1970s, Australia's population was just too small, just 13 million people.

Australian manufacturers of cars, shoes, clothes, furniture, canned food, chemicals, and ships couldn't compete with much larger Asian American and European companies.

Asian competitors were a particularly big problem as wages there were far lower than in Australian factories.

So, what did the government do about that?

Listen, you motherfuckers, we're going to tax you 25%.

No, no, no, they were much more civil about it.

They sent the first messenger with the squeaky voice.

We're going to tax you 25%.

Say you're shopping for a black and white TV.

There's an Australian-made AWA TV for $300.

And next to it is a Japanese TV for $336.

Now, without the 180% government tariff, the Japanese TV would have cost you $120.

They can make TVs way cheaper in Japan.

But thanks to the Australian government, you're going to ignore that Japanese TV and pay 300 bucks for that AWA set.

And if you do go for the Japanese TV, the government gets to pocket the $216 tariff.

You get a TV and a manufacturing industry, but stuff is way more expensive.

If you're a foreign company, you can get around it by making the TV or whatever it is here in Australia.

So by the mid-1970s, the government was in a bind.

The tariffs meant that Australians had to pay a lot for manufactured goods.

Australia is one of the last countries in the world to maintain high tariff policy.

It's becoming quite discredited in Europe and America.

But the government got a lot of money from these tariffs and they propped up thousands of jobs.

It was an economic trade-off, the same one that Donald Trump is making in 2025.

But the looming colour TV switch drew attention to the cost of tariffs for ordinary Australians.

In 1973, tariffs on foreign-made TVs were at 180%.

Prime Minister Whitlam asked the National Tariff Board to review the situation, and by the time that colour TV was introduced, he had dropped the tariff to 35%.

I'm looking at the Port Kembler Steelworks, Army Jack, and nothing but pitch black.

Oh, God.

On the night of the 28th of February, 1975, the ABC did something extremely odd slash creative to welcome the arrival of colour television.

Hey, wait a minute.

Wait a minute, the grass.

Under the foundry, it's turning green!

Perky Perky, it's here already!

The cast of the ABC's deeply strange cult comedy show Auntie Jack tried to fight off the arrival of the colour monster, which was set to take over their Wollongong home at midnight.

What are we gonna breathe?

Quick art of the Wollumgong air!

I'll try and hold it down!

It's really quite nice breathing colour, isn't it?

Australians went nuts for it.

The Australian television market is coming home to colour at a far faster rate than the manufacturing industry predicted.

Despite the price, after a year of TV broadcasting in colour, one in five Australian homes had a set that they could watch it on.

It was one of the fastest switches to colour in any country in the world.

But it came at a cost.

That 35% tariff wasn't nearly high enough to save the Australian electronics industry.

By the end of 1975, AWA had laid off 2,000 factory workers.

The industry was in a nosedive, and it was a sign of things to come.

Throughout the 80s and 90s, one by one the tariffs were dropped and one by one the industries they had been protecting disappeared.

Many producers are beginning to wonder whether Australia really wants a manufacturing sector at all.

By the end of the 1990s Australian tariffs had dropped to an average of around 5% and they've basically stayed there.

Our manufacturing industry is gone.

We don't really make things here anymore.

Other countries can just do it cheaper.

For consumers, it's made a massive difference.

Food, clothes, appliances, furniture, and cars are way cheaper now than ever before.

Now, is all of this good?

Is having three TVs better than having TV factories in Australia?

Well, that's very much a matter of opinion, but this is the economy that America, Australia, and basically every other developed country has decided to have until this guy.

And I'm not looking to have enemies with China.

You know, I actually get along.

I'm a lover, not a fighter.

In the early stages of the 2016 election campaign, Donald Trump invited CNN into his golden lair, Trump Tower, to do an interview.

Tonight, a CNN special report, the Donald Trump interview.

In the golden lobby in front of the golden escalators and the golden elevators, Trump promised to bring manufacturing jobs back to America.

I'll be the greatest jobs president that God ever created.

I'll take them back from China, from Japan, from Mexico.

Trump said that he would achieve this with tariffs on things like cars.

But won't that increase the price of the cars?

No, you know what?

They're going to make cars here.

And maybe a person will buy fewer cars over the course of a lifetime.

Who cares?

Who cares?

Well, the car companies, for one, they definitely care.

But fair enough.

He's saying that prices will go up, people will buy fewer cars, but at least they'll be buying American cars.

That's a policy, and it's kind of similar to the attitude of 20th century Australia.

Yes, we're paying more for cars than everyone else, but our people are the ones making them.

Win.

But

that was golden lobby Trump.

White House Trump said something very different.

He started talking about tariffs like they were big taxes on foreign countries.

Here he is imposing tariffs on some Chinese products in 2018.

We've taxed China on $300 billion worth of goods and products being sold into our country and China eats it because they have to pay it.

They very explicitly do not have to pay it.

The Americans who are importing the products are the ones paying it.

We're taking in many billions of dollars.

There's been absolutely no inflation and frankly it hasn't cost our consumer anything.

It costs China.

Nope.

That's definitely not what happened.

It cost American consumers $72 billion in the first year alone.

But what about the jobs?

The industries it revived?

Well, in a lot of cases, it actually backfired.

The Federal Reserve found that Trump's 25% tariff on steel, for instance, raised costs for American factories that relied on imported steel and led to a net loss of 76,000 jobs.

The global economy is more tangled up together than ever before.

Almost every complex product in the world, like a car or a TV, relies on bits coming in from lots of different countries.

Tax even one part of it, and the whole thing might become uneconomical.

Virtually every American economist who looked at the situation found that these tariffs did the opposite of what Trump wanted them to do.

But never mind.

I'm sure that Trump learned a valuable

work for these other countries in some form.

Well,

nevertheless.

Smart tariffs will not create inflation.

They will combat inflation.

That's not at all how they work.

They are literally designed to increase prices.

I had almost no inflation, and I had the highest tariffs that anyone's seen, and they were going a lot higher.

Foreign nations will pay us hundreds of billions of dollars, reducing the deficit and driving inflation down.

I'm not saying that tariffs are bad, but foreign nations do not pay them, and they do not drive inflation down.

The way that golden lobby Trump talked about tariffs, it may not have worked as he hoped, but it kind of made political sense.

The loss of manufacturing jobs in America has deepened inequality between people with higher education and people without it.

In 1980, Americans with degrees used to earn 40% more than those without degrees.

Now it's 80%

more.

It's these people without degrees who have elected Donald Trump twice now, and he could conceivably use tariffs to get them better jobs.

If Trump targeted tariffs at specific products and industries, it might incentivize companies to open factories in America.

It would mean higher prices for certain products, products, but that may be a price that Americans are willing to pay to bring manufacturing jobs back to America.

This 2025 version of Trumpian tariffs, though, they are not

that.

If you don't make your product in America, which is your prerogative, then very simply you will have to pay a tariff.

If Trump goes through with this, it will cause a fundamental shift in the way that the U.S.

economy works.

Just like dropping tariffs in Australia in the 1990s changed how the Australian economy worked.

Prices on some things will rise.

Household budgets will get a total shake-up.

One item that's set to get more expensive, televisions.

There are no standard TVs that are entirely made in the USA.

Most of them are made in China and Mexico, two of the places that Trump wants to tax.

The world is much more interconnected than it was when Australia was a tariff fortress, and the United States is the largest economy in that world.

Given how much global trade flows through the US,

these tariffs are going to impact the rest of us as well.

If you're listening is written by me, Matt Bevan.

Supervising producer is Jess O'Callaghan.

Audio production this week is by Sam Dunn.

So if you're in Adelaide, I'm coming to see you on the 1st of March.

We've prepared an amazing live show for Adelaide Festival's Writers' Week, which I'll be performing at the Torrens Parade Ground at 2.30pm on Saturday, the 1st of March.

It's all new stuff, you haven't heard it before.

Heaps of ABC podcasts are coming with me to do their own live shows.

It's going to be a massive event and tickets are on sale now.

We'll put a link in the show notes.

I'll also be doing the show in Newcastle in April and hopefully in other places throughout 2025.

Meanwhile, earlier this week, you probably heard that Donald Trump was in a clash with Colombia after the country refused to accept some people that Donald Trump was deporting.

Trump threatened tariffs, sanctions and travel bans and the Colombian president caved.

Is that what's going to happen to all of the Latin American countries that Trump demands things from?

Or can they find a way to push back?

That's next week on if you're listening.

See you then.

Hi, I'm Fran and I'm PK and the party room is back for 2025.

Bigger and better than ever PK.

It's going to be a huge year in politics but Fran and I are here to tell you what you need to know.

And every week we'll be joined by a guest to analyse all of the big political news from inside and outside the Canberra bubble.

It's called The Party Room, you can find it on the ABC Listen app.

See you, PK.

See you, Fran.