MICHEL MARTIN, HOST:
We're going to begin with President Trump's address to the annual World Economic Forum in Davos, Switzerland, on Thursday. Here's the pitch he made on live video via satellite to more than a thousand global political and business leaders.
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PRESIDENT DONALD TRUMP: Come make your product in America, and we will give you among the lowest taxes of any nation on Earth.
MARTIN: Or...
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TRUMP: Then very simply, you will have to pay a tariff, differing amounts, but a tariff, which will direct hundreds of billions of dollars, and even trillions of dollars into our Treasury, to strengthen our economy and pay down debt.
MARTIN: To hear more about this and some of the other economic plans the president talked about, I'm joined now by David Wessel. He is the director of the Hutchins Center at the Brookings Institution. That's a nonpartisan think tank based in Washington, D.C. It's focused on policy and governance. Good morning, David.
DAVID WESSEL: Good morning, Michel.
MARTIN: OK. So I called what Trump talked about economic plans. But are they? Are they plans, or are they bargaining tactics?
WESSEL: That's the right question, and we don't know the answer. I mean, it's really important to watch what President Trump actually does, not only what he says, because he likes to say a lot of things that are pretty provocative. He's basically offering foreign companies a carrot and a stick. The stick is the tariffs, but we don't know exactly how he'd target them or what exceptions he'd make. Tariffs, of course, are taxes on imports, some of which would be passed on to consumers in higher prices. I mean, does he really want to put tariffs on the oil we import from Canada, for instance? And we don't know, also, how our trading partners would respond, but they've threatened to retaliate, which would hurt our exporters.
On the carrot side, he's talking about cutting the corporate tax rate from 21% to 15%. That's something that he could only do with Congress' consent, and it's really expensive. If it's really narrowly targeted, it's still 200 billion over 10 years, and that's on top of the cost of extending the individual tax cuts which expire at the end of this year.
MARTIN: So, you know, you've been in Davos in the past, David. Did this speech differ from what you might usually hear there?
WESSEL: It does. I mean, this was an America First speech. It sounded more like he was campaigning in Pittsburgh or Las Vegas than reassuring allies and adversaries in other countries. I mean, listening to him, you'd never know that the U.S., actually, economy was pretty strong. And you'd think that he had the power to order people to do other things, to tell OPEC to bring down tax - oil prices, to tell Europe to spend more on defense. And what struck me was the contrast to the speech given by the Chinese vice premier, who talked about the universal and beneficial, inclusive economic globalization. Trade wars have no winners, he said. Now, China isn't exactly playing by the rules, but I suspect the Chinese are looking at what Trump is doing and saying he's putting cracks in the Western alliance, and they're going to go right through them.
MARTIN: And I do have to say that some of the things he said just simply aren't true. Like Canada, for example, is not running a $200 billion trade surplus with the U.S. I think it's, what - is it more like...
WESSEL: More like 45 billion.
MARTIN: Forty-five billion. OK.
WESSEL: Yeah.
MARTIN: So there's that. All right. Energy figures prominently in a lot of Trump's speeches, including yesterday's. He talked about increasing oil production, even coal. Could you say more about what his priorities and point of view are in this area?
WESSEL: Well, his point of view is that we should just produce more oil and gas. He doesn't care about climate change. He says that increased production of oil and gas will lower prices in the U.S. and that'll help fight inflation. But actually, in the past year, energy prices have been falling. It's other things driving inflation. And the U.S. is producing more oil now than it did - has before - 20% more than when he left office. But producing oil, he seems to think that's the magic elixir, and he's going to waive permits to the extent he can. And one thing's interesting is if he really does push down the price of oil, that, of course, reduces the incentive for American producers to drill.
MARTIN: Yeah. I was thinking about that. OK. One more thing, briefly, the president drew a connection between lower oil prices and interest rates. How does that work?
WESSEL: Well, look, the president did say if inflation comes down, interest rates will tend to move down. That's true. But he said he could demand interest rates come down, and that's just not something he has the power to do. The bond market has pushed up long-term interest rates, and the Fed has signaled it's not going to rush because they're worried about his plans.
MARTIN: That is David Wessel with the Brookings Institution. David, thank you.
WESSEL: You're welcome. Transcript provided by NPR, Copyright NPR.
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