Robert Lighthizer: tariffs can prevent U.S. economic crash

Robert Lighthizer appeared on the Tucker Carlson podcast this week. A lawyer and civil servant, he notably served as U.S. Trade Representative during Trump's first term.

During Trump's first term in office, Lighthizer was one of the senior people in charge of U.S. trade policy.

A critic of free trade and a protectionist, his policies are aimed at safeguarding U.S. manufacturing.

Lighthizer was also a key player in the renegotiation of the Treaty between Mexico, the United States and Canada (T-MEC) sponsored by the Trump Administration in 2017.

He was also actively involved in the trade war between China and the United States initiated by Donald Trump in 2018.

During his interview with Carlson, Lighthizer explained the importance of the tariff policies pushed by Donald Trump. An opposing model to that proposed by Joe Biden during his 2024 campaign when he championed laughable Bidenomics ideas.

During Biden's term, the economy suffered inflation that reached 9.1% in 2022, the worst in 40 years of history.

Tariffs are the political lifeblood of Donald Trump

During his conversation with Tucker Carlson, Lighthizer explained that to understand the political essence of Donald Trump you have to understand what his mentality is regarding the issue of tariffs.

The former official explained that for Trump, the American working class is being robbed, while it is trapped in the wrong system.

In this sense, Trump realized that previous Administrations never knew how to take advantage of America's economic position as a tool to solve problems such as the flight of manufacturing industries, illegal immigration and drug trafficking, preferring to let the problems become entrenched and multiply.

It must be understood that for the Trump Administration, the implementation of tariffs is a mechanism that helps protect the national security of the United States and distribute wealth so that Americans can live their best lives.

The consequences of free trade: trade deficits

For Lighthizer, free trade has evolved in a way where you have some countries like "the United States with an open capital and trade system, while other countries have an industrial policy that is not designed to raise the standard of living of their citizens, but to gain wealth."

What those countries do is to gain wealth in order to obtain goods in the United States and thus be able to acquire technology, in order to obtain assets that make them richer.

According to the former official, "in the United States there is a gigantic transfer of wealth abroad, and this generates trade deficits." For Lighthizer, no country should have large trade deficits for long periods of time.

The former Trade representative stated that there are reasons for concern.

There is a number called a country's International Investment Position, and it is how much Americans own around the world versus how much everyone else in the US owns. That number is a negative $23.5 trillion, whereas 20 years ago, it was a negative $3 trillion.Robert Lighthizer

According to Lighthizer, "The United States has transferred nearly $20 trillion in domestic wealth overseas, and coupled with that is the future income from that wealth."

In addition to this, the former official claims that when manufacturing is lost and factory jobs are lost, it also slows innovation. Lighthizier explained that there was an idea that some would innovate and some would manufacture, but that is not the case. Most of the innovation is near the point of manufacturing, the former Commerce representative added.

An example of this is the invention of the semiconductor. This device was invented by the United States and now only produces 8% of the global production.

Free trade has destroyed the social fabric of communities in the United States

According to the former official, an economy governed by the free market has caused the inhabitants of many corners of the United States to lose their jobs and the standard of living to decrease dramatically in these places that have suffered the closure of their industries.

For Lighthizier, situations such as unemployment, poverty, alcoholism, drug abuse, and suicides have devastated countless communities in the United States and this reality is nothing more than proof of a failed experiment in globalization that has been fueled by free trade.

The propaganda machine that defends free trade

According to the former Trade Representative, all these changes were defended by a whole machinery of academic studies and propaganda that supported the think tanks that defended the idea of free trade. For these "non-profit" organizations this was all well and good, while the country's industries were being decimated, at the same rate that the communities that made them work were being devastated. According to Lighthizer, "the only way to counter this scourge is to pursue it through the political system."

One example cited during the conversation was that of the Wall Street Journal. This newspaper has a very clear ideology that is promoted alongside the Washington elite. Free trade for its readers is the "road to prosperity."

The economic reality of tariffs, according to Robert Lighthizer

According to the former trade official, with Trump there are now substantial changes. In the last 25 years the system failed American workers dramatically.

According to Lighthizer, "tariffs are necessary to transform the economic injustice generated by the free market."

For the former official, "tariffs will create some disruption, but after a reasonable period of time you will see the rebirth of manufacturing, new jobs and higher wages."

According to Lighthizer, tariffs give balance and reciprocity to these bad practices. What we are going to see with the reciprocal tariffs that will go into effect, starting April 2, is that the direction has not yet been determined. According to the former Commerce representative, "there will be adjustments, mistakes will be made, there will be modifications, there will be changes and last time it was done in a controlled manner, where we took the steam out of the balloon before it burst. We have to do this and do it as quickly as we can."

However, Lighthizer is optimistic in saying that in the first Trump Administration people didn't accept it, but this time there is more acceptance to using tariffs as an economic tool.

Will tariffs cause inflation in the United States?

According to Lighthizer, "the inflation is a systemic thing, the question is how are prices going to rise systemically. It's basically monetary policy that will dictate whether something goes up or not and monetary policy is not something that's necessarily going to change. Some would say it's going to slow the economy and that's when we should lower interest rates, some will say there's going to be inflation so we're going to raise rates. The notion is that you will raise production, you will maintain consumption and that is lowering inflation."

For Trump's former trade representative, "the idea is that you will increase production in the United States and that will be able to counter inflation."

Lighthizer said that "during the first Trump Administration, the implementation of tariffs did not produce inflation. All those who didn't approve of our economic policies were proven wrong."

This time around, President Trump's program will focus on tax cuts, spending cuts, deregulation, more energy, and tariffs. According to Lighthizer, "a combination of these can generate everything but inflation."