Tariffs will help improve ‘broken global economic situation,’ economist Oren Cass says

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• Amna Nawaz:

  Welcome to the "News Hour."

  Major economic shakeups are under way. President Trump today fired the head of the agency that produces the monthly jobs report, accusing her, without evidence, of manipulating the numbers that show weaker hiring than previously reported.

  Donald Trump, President of the United States: I believe the numbers were phony, just like they were before the election. And there were other times. So you know what I did? I fired her. And you know what? I did the right thing. I put somebody in who's going to be honest.

• Geoff Bennett:

  It comes a day after Mr. Trump announced sweeping new tariffs on more than 60 countries. The tariffs, which range from 10 to 41 percent, take effect next week.

  An executive order he signed last night set high reciprocal rates for countries like Syria, Switzerland and South Africa. It also confirmed lower rates for those that have made deals with the U.S., including South Korea, the E.U., Japan and the United Kingdom. Separately, the president announced he was raising tariffs on Canada effective today to 35 percent. And earlier this week, he slapped Brazil, Latin America's biggest economy, with some of the highest rates in the world, 50 percent.

  Last night, we spoke about the tariffs with Jason Furman, the former head of the Council of Economic Advisers under President Obama. Tonight, we get a different view from Oren Cass. He's a founder and chief economist of American Compass and a former senior fellow at the conservative think tank the Manhattan Institute.

  Thanks for being with us.

• Oren Cass, American Compass:

  No, thanks for having me.

• Geoff Bennett:

  I want to start with your reaction to President Trump moving to fire the commissioner of the Bureau of Labor Statistics after today's weak jobs report, accusing her, without evidence, of manipulating the monthly jobs report for political purposes.

  That's despite the BLS widely being seen as the global gold standard for data collection.

• Oren Cass:

  Well, I definitely think it's a mistake. I don't think it's ever a good idea to fire someone for delivering bad news, especially when, in this case, I don't think it was bad news.

  I think, if you look at the overall picture, I think the economy continues to be doing quite well, especially given everything that's going on, on the trade front. I think the White House has a lot to be celebrating, all things considered.

• Geoff Bennett:

  Well, let's unpack that a bit, because, according to the fresh labor data, this is the worst job market since 2020.

• Oren Cass:

  Well, I guess I'm not sure how you're measuring it then. I mean, the unemployment rate is at 4.2 percent, exactly what it's been — what it was on liberation day, what it's been within a fraction of a point for months now. Initial jobless claims remain very low and steady.

  It seems to me that what's happening, if you actually look at the data is that, because — mostly because of immigration policy, you're seeing a quite large exodus out of the labor force of foreign-born workers. You have seen that figure decline by more than a million. And so, with that, the number of employed workers in that category has fallen dramatically.

  If you look at native-born workers who wouldn't have been affected by the immigration policy, you actually see that up close to two million new jobs in recent months. And so, again, I think you have to really look at what's going on in the economy generally. And with that picture, I think it's a lot harder to make out where the distress is.

• Geoff Bennett:

  So how then do you interpret this jobs report that came in weaker than expected? 73,000 jobs added last month? The May and June figures were revised down by a combined 258,000.

• Oren Cass:

  Well, like you just said, there were a lot of revisions. And I think — I don't know exactly why the revisions happened. If I had to guess, in part, when you have the kind of turbulence in the labor market that we have with the ongoing immigration enforcement, you're likely to see more adjustments.

  But I don't know the specific facts around that. And so, again, I think it's important to step back and look at where we are with the economy broadly. I mean, think about what economists were saying about tariffs, what they were saying after liberation day, the idea that we're headed into a recession, the idea that this was going to be a disaster.

  And now look at where we are. The unemployment rate is the same place where it was. Like I said, jobless claims are low. Inflation has ticked up a little bit. You would expect to see some price increases from tariffs. The president has said that. Secretary Bessent has said that.

  But, obviously, the stock market has also reacted quite well. There's been solid wage growth. I think the investment numbers in terms of real investment in the economy look good. And so I think the big question is, how did economists get this so wrong?

  How did they have — Jason Furman, the former chair of the Council of Economic Advisers under Obama, he had a very good piece in The New York Times yesterday, where he acknowledged that economists suffer from tariff derangement syndrome.

  They, I think, had this ideological view that you just — you could not do tariffs. Tariffs were a mistake. You had to have free trade no matter what. And we're seeing that that's just not the case. In fact, I think President Trump has responded to what was a very broken global economic situation, a very unfair trading system, with a set of changes that have obviously been very manageable in the short run, and I think have the potential to deliver a lot of benefits in the long run.

• Geoff Bennett:

  Jason Furman was on the program last night, and he was critical of President Trump's tariff policy. You described Trump's tariffs in terms of trade-offs. What are the trade-offs now, especially looking at the high reciprocal rates for some of these countries?

• Oren Cass:

  Well, I think it's really important to recognize that life is about trade-offs. There are obviously people out there who will say, this is all bad, this is all good, or the opposite is all good or all bad.

  We made a choice a generation ago that we were going to go all in on free trade. We were going to embrace China. We wanted the cheap stuff, and we knew that there were going to be costs to that, right? Economists would tell you, well, there will be winners and losers. And what they meant in particular was a lot of the people who had been doing best in our economy were going to be doing even better.

  A lot of people who were struggling were going to struggle even more, but we should celebrate it anyway and push ahead because we're going to get a lot of cheap stuff.

  And I think what the American people have rightly realized over the last couple of decades is that's not a good trade-off. Just getting more cheap stuff, having bigger TVs does not compensate for an unbalanced economy, an economy that leaves way too many people behind, an economy that has had industry hollowed out, and as a result of that, an economy that doesn't really support our national security, our resilience.

  And so taking the other side of that trade-off, saying, yes, look, there's going to be some disruption in the short run, yes, some things are going to have prices rise, but the flip side is, we're going to rebuild our industrial base. We're going to bring back manufacturing. And we're going to have a stronger economy for typical workers and their families.

  That's the right side of the trade-off to take.

• Geoff Bennett:

  Lastly, let's talk about interest rates.

  The president is laser-focused on interest rates. He wants a rate cut. What does all of this mean for the chances that the Fed might cut rates at their meeting in September?

• Oren Cass:

  Well, I think the chance of a cut has definitely gone up.

  I think — I feel badly. Now we're just both quoting Jason Furman. I saw Jason say also, in light of this employment data, it probably makes sense now to consider a rate cut. I think Jay Powell, the Fed chair, has been in a very strange position, where he said he would support a rate cut except for the tariffs.

  And that's a huge mistake. Tariffs do change the price level. The whole point of a tariff is to make some things more expensive. But that's not the same as the kind of inflation that the Fed needs to worry about. And so I think, when you had Powell saying, well, I'd cut, but I'm worried about the tariffs, that's something he really had backward.

  And I am hopeful that we will move forward with a view that recognizes that this economy can be quite strong, even with tariffs in place. But at the same time, on balance, if you look at how it's performing, rates are probably higher than they need to be.

• Geoff Bennett:

  Oren Cass, founder and chief economist of American Compass, thanks again for being with us.

• Oren Cass:

  Yes, thanks for having me.