>>> NOW, BACK TO TRUMP'S TRADE WAR, WHICH HAS BEEN SHOCKING GLOBAL MARKETS AND RAISING FEARS OF A RECESSION.

ALL THIS UNCERTAINTY HAS LED ECONOMISTS --AND FRIENDLY, THE WORLD --TO BEG THE QUESTION, "WHY?"

HERE TO OFFER HIS INSIGHT ON THAT MILLION-DOLLAR QUESTION IS OREN CASS, FOUNDER OF THE CONSERVATIVE THINK TANK, AMERICAN COMPASS, WHICH HAS TIES TO PROMINENT REPUBLICANS LIKE VICE PRESIDENT JD VANCE, SECRETARY OF STATE MARCO RUBIO, AND OTHERS.

HE JOINED WALTER ISAACSON JUST BEFORE THE PRESIDENT REACHED FOR THE PAUSE BUTTON, AND HERE IS WHAT HE THINKS MOTIVATES TRUMP'S ECONOMIC VIEWS.

>> THANK YOU, CHRISTIANE.

AND OREN CASS, WELCOME BACK TO THE SHOW.

>> IT'S GREAT TO SEE YOU, AGAIN.

>> YOU HAD AN OP-ED THAT YOU WROTE THIS WEEK THAT SAYS, "STOP FREAKING OUT.

TRUMP'S TARIFFS CAN STILL WORK."

OKAY, GIVE ME THE PLAYBOOK.

HOW SHOULD THEY WORK?

>> WELL, I THINK THE IMPORTANT PIECE TO START WITH IS THAT I THINK THE DIRECTION, HERE, WOULD BE A VERY POSITIVE ONE.

I THINK IT IS ACTUALLY VERY ENCOURAGING, TO SEE PEOPLE FOCUSING ON IMBALANCES IN THE TRADING SYSTEM, THE NEED TO REALLY CHANGE THE WAY SOME OF THIS WORKS.

YOU KNOW, FRANKLY, ACCEPTING THAT THERE WILL BE SOME COSTS ASSOCIATED WITH DOING THAT.

IT IS REFRESHING TO HAVE LEADERSHIP THAT IS WILLING TO SPEAK ABOUT THE COSTS AND SAY, "HERE IS WHY IT IS WORTH IT."

THAT BEING SAID, I THINK YOU HAVE A RESPONSIBILITY TO MINIMIZE THOSE COSTS, AND I THINK WE COULD GET THERE, FOR ONE THING, IF WE FACE A LOT OF THESE TARIFFS IN.

I THINK THERE ARE SITUATIONS WHERE YOU MIGHT WANT TO DO SOMETHING RIGHT AWAY, BUT A LOT OF THESE TARIFFS WOULD WORK A LOT BETTER IF YOU SAID, "LOOK, HERE IS WHAT WE WILL DO IN SIX MONTHS, IF WE DON'T GET A DEAL."

AND HAVE SOME TIME TO TRY TO DO THAT NEGOTIATION, AND GET THE DEAL, AND GET PEOPLE TIME TO PREPARE AND ADOPT.

SO, I THINK A LOT MORE PHASING IN ON THE FRONT END, AND THEN I ON THE BACK END.

PEOPLE KNOW --NEED TO KNOW WHAT PARTS OF THIS ARE GOING TO BE PERMANENT.

PEOPLE NEED TO KNOW, IS THE PLAN TO MAKE A DEAL WITH CHINA, OR IS THE PLAN TO EXCLUDE CHINA?

AND THE GOAL, WITH ALL OF THIS, IS TO GET MORE INVESTMENT IN THE UNITED STATES.

IF YOU WANT THE INVESTMENT, YOU NEED TO GIVE THE CLEAR PICTURE OF WHAT THE SITUATION IS GOING TO BE.

>> THERE SEEM TO BE TWO TYPES OF TARIFFS HE IS TALKING ABOUT.

A 10% ACROSS THE BOARD -- WHICH I KNOW YOU HAVE KIND OF ADVOCATED IN THE PAST, WHERE IT IS NOT TO PICK AND CHOOSE, PICK AND CHOOSE --AND THEN, THESE VERY SPECIFIC TARIFFS ON CERTAIN COUNTRIES, BASED ON THEIR TRADE DEFICIT.

EXPLAINED TO ME, WHY YOU WOULD DO BOTH?

>> WELL, THEY HAVE VERY DIFFERENT PURPOSES.

YOU KNOW, THE 10% GLOBAL TARIFF IS THE ONE THAT CERTAINLY, MY ORGANIZATION, AMERICAN COMPASS, HAS DONE A LOT OF WORK ON, AND I THINK IS THE REALLY IMPORTANT, PERMANENT PEACE THAT WE JUST PUT IN OUR ECONOMIC SYSTEM THAT SAYS, YOU KNOW, WE ARE PUTTING A FINGER ON THE THIS COUNTRY.

WE THINK MAKING THINGS MATTERS.

AND IF ALL THINGS EQUAL, WE WOULD RATHER HAVE YOU MAKING THINGS, HERE.

ESPECIALLY IF YOU ARE PLANNING TO SELL THEM, HERE.

SO, THAT, I THINK, IS A STABLE, PERMANENT ELEMENT, IS REALLY GOOD.

THE RECIPROCAL TARIFFS --THESE ONES THAT ARE COUNTRY BY COUNTRY --ARE AT MUCH HIGHER LEVELS, IN A LOT OF CASES.

I THINK THEY ARE BEST UNDERSTOOD AS NEGOTIATING TARIFFS.

I DON'T THINK THE IDEA IS THAT IT ACTUALLY BENEFITS THE U.S. ECONOMY IN THE LONG RUN TO HAVE A HIGH TARIFF WITH A TRADING PARTNER, LIKE A JAPAN, OR LIKE THE EU.

OR, CERTAINLY, CANADA AND MEXICO.

BUT, THE IDEA IS THAT WE DO WANT THEM TO CHANGE THEIR OWN BEHAVIOR, IN VARIOUS WAYS, YOU KNOW?

THEY DO HAVE A LOT OF POLICIES, IN SOME CASES, THAT THEY ARE USING TO PROMOTE TRADE IMBALANCES, TO EXPORT MORE INTO OUR COUNTRY, AND TO BUY LESS FROM US, IN RETURN.

AND IF WE SAY, "THAT'S FINE, WE LOVE FREE TRADE ANYWAY," THEN THEY KEEP DOING IT.

IF WE SAY, "THAT'S NOT REALLY AN OPTION ANYMORE," THEN I THINK THERE IS ROOM FOR A LOT OF PROGRESS.

>> YOU TALK ABOUT THIS "COUNTRY BY COUNTRY" APPROACH WITH TRADE IMBALANCES, WHICH IS WHEN A COUNTRY EXPORTS MORE TO US THAN WE EXPORT TO THEM.

BUT, TELL ME, WHY ARE TRADE IMBALANCES INHERENTLY BAD?

>> SO, I THINK IT IS IMPORTANT TO SAY, A TRADE IMBALANCE WITH A SPECIFIC COUNTRY ISN'T INHERENTLY BAD.

YOU CAN HAVE ALL SORTS OF REASONS THAT YOU BUY MORE FROM SOME COUNTRIES AND SELL TO OTHERS.

RIGHT?

YOU CAN IMAGINE YOU BUY A LOT OF RAW MATERIALS FROM ONE PLACE AND SELL FINISHED PRODUCTS TO ANOTHER.

THE CONCERN IS WHEN YOU HAVE A VERY LARGE IMBALANCE, OR A TRADE DEFICIT, OVERALL.

SO, IF YOU LOOK AT THE UNITED STATES, YOU KNOW, WE HAVE ROUGHLY $1 TRILLION PER YEAR TRADE DEFICIT, AT THIS POINT.

WHICH MEANS, WE HAVE $1 TRILLION WORTH OF DEMAND FOR STUFF, THAT WE ARE NOT SERVING, WE ARE IMPORTING, INSTEAD.

AND IT SHOULD NOT BE A SURPRISE, THE FACT THAT WE LET MAN, WE WERE TAKING A LOT OF JOBS, A LOT OF GOOD BUSINESS THAT USED TO BE DONE IN THE UNITED STATES, PRODUCING THINGS, AND JUST MOVING IT ABROAD.

>> WELL, AREN'T A LOT OF THOSE TRADE BALANCE IS OFFSET BY THE FACT THAT WE HAVE DIGITAL SERVICES, AND ALL TYPES OF SERVICES THAT ARE NOT COUNTED IN THOSE TRADE IMBALANCES?

>> THAT IS A GOOD QUESTION.

THERE IS BOTH GOODS AND SERVICES TRADE AND IT IS TRUE THAT THE UNITED STATES HAS A SURPLUS IN SERVICES TRADE.

THE PROBLEM IS THAT SERVICES TRADE IS MUCH, MUCH SMALLER.

SO, YOU KNOW, GOODS TRADE IS AT LEAST FOUR TIMES THE SIZE OF SERVICES TRADE.

OR, AT LEAST, CERTAINLY, OUR DEFICIT IN GOODS IS AT LEAST FOUR TIMES THE SIZE OF OUR SURPLUS IN SERVICES.

AND SO, THAT TRILLION DOLLAR NUMBER IS ACTUALLY AFTER TAKING BOTH GOODS AND SERVICES INTO ACCOUNT.

IF YOU WERE TO LOOK AT JUST THE GOODS DEFICIT, IT IS WELL OVER $1 TRILLION.

AND SO, YOU KNOW, THERE HAS BEEN ONE PERSPECTIVE OVERTIME THAT HAS BEEN, "WELL, A TRADE DEFICIT IS A GOOD THING.

THAT MEANS PEOPLE ARE MAKING THINGS AND GIVING THEM TO US, AND WE DON'T EVEN HAVE TO MAKE ANYTHING AND SEND IT BACK."

RIGHT?

WHAT A GREAT DEAL.

BUT, IN EFFECT, WHAT WE HAVE BEEN DOING, IS OPENING UP CREDIT CARDS ON THE COUNTRY, YOU KNOW, ON THE NATIONAL CREDIT LINE, AND BUYING MORE AND MORE STUFF, THAT WE ARE NOT TRADING STUFF BACK FOR.

WE ARE TAKING ON DEBT TO DO IT.

AND SO, WE BOTH HOLLOWELL OUR OWN ECONOMY, MEANING WE LOSE THOSE JOBS, WE LOSE THOSE CAPABILITIES TO MAKE STUFF, AND WE LOSE THE FUTURE PROSPERITY, BECAUSE WE ARE SENDING BACK OWNERSHIP OF OUR COMPANIES, WE ARE SENDING BACK IOUS THAT SAY "WE WILL PAY YOU BACK FOR THIS, SOMEDAY."

SO, I JUST THINK IT'S REALLY IMPORTANT TO GO BACK TO THAT ECON 101 LESSON, WHEN ECONOMISTS TEACH WHY WE ARE SO CONFIDENT FREE TRADE IS A GOOD THING, THE MODEL ALWAYS ASSUMES YOU ARE TRADING THINGS THAT YOU MAKE, FOR THINGS THAT OTHERS MAKE.

AND THAT IS REAL TRADE.

AND THAT, I THINK, IS WHAT WE NEED TO GET TO, THAT BALANCED TRADE THAT REALLY DOES BENEFIT EVERYBODY, BUT NOT THIS WILDLY IMBALANCED TRADE, WHERE SOME PEOPLE, OR SOME COUNTRIES, REALLY, SORT OF CHOOSE TO EMBRACE A LOT OF THE INDUSTRY THAT IS MOST ECONOMICALLY VALUABLE.

>> ARE WE BETTER OFF BEING A NATION THAT PRODUCES SERVICES, THEN BEING A NATION THAT PRODUCES MANUFACTURED GOODS?

>> I THINK WE ARE BETTER OFF BEING A COUNTRY THAT PRODUCES BOTH.

I THINK THAT SORT OF THE EVERYTHING IN MODERATION MODEL REALLY APPLIES TO THE FACT THAT WE NEED TO HAVE A DIVERSIFIED ECONOMY.

WE HAVE A LOT OF DIFFERENT KINDS OF PEOPLE, LIVING IN A LOT OF DIFFERENT KINDS OF PLACES, WITH A LOT OF DIFFERENT ASPIRATIONS.

AND ECONOMICS DOESN'T TAKE ANY OF THAT INTO ACCOUNT.

THE ECONOMIC MODELS THAT SAY "JUST SPECIALIZE IN WHATEVER YOU DO BEST," AND CELEBRATE AT THE STUFF THAT SOMEONE CAN DO MORE CHEAPLY GOES OVERSEAS, THAT MODEL WOULD SAY, YOU KNOW, WHAT WE SHOULD REALLY DO, LET'S SEND ALL THE MANUFACTURING OVERSEAS, AND LET'S JUST SPECIALIZE IN FINANCE, AND TECH, AND MEDIA IN OUR BIG YOU COULD PROBABLY GET GDP UP PRETTY HIGH, THAT WAY.

BUT, I THINK MOST PEOPLE WOULD RECOGNIZE THAT IS NOT ACTUALLY A HEALTHY ECONOMY.

AND WHAT WE HAVE BEEN DOING IS PUSHING FURTHER AND FURTHER IN THAT DIRECTION WITH THIS FREE- TRADE SYSTEM, AND I THINK WHAT WE ARE ESSENTIALLY SAYING NOW, AND WHAT THE TRUMP ADMINISTRATION IS TRYING TO DO, SAYING, "THAT WAS THE WRONG TRADE-OFF.

WE NEED TO START PUSHING BACK THE OTHER DIRECTION."

YOU KNOW, AS AN ECONOMIST WOULD SAY, AT THE MARGIN.

IF YOU ARE ASKING, GIVEN WHERE WE ARE RIGHT NOW, WOULD WE TRADE OFF SOME OF THOSE, YOU KNOW, JOBS IN HIGH-TECH SERVICES, FOR MORE GOODS MANUFACTURING JOBS IN THE MIDDLE OF THE COUNTRY?

I THINK THAT IS THE DIRECTION THAT WOULD BE MUCH, MUCH BETTER FOR US.

BUT, IT TAKES A DIFFERENT SET OF POLICIES TO GET THERE.

>> WELL, TRUMP HAS PUT ON THESE TARIFFS THAT ARE COUNTRY SPECIFIC, BASED ON THE TRADE IMBALANCE THEY HAVE WITH US, AND SAID THAT THEY SHOULD ALL TRY TO NEGOTIATE WITH US, TO DO THINGS TO GET THAT DOWN.

IS THERE SOME MESSINESS, OR PROBLEM, OR SOME CRONY CAPITALISM THAT COULD BE INVOLVED, WHEN YOU START HAVING 70 OR 80 OF THESE NEGOTIATIONS?

>> THERE IS DEFINITELY SOME MESSINESS, NO QUESTION ABOUT THAT.

I THINK ONE THING THAT THE ADMINISTRATION WAS DELIBERATING ON BEFORE, BEFORE LIBERATION DAY, AND THAT THEY SEEMED TO BE FOCUSING ON SOMEWHAT NOW, IS THAT THERE ARE OBVIOUSLY HIGHER PRIORITY AND LOWER PRIORITY TRADING RELATIONSHIPS, HERE.

AGAIN, TO SOME EXTENT, THAT SPEAKS TO THE PHASING.

IF THERE ARE A LOT OF COUNTRIES THAT WE ARE NOT EVEN GOING TO GET AROUND TO TALKING TO FOR A LONG TIME, I'M NOT SURE IT MAKES A LOT OF SENSE TO STICK THEM WITH THE FULL TARIFF IN THE MEANTIME., IT IS VERY CLEAR THAT THEY ARE FOCUSING, YOU KNOW, FIRST AND FOREMOST, ON JAPAN, ON KOREA, ON INDIA, ON THE EU, ON THE UK.

AND IT IS CERTAINLY POSSIBLE TO DO A FEW AGREEMENTS AT THE SAME TIME.

IT IS THE CASE, THAT ANY NEGOTIATION, YOU KNOW, THEN RAISES THAT RISK OF, OKAY, WHO ARE YOU BENEFITING, WHO ARE YOU I WOULD JUST NOTE THAT, OF COURSE, THE ENTIRE MODEL OF FREE TRADE AGREEMENTS THAT EVERYBODY HAS ALWAYS BEEN SO ENTHUSIASTIC ABOUT, AND PROMOTING AS EXACTLY THE RIGHT WAY TO PROMOTE TRADE, IS A NEGOTIATION, TOO.

RIGHT?

YOU KNOW, GO CHECK OUT THOSE FREE-TRADE AGREEMENTS.

IT IS 5000 PAGES LONG AND OVERWHELMINGLY WRITTEN BY CORPORATE LOBBYISTS.

AND SO, YOU KNOW GO NEGOTIATIONS ARE GOING TO BE AN IMPORTANT ELEMENT OF TRADE.

I THINK WHAT IS DIFFERENT HERE, THE UNITED STATES IS SAYING, "WE HAVE DIFFERENT DEMANDS THAN WE USED TO."

FOR THE LONGEST TIME, THE DEMAND WAS "OPEN YOUR MARKET, OPEN YOUR MARKET, OPEN YOUR MARKET, WE JUST WANT OPEN MARKETS."

I THINK WITH THE U.S. IS SAYING NOW, ESPECIALLY AS CHINA RISES, AS WE MOVE INTO WHAT SOME FOLKS ARE CALLING A MULTIPOLAR WORLD, WHERE THE U.S.

ISN'T JUST IN CHARGE OF EVERYTHING, YOU KNOW, I THINK THE U.S.

ABSOLUTELY WANTS TO HAVE A STRONG ECONOMIC AND SECURITY ALLIANCE, BUT IT HAS SOME DEMANDS FOR THAT.

IT WANTS TO HAVE BALANCED TRADE WITHIN THAT ALLIANCE.

IT WANTS THOSE ALLIES TO REALLY DO THEIR PART ON THE SECURITY SIDE.

AND, IT WANTS EVERYBODY TO AGREE TO KEEP CHINA OUT.

AND I THINK THOSE ARE PRETTY REASONABLE DEMANDS, YOU KNOW?

WE ARE NOT EXPLOITING PEOPLE WITH DEMANDS LIKE THAT.

BY THE WAY, THOSE ARE THINGS THAT THE U.S. WILL HOLD ITSELF TO, AS WELL.

BUT, IT IS DEFINITELY A DIFFERENT SHAPE FOR NEGOTIATION THEN THE ONE FOLKS HAVE BECOME ACCUSTOMED TO.

>> SO, YOU THINK THAT, AS PART OF THESE TRADE NEGOTIATIONS, WE SHOULD BE TELLING ALL THE COUNTRIES AROUND THE WORLD, OR MOST OF THEM, "DON'T TRADE WITH CHINA?"

>> YES, IN FACT, WE ARE ALREADY DOING THAT.

SECRETARY DOESN'T, EVEN IN THE CONTEXT OF THE EARLY CONVERSATIONS WITH MEXICO AND CANADA, EMPHASIZED THAT ONE THING WE ARE REALLY LOOKING FOR IS THAT THEY AGREED TO ADOPT THE SAME POLICIES TOWARD CHINA THAT WE HAVE.

AND NOW, YOU ARE EVEN SEEING -- WITH AS MANY OTHER COUNTRIES AS THAT SET OF COUNTRIES CAN THEN FACE CHINA, JOINTLY.

>> WELL, EVEN THE EUROPEAN UNION IS NOW DECIDING TO HAVE TRADE NEGOTIATIONS WITH CHINA.

>> I THINK, YOU KNOW, THE EUROPEAN UNION IS AN INTERESTING CASE, AND I THINK THE NEW, EU EVEN IN DEALING WITH SOME OF THE CONFLICTS OVER ELECTRIC VEHICLES, AND SO FORTH, HAS SHOWN MUCH LESS CONVICTION, THAT IT ACTUALLY NEEDS TO CONFRONT CHINA, AND MUCH MORE POTENTIAL OPENNESS TO WORKING WITH CHINA.

AND THAT IS A REALLY INTERESTING QUESTION, THAT THE EU IS GOING TO HAVE TO DECIDE, FOR ITSELF.

I THINK THAT THERE IS A FUNDAMENTAL QUESTION OF CIVILIZATIONAL WILL, WHETHER THE EU WANTS TO REMAIN IN THE SPHERE OF WESTERN DEMOCRACIES AND MARKET ECONOMIES, OR IF IT WANTS TO BE IN PARTNERSHIP WITH CHINA.

I CERTAINLY KNOW WHAT I WOULD CHOOSE, AND WHAT I WOULD ADVISE THEM TO CHOOSE, BUT TO SOME EXTENT, THEY ARE GOING TO HAVE TO MAKE THAT DECISION FOR >> ONE OF THE THINGS I DON'T QUITE UNDERSTAND ABOUT YOUR PUSH AGAINST CHINA ON ALL OF THIS, IS THAT DURING HIS RUN, PRESIDENT TRUMP REALLY TRY TO MAKE A DEAL WITH CHINA, XI JINPING, AND HE IS STILL TALKING ABOUT WANTING TO MEET WITH XI JINPING AND MAKE A DEAL.

SO, AT THE VERY LEAST, WOULDN'T THAT CONFUSE OUR ALLIES, OR WOULDN'T THAT BE BAD POLICY?

>> WELL, ON THE CONFUSION POINT, I AGREE, ABSOLUTELY.

I THINK ONE OF THE WAYS THAT THE ADMINISTRATION REALLY NEEDS TO IMPROVE WHAT IT IS DOING, HERE --YOU KNOW, I TALKED ABOUT THE IDEA OF PHASING IN SOME OF THE TARIFFS --JUST BASIC COMMUNICATION ON, WHAT IS THE ACTUAL PLAN?

WHAT IS THE GOAL?

I THINK THAT IS INCREDIBLY IMPORTANT, BOTH FOR MARKETS, AND FOR BUSINESSES TRYING TO INVEST, AND FOR COUNTRIES TRYING TO NEGOTIATE WITH US.

SO, I AGREE THERE, ENTIRELY.

I DO THINK, THOUGH, THERE HAS BEEN A CLEAR PROGRESSION IN OUR EFFORTS TO ENGAGE WITH CHINA, YOU KNOW?

IT WAS NOT THAT LONG AGO --25 YEARS AGO --THAT WE WERE FULLY EMBRACING THEM AND BELIEVING KNOW, HELP THEM LIBERALIZE, AND DEMOCRATIZE, AND EVERYBODY WAS INCREDIBLY ENTHUSIASTIC.

AND I WOULD SAY IT TOOK PROBABLY 10 OR 15 YEARS FOR FOLKS TO NOTICE THAT WAS REALLY NOT WORKING.

AND, YOU KNOW, I REMEMBER, EVEN IN 2012, I HAD THE CHANCE TO WORK FOR THEM GOVERNOR MITT ROMNEY WHEN HE WAS RUNNING FOR PRESIDENT.

AND AT THAT TIME, HE WAS ONE OF THE FIRST TO SAY, "ACTUALLY, THIS ARRANGEMENT WITH CHINA IS NOT WORKING, WE NEED TO TAKE A DIFFERENT STANCE."

AND THEN, OBVIOUSLY, TRUMPETED THAT, VERY AGGRESSIVELY IN 2016.

THAT WAS KIND OF THE POINT AT WHICH WE STOOD UP AND STARTED SAYING, "THE MODEL THAT WE THOUGHT WAS GOING TO WORK, IS NOT WORKING.

WE NEED TO WORK ON THIS."

AND IT WAS ENTIRELY REASONABLE, AT THAT POINT, TO THINK, "WELL, LET'S NEGOTIATE, SIT DOWN WITH THEM, TELL THEM WE ARE NOT GOING TO TOLERATE THIS, FIND A WAY TO MAKE IT WORK."

THE TRUMP ADMINISTRATION TRIED THAT, IT DIDN'T WORK, THEY CAME TO A DEAL THAT DIDN'T END UP BEING WORTH ALL THAT MUCH, AND CHINA HAS JUST CONTINUED TO DIG IN, TO FURTHER WORSEN AND BALANCES.

WE ARE NOW GOING THROUGH WHAT A LOT OF FOLKS ARE CALLING "CHINA SHOCK 2.0."

BECAUSE AGAIN, THEY HAVE ENORMOUS EXCESS CAPACITY THAT THEY ARE DUMPING INTO OTHER MARKETS, AROUND THE WORLD.

IT IS A HUGE PROBLEM FOR EUROPE, IT IS A HUGE PROBLEM FOR OTHER DEVELOPING COUNTRIES.

SO, I THINK WE ARE AT THE POINT WHERE WE HAVE TO ACCEPT THAT THERE IS NOT A NEGOTIATION HERE THAT IS GOING TO END HAPPILY.

WE ARE HEADED TOWARD A DIFFERENT KIND OF WORLD, FOR THE FORESEEABLE FUTURE.

>> THERE IS A SAYING IN CHINA OF "EAT BITTERNESS," WHICH I THINK ROUGHLY MEANS "TOLERATE PAIN."

DO YOU FEAR THAT CHINA CAN TOLERATE MORE PAIN, THAN THE AMERICAN CONSUMER, AND THE AMERICAN VOTER WILL, IF WE GET INTO THIS CONTEST?

>> WELL, I THINK THERE IS A LOT OF ASYMMETRY HERE, THAT WORKS TO THE U.S.' ADVANTAGE.

PARTIALLY, BECAUSE WE DO HAVE SUCH A LARGE TRADE DEFICIT TODAY.

PARTLY, BECAUSE TREY JUST ISN'T SUCH A BIG PART OF OUR ECONOMY, BECAUSE WE HAVE SUCH A LARGE DOMESTIC MARKET.

WE ARE RELATIVELY MORE INSULATED FROM THE EFFECTS OF THESE POLICIES THAN MOST OF OUR TRADING PARTNERS ARE.

THERE IS NO QUESTION THAT -- CERTAINLY, NOW, THIS WEEK, WITH THE TRUMP ADMINISTRATION GOING UP TO AS MUCH AS, YOU KNOW, 100% TARIFF ON CHINA -- WHILE THAT IS PAINFUL, AND I THINK, YOU KNOW, FATALLY DISRUPTIVE, POTENTIALLY, FOR PARTICULAR BUSINESSES IN THE UNITED STATES, THE THREAT TO CHINA FROM THAT IS MUCH, MUCH LARGER.

SO, TO THE EXTENT THAT IT BECOMES A BATTLE OF WILLS, OR A TIT-FOR-TAT TRADE WAR, I THINK THAT THE UNITED STATES IS IN A VERY STRONG POSITION.

WHAT I REALLY WORRY ABOUT MORE, IS THAT IF WE TAKE SUCH A STRONG POSITION, THAT WE LOOK SUSTAINABLE, THEN WE ARE NOT ACTUALLY BEING MORE CREDIBLE, WE ARE BEING LESS CREDIBLE.

I THINK THE BEST THING THAT CAN BE SAID FOR THE TRUMP ADMINISTRATION'S APPROACH OF, WE ARE COMING IN ON DAY ONE AND STICKING ALL THIS STUFF IN, IS, WELL, NO ONE IS GOING TO DOUBT THAT THEY MEAN IT.

THEY HAVE ALREADY DONE IT.

BUT, IF YOU DO IT SO AGGRESSIVELY THAT PEOPLE ARE GOING TO LOOK AT IT AND SAY, "WE ARE NOT REALLY SURE YOU CAN KEEP THAT UP VERY LONG," THEN YOU HAVE ACTUALLY WEAKENED YOUR OWN CREDIBILITY, AND GIVEN THEM A REASON TO DRAG THINGS OUT, AND SO, I THINK THERE IS A BALANCE TO BE STRUCK, THERE.

AND, TO BE IN THE RIGHT POSITION FOR NEGOTIATION, TO MINIMIZE THE COST, TO MAXIMIZE THE POTENTIAL BENEFIT, WHAT WE NEED TO BE SAYING IS, "LOOK, HERE IS WHAT WE WANT, HERE ARE GOING TO BE THE CONSEQUENCES IF WE DON'T MOVE TOWARD IT AT A RAPID PACE."

BUT, LET'S SEE WHAT WE CAN GET DONE AND LET'S SEE HOW MUCH WE CAN ACCOMPLISH, BEFORE WE START INTO THE DISRUPTION, AND THE COSTS THAT, IDEALLY, WE WOULDN'T HAVE, IF WE DIDN'T >> OREN CASS, THANK YOU SO MUCH FOR JOINING US, AGAIN.

>> MY PLEASURE.

IT WAS GREAT TO SEE YOU.