The Trump administration has taken sweeping actions on tariffs, with more scheduled to be imposed in April. On this episode of The Zeitgeist, Kim Clausing explains the administration’s approach to tariffs and their role in wider economic policy. She also discusses whether value-added taxes or digital services taxes constitute trade barriers and how these may affect trade relations between the European Union and the United States.



Host

Jeff Rathke, President, AGI

Guests

Kimberly Clausing, Eric M. Zolt Chair in Tax Law and Policy, University of California Los Angeles (UCLA) School of Law

Peter Rashish, Vice President and Director, Geoeconomics Program, AGI



Transcript

Jeff Rathke

Welcome all of the listeners of The Zeitgeist; we’re glad to have you with us today. We are especially glad to have Kim Clausing with us. Hello, Kim.

Kimberly Clausing

Hello, nice to be here.

Jeff Rathke

Where are we reaching you?

Kimberly Clausing

In Los Angeles.

Jeff Rathke

Kim Clausing is the Eric Zolt Chair in Tax Law and Policy at the UCLA School of Law, and she also previously was the Deputy Assistant Secretary of the Treasury and the lead economist in the Office of Tax Policy. So, somebody who knows taxes—and I bet tariffs—pretty well. We are glad to have her with us today to talk about taxes and tariffs. I am also joined by my colleague, AGI Vice President Peter Rashish. Peter, hello.

Peter Rashish

Jeff, hello. Kim, hello. Good to be with you both.

Jeff Rathke

Let’s just dive right into it. We are recording on the 19th of March, 2025. I say that because things move quickly, and you never know what announcements might come up today, tomorrow, or in a few days from now. Kim, if we look at the Trump administration’s tariff actions thus far, there are a lot of them. They are switched on and switched back off again in some cases. What stands out to you about the approach to tariffs in the Trump administration, especially compared to the way that the Biden administration also used tariffs?

Kimberly Clausing

Yes, that’s an excellent question. And I think we could also usefully contrast this Trump administration from the prior Trump administration. The prior Trump administration levied tariffs mostly on China. And if you look at the quantity of trade relative to all of our trade, it was about 10 percent of our trade, it wasn’t all of the trade. Biden continued many of those tariffs and added just a tiny bit more, not a lot more, about 18 billion out of 3 trillion of traded goods in certain strategic sectors with respect to China.

And then we get into the second Trump administration, and their interest in tariffs is far broader. They’re interested in tariffing virtually every country in the world, which he aspired to do during the campaign. He mentioned the possibility of a 10 to 20 percent tariff on every country in the world, and, in the early days of his administration, he began by levying tariffs—or at least threatening to levy tariffs—on Canada and Mexico. And that’s an interesting and peculiar choice because those are our two closest trading partners, both geographically and in terms of size. And they are also countries where we have a free trade agreement already and one that was just recently renegotiated by President Trump. I point to that in part as a bellwether for how broadly this Trump administration intends to use tariffs. If they’re starting with Canada and Mexico, we can expect them to include the entire world. And then we’re talking about $3.1 trillion in trade, an amount that’s ten times the size of the first Trump administration tariffs.