Friday on Fox Business Network’s “Morning with Maria,” venture capitalist and PayPal co-founder Peter Thiel discussed President Donald Trump’s proposed tariffs on certain imported goods, which has a lot of people in the financial sector concerned.
Thiel said it was good that Trump was approaching the issue from a standpoint that wasn’t ideologically rigid given the unique circumstances that exist between the United States and China.
Partial transcript as follows:
MARIA BARTIROMO, FBN ANCHOR: The tax plan and the rollback in regulations have definitely impacted the economy in a positive way. It’s boosted things, we’re talking about 3 percent economic growth this year, which is great, but he is getting pushback on this tariff story and trade, where are you on that?
THIEL: Well, I — you know I think even something like the tariffs which always — you know, it’s always — it’s always supposed to be anti-tariff because — it’s always supposed to be reflexively pro-free trade but I think that needs to be rethought as well. It’s obviousness that there is something wrong with our trade relations when this asymmetric. We import $475 billion a year from China. We export $100 billion. That’s an incredible trade deficit. And the economic theory is that the country — the developing country should have trade deficits because it has the faster-growing economy and so capital should be flowing from the U.S. to invest in China. And then, China should have trade deficits that offset the flow.
And we instead live in a world where the money is sort of strangely flowing uphill. The U.S. — the slower growing economy, the developed country has the trade deficits and the investments are flowing from, you know, poor people in China into the U.S. economy, it’s completely backwards. And so that tells us some things very, very strange in terms of the trade dynamics in the world. And then when you look at it, you know, there are all kinds of different issues where there is very differential treatment, there is, you know, intellectual property is not always respected the U.S. has, and so to get to reasonable trade, it often is helpful to have people negotiating the trade treaties, we’re not too ideologically committed because if you’re too ideological on free trade, you will say that it doesn’t matter.
And if you — even if you negotiated a bad treaty, it’s always better for everybody. And, you actually want someone negotiating these treaties because a little bit skeptical and these things, you know, we have to — we have to negotiate the I.P. protection, we have to negotiate the, you know, the taxes on different companies, the investment provisions, all these things have to be seen as part of the package deal.
BARTIROMO: You’re right. And this number is incredible, $476 billion in terms of a deficit from China. This is why the White House is now readying a new program too, you know, put in place new tariffs against China, new restriction for China because they are trying to transfer our technology to China. What is your experience with China?
THIEL: Well, it’s, you know, my book “Zero to One” did incredibly well in China, so I’ve spent quite a bit of time — quite a bit of time there. I think — I think they are doing a terrific job developing their country, growing their economy. But it certainly is a much less open economy than the U.S. is. So, you know, if you — if we were to say that China is doing a lot of things well, then certainly on the — on the trade side we’re more like China, you’d be way beyond anything Trump is proposing.
And you have to always see these things as part of the negotiations where the goal is not to have massive tariffs on both sides. The goal is to get fair trade and open up both markets equally.
BARTIROMO: Yes. I thought it was incredible that China has participated in 10 percent of all venture deals in the last five years in the U.S. So, they are obviously looking at the innovation in America, trying to bring it to China.
THIEL: But that’s always — that’s always the other side of the trade deficit with the U.S. so that the capital flows to — money flows to China, and then it has to get reinvested in the U.S. So even though it’s a good thing that they’re investing, the reason it’s happening is because of these enormous trade deficits. And so there is far more Chinese investment in the U.S. than U.S. investment in China.
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