This is CBSI on the world. I'm John Batchel.

I welcome Professor Richard Epstein, teaches law at NYU in the University of Chicago.

He is at the Civitas Institute reflecting upon the decision by the Trump administration

for reciprocal tariffs at Liberation Day.

Since then, tariffs have been part of the argument about America

around the world. Right now, we're going to apply ourselves to what it means for the American

economy. Richard, a very good evening to you. A headline in the Financial Times these last

days points to an explanation for the tariffs since April's

conversation started, which is the S&P ratings for the American creditworthiness was not

changed as they anticipated it would be because of the big beautiful bills tax cut.

And it was not changed, according to S&P, because of the extraordinary income of tariffs since April,

collected by the federal government, offsetting the damage that would be done to the debt

by the Big Beautiful bill.

That certainly is a major success for the Trump administration if it's real.

I want to begin with criticism and recommendation of the tariff and ask your help to understand

the other side of the story. Let's begin with what I've been told the most benign way to say it is.

Tariffs are just a VAT for American consumers. Good evening to you, Professor.

Yeah, well, it's a BAT, the likes of which we've never seen before. The essence of a VAT

is to try to have a tax on incremental gains of any and all production. And the theory is that if you collect it

through ordinary channels, it's less disruptive than any other kind of tax that you can impose.

What he has done is imposed a selected VAT and has varied the rate from one country to another,

from one set of goods to another, and has's kept it constantly up in the air so you

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