As debate over U.S. trade policy intensifies amidst a new round of tariffs imposed by the Trump administration, Norbert J. Michel, vice president and director of the Cato Institute’s Center for Monetary and Financial Alternatives, joined Chicago’s Morning Answer to tackle widespread misconceptions about trade, the middle class, and the structure of the American economy.
Host Dan Proft kicked off the segment by noting Senator Rand Paul’s recent comments criticizing tariffs and outlining the concerns of farmers, bourbon producers, shippers, and homebuilders in Kentucky. Paul described the negative impact of past tariffs and warned of further economic consequences if protectionist measures continue.
Michel, a staunch advocate of free-market policies, was quick to challenge the popular narrative that trade has hollowed out the American middle class. “The middle class has done very well,” he said, citing inflation-adjusted data showing a sharp increase in households earning over $100,000 and a steady decline in those earning less than $35,000. According to Michel, the idea that the middle class needs rescuing from the effects of global trade is simply not supported by the facts.
Much of the economic anxiety often attributed to free trade, Michel argued, stems from automation and productivity gains, not from offshoring alone. He emphasized that the service sector has long dominated the U.S. economy and that the shift away from manufacturing is a decades-long global trend—not a sudden outcome of NAFTA or China’s entrance into the WTO.
As the conversation turned to national security and supply chains, Michel rejected the idea of carving out exceptions for sectors like pharmaceuticals and semiconductors. “The supply chains are global,” he noted, pointing out that even high-tech products are built using components from dozens of countries. “It’s simply not true that the U.S. is completely dependent on China for any one critical product.”
Asked about recent disruptions in semiconductor supplies, particularly during the COVID-19 pandemic, Michel acknowledged that shortages occurred—but argued that policy mistakes, not trade exposure, were to blame. “When you shut down the economy, you’re going to have shortages of everything, from toilet paper to microchips,” he said. “That’s not a justification for tariffs.”
Michel also criticized restrictions on high-skilled immigration, calling it a missed opportunity for the U.S. to strengthen its competitive advantage. “We need more engineers and data scientists here,” he said. “It doesn’t matter if that talent comes from Indiana or India—an American citizen is an American citizen.”
The conversation concluded with a discussion of Apple’s recent shift in iPhone production from China to India. Michel pointed to the move as proof that companies will adapt quickly to changing trade policies, even if governments are slow to respond. “Corporations move like speedboats. Governments move like battleships,” he noted.
Michel’s take offered a strong defense of free trade and globalization at a moment when populist economic nationalism is again on the rise. His message to policymakers: focus on long-term economic fundamentals, not short-term political optics.
As tariffs continue to dominate headlines, voices like Michel’s serve as a reminder that market-based solutions—and economic facts—still have a role to play in shaping the future of American prosperity.