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Alfredo Carrillo Obregon’s and Scott Lincicome’s letter in today’s Wall Street Journal is superb:

Paul Rahe’s justifications for tariffs fail under scrutiny (“There’s a Case for Tariffs,” op-ed, April 16).

Mr. Rahe assumes tariffs boost resiliency, but recent history shows the opposite. National security might justify narrow trade restrictions, but tariffs have not insulated Americans from economic disruptions and have frequently made things worse. The baby-formula crisis of 2022 and automakers’ recent struggles to obtain aluminum, each triggered by the sudden closure of a tariff-protected U.S. factory, show that localized supply chains are vulnerable to local shocks—and tariffs block alternatives. Research from the pandemic finds that globalized supply chains performed better and adjusted faster than nationalized ones.

Mr. Rahe also errs on tariffs’ ability to promote manufacturing. Decades of protection failed to create thriving U.S. steel, shipbuilding, textile and footwear industries. More recent duties on solar panels did the same. With around half of imports being manufacturing inputs, tariffs raise American producers’ costs and undermine competitiveness. Combined with uncertainty surrounding executive branch tariffs, this explains why surveys consistently reveal manufacturers opposed to new protectionism.

Mr. Rahe is correct about the intrusiveness of income taxes, but tariffs can’t replace them because import volumes are far too small. Their invisibility, meanwhile, isn’t the benefit Mr. Rahe thinks. Since the 19th century, tariffs have been a breeding ground for rent-seeking and corruption and have persisted after decades of failure, precisely because their costs are hidden and diffuse. Transparency is a hallmark of good tax policy; opacity is its enemy.

Also from Alfredo Carrillo Obregon – here writing at National Review – is this accurate assessment of Trump’s tariffs punitive taxes on Americans’ purchases of imports. Three slices:

Even before the Court scrapped the Trump administration’s reciprocal tariffs, however, these duties were riddled with tariff-rate reductions and exemptions. First, the president paused the implementation of the tariffs for 90 days following a stock market plunge in reaction to his liberation day announcement, and he invited countries to negotiate lower rates during that time. Several U.S. trading partners (including the European Union, Japan, and South Korea) proceeded to negotiate agreements (or frameworks for agreements) with the administration, locking in lower reciprocal tariff rates in exchange for trade concessions and investment pledges. Then the president issued many rounds of exemptions from the reciprocal tariffs, most notably for semiconductors and certain electronics, including smartphones and computers, products from countries that negotiated agreements or framework agreements, and agricultural products.

As a result, the applied U.S. tariff rate fell from 21.5 percent, at its highest point in 2025, to 13.6 percent before the Supreme Court ruling. Most notably, only 42 percent of U.S. imports (based on 2024 import levels) were subject to IEEPA tariffs by the end of 2025. While these numbers help explain why the tariffs were not as harmful as many experts feared in April 2025, they also demonstrate that the president’s policies, from the outset, were hampered by economic realities and influenced by political considerations.

…..

The emerging economic literature on the tariffs imposed in 2025 broadly finds that Americans paid for most of the tariffs’ higher costs. Studies published by the National Bureau of Economic Research, Goldman Sachs, and the Brookings Institution, among others, find that, in the aggregate, Americans bore 77 to 96 percent of the 2025 tariffs’ higher costs, with American companies paying for most of this tariff pass-through. At the same time, a Harvard Business School survey of products sold at large U.S. retailers found that tariffs led to higher retail prices of both imported and domestic goods in the same product categories. Not only did U.S. consumers pay for about 43 percent of the tariff-induced increase in the cost of imported goods, but import-competing U.S. producers also marked up their prices.

The administration and proponents of protectionism often point out that tariffs did not lead to an inflationary spiral. A low bar, to be sure, yet many economists doubted this could happen from the outset. Even many economists opposed to the tariffs doubted such a spiral, in part because imports of goods accounted for only 11 percent of U.S. GDP in 2024.

These economic analyses consider tariffs’ visible costs — that is, their effects on prices — yet tariffs also impose invisible costs on Americans that, while harder to quantify, compound their economic damage. One of these unseen costs is the uncertainty surrounding U.S. tariff policy. The U.S. tariff code underwent 50 changes in 2025, most of them related to tariffs imposed and modified by the executive branch. That is double the average number of tariff changes in the preceding five years. It is no surprise, then, that researchers have quantified that uncertainty surrounding U.S. trade policy reached its highest point on record in April 2025. For businesses with global networks of suppliers that took years to build, this uncertainty is crippling.

…..

Most notably, a tariff-induced “manufacturing renaissance” has not materialized. While industrial capacity indeed increased in 2025, this is only a continuation of a trend that started in early 2022. Real manufacturing output is unchanged from 2022. Real manufacturing value-added (i.e., output minus costs of intermediate inputs) appears to be on track for a historic high, yet this record has been broken nearly every year since the Great Recession in 2009. Meanwhile, inflation-adjusted spending on manufacturing facilities precipitously declined throughout 2025. The post-2022 decline in manufacturing capacity utilization continued, and the economy added no manufacturing jobs in 2025.

While the U.S. manufacturing sector, as a result of many factors, has gone through fits and starts since 2022, the recent tariffs clearly have not reversed the sector’s fortunes. On the contrary, they probably worsened them. Industry surveys during 2025 indicated that higher, tariff-induced prices and tariff uncertainty depressed activity and growth for firms throughout most of the sector. Re-shoring, though appealing as political rhetoric, is not a viable business strategy for many of these businesses.

Richard Menger makes clear that, like international-trade protectionism, domestic protectionism – specifically here, certificate-of-need (“CON”) legislation – also reduces competition, restricts output, raises prices, and lowers quality.

My former Mercatus Center colleague Adam Thierer tweets: (HT Scott Lincicome)

What have information and communications technology companies done for us lately?

Well, here’s one of the most underappreciated things. It remains remarkable​ just how fast information technology platforms and application providers responded to the COVID shutdowns with rapid-fire deployment of new services that helped many sectors and workers muddle through​ using new work from home​ (WFH) technologies​.

This innovation and workplace revolution continues marching forward according to this new study, which reveals: “The share of patent applications that advances technologies in support of WFH rose by about two thirds within three years after the pandemic struck and remains about 50% above pre-pandemic levels five years later. [. . . ] It is driven overwhelmingly by US corporations rather than foreign assignees or universities. In short, we find evidence that a sudden, lasting rise in WFH redirected innovation to technologies that support it.​”​

This has opened the door to more remote work / flexible work arrangements for a huge number of people, including me. 🙏

“Trump Proved to be Unimaginably Bad for the Free Market Cause: A Conversation with Veronique de Rugy.”

The Editorial Board of the Washington Post warns against the childish belief that government should supply health-care free of direct charges to users of health care. A slice:

Rep. Alexandria Ocasio-Cortez (D-New York) visited a park with a podcaster recently to seek policy advice from elementary school students. Surprise: The children agreed with AOC – and brought the same level of sophistication to political and economic questions that Americans have come to expect from the four-term congresswoman.

One child suggested that the United States should have free health care. But why talk to children, who should never be used as political props, when there is plenty of empirical data about health policy around the world?

Putting the government in charge of giving out “free” health care inevitably leads people to look elsewhere.

Consider Britain and its National Health Service, which for decades has been the beau ideal for American progressives

Despite the government funding and running a universal health care system, private hospital admissions in the United Kingdom reached their highest level ever in 2024, according to fresh data from the Private Healthcare Information Network.

The number of people opting to buy private health insurance rose to 6.5 million in 2024, the highest number in a quarter-century, according to the Association of British Insurers.

GMU Econ alum Caleb Petitt looks at the nations in Adam Smith’s Inquiry Into the Nature and Causes of the Wealth of Nations.

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… is from page 71 of Thomas Sowell’s 1999 book, Barbarians Inside the Gates:

The automobile has been one of the great liberating forces of the twentieth century. It did more to reduce severe overcrowding, common in cities a century ago, than all the hand-wringing reformers put together. But, as the automobile enable people to spread out into the suburbs, to get some elbow room, the anointed began to wring their hands over what they now chose to call “urban sprawl.”

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Here’s the abstract of a new paper out of the Richmond Fed [emphasis added]: (HT Scott Lincicome)

This paper analyzes the effect of the 2025 U.S. import tariffs on import prices and local labor-markets. To that end, we use highly disaggregated customs data to construct realized tariff rates from actual duty collections, rather than announced statutory schedules. An important contribution is that we document a large and persistent gap between the two measures, driven by within-country product reallocation, cross-country sourcing shifts, and implementation frictions. This implies that statutory rates are a poor proxy for the trade shock that firms actually faced. Using realized tariffs, we find that pass-through of realized tariffs into import prices was close to one hundred percent, with negligible adjustment by foreign exporters and a significant reduction in import quantities. When we examine local labor-market consequences of the increase in import tariffs, we find that counties which are more exposed to import-competing sectors experienced small declines in unemployment and that rising input costs weighed marginally on labor-force participation. Both effects, though heterogeneous across space, are economically negligible. In contrast to the 2018–2019 tariff episode, where rising input costs dominated, resulting in lower manufacturing employment, the 2025 tariffs did not generate large labor-market changes in either direction.

Chad Wolf and my old law-school classmate Tom Plofchan, writing in National Review, argue for nationwide privatization of airport security. A slice:

The movement of millions of Americans through our domestic aviation ecosystem represents a multibillion-dollar industry and supports billions more in downstream annual economic value. Not only is it irresponsible to continue to treat both our current TSA employees and the American public as negotiating chips in border and immigration security funding negotiations; it is also unnecessary. More than 20 airports around the country have experienced almost no delays during this lapse in DHS funding because they are staffed by private contractors under a TSA program known as the Screening Partnership Program (SPP), which allows airports to “opt in” to having qualified private companies handle screening under TSA’s oversight. Proprietary industry analysis highlights the ability of the SPP to save taxpayers as much as 15 percent per airport — potentially $1 billion annually if scaled nationwide.

This program must be expanded and incentivized by empowering airports to have a greater say in who runs their security and incentivizing private investment in security upgrades, and other, more comprehensive options for privatization should be made available.

Also calling for the privatization of U.S. airport security screening is Marc Scribner. Here’s his conclusion:

To ensure that airports aren’t stuck with the unfunded mandate that led airlines to lobby for security nationalization after the 9/11 attacks, the longstanding September 11 Security Fee assessed on airline tickets should be converted into a local airport user fee. Airlines would continue to collect the money, but instead of remitting the revenue to the Treasury—where much of it is diverted for nonsecurity purposes—it would be paid directly to airports to fund TSA-approved security projects and operations.

The TSA’s defective design is one of many errors made by elected officials in response to 9/11—and American travelers are paying the price. Congress limiting TSA’s role is the only way to insulate airport security from dysfunctional Washington politics.

David Henderson shares four timeless facts about taxes.

Paul Mueller talks with Julia Cartwright and Tom Savidge about taxing wealth.

C. Jarrett Dieterle decries “the bipartisan war on cheap food.”

David Harsanyi rightly ridicules Zohran Mamdani’s economic cluelessness. A slice:

The latest is New York City Mayor Zohran Mamdani, who has promised to open five city-run markets to combat “out-of-control” grocery prices by getting rid of the “profit motive,” passing on the savings to consumers.

The first glaring problem with Mamdani’s plan is that the “profit motive” is the best device to <icreate savings.

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… is attributed to Leslie Ford:

The colonists understood their obligation to defend their families, their homes, and their town. Fathers and sons, young and old, the men of Lexington were the first to pledge their lives, fortunes, and sacred honor. They hoped to prevent a war, but they would not surrender their liberties.

DBx: 251 years ago today, at Concord, there was “fired the shot heard round the world.” The American Revolution began in earnest on this date in 1775 at Lexington and Concord.

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Here’s a letter to my long-time protectionist correspondent.

Mr. M__:

Thanks for sharing Oren Cass’s latest comments on trade. You’ll be unsurprised to learn that I’m unimpressed.

Oren laments “our failure to attend to industrialization.” What failure? When Pres. Trump returned to the White House in January 2025 America’s industrial capacity had been on the rise since the pandemic and that month reached an all-time high. This capacity has continued to grow. Today, America’s industrial capacity is 13 percent larger than when China joined the World Trade Organization in December 2001, 66 percent larger than when NAFTA took effect in January 1994, and 148 percent larger than in 1975, the last year the U.S. ran an annual trade surplus.

Oren might respond that the precise kind of capacity that we now have prevents us from producing the most-important stuff. Using the example featured in the piece you sent, Oren would likely point out that because we import many transformers of the sort used in data centers, our reliance on foreign producers for transformers is slowing our completion of data centers and, hence, hampering our development of AI. Perhaps. (Never mind that domestic politics is now the highest obstacle to data-center construction, and also threatens to thwart AI directly.) Oren’s solution is to produce more transformers domestically.

How simple! This conclusion appears to be a no-brainer. But appearances here deceive. Like all protectionists, Oren never asks: What outputs will America therefore produce less of? He supposes that the capital and resources that tariffs or subsidies draw into transformer production will be drawn away only from domestic industries producing goods or services that are less important (according to criteria preferred by Oren) than are transformers. But Oren can’t possibly know just what other domestic industries will shrink as a result of transformer tariffs or subsidies, or by how much they’ll shrink.

We might all agree that an engineered increase in the production of transformers would be worthwhile if the only consequence were reduced American production of deodorant and dog biscuits. But what if increased production of transformers reduces American production of semiconductors or jet engines or software for running AI?

Of course, I have no idea what we Americans would produce less of if the government uses tariffs or subsidies to increase American transformer production. But nor does Oren have any idea. He naively points to something – transformers – that would be good to have more of were that something costless, and then he leaps to the unwarranted conclusion that free trade has failed because we currently don’t have more of that something.

To overcome, for any product, the strong presumption in favor of a policy of free trade – a policy with a proven record not only of raising living standards but also of enhancing national defense – requires compelling argument and solid evidence. But all that Oren gives here, as in his other writings, are half-told tales detached from the important considerations that serious economists habitually take note of.

Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030

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Check out the Cato Institute’s new Handbook on Affordability.

My Mercatus Center colleague Salim Furth shares a new paper that, as summarized by Salim, “demonstrates that mayoral elections have a large influence on housing supply outcomes. It also shows that developer’s political contributions pay off in ways that sound like corruption.”

Murray Sabrin’s letter in yesterday’s Wall Street Journal is excellent:

Sen. Bernie Moreno’s op-ed, “Trump Gave the GOP a New, Populist Soul,” (April 14), rests on a series of deeply flawed economic premises. The claim that American workers are being ripped off by corporate greed ignores a basic reality: In competitive markets, firms must bid for labor, driving wages in line with productivity. Government intervention is what truly erodes workers’ purchasing power.

Equally troubling is the redefinition of free enterprise as federal micromanagement. True free markets rely on voluntary exchange and price signals, not industrial policy directed from Washington. When the government substitutes its judgment for that of millions of people, inefficiency and cronyism inevitably follow.

Furthermore, the op-ed’s nod to “fiscal discipline” is difficult to take seriously as federal deficits continue to balloon. Similarly, while tariffs are portrayed as a path to manufacturing strength, they actually function as taxes on American consumers and invite retaliation, distorting trade rather than revitalizing it.

Sound economic policy requires a stable dollar, low tax burdens, constitutionally limited spending and the removal of unnecessary regulations. Sen. Moreno’s piece contains echoes of ideas more commonly associated with Sen. Bernie Sanders than with a genuine commitment to free enterprise.

George Will warns of dire consequences if California’s proposed wealth tax is enacted. A slice:

Although the wealth tax is a cafeteria of unintended economic consequences, even cumulatively they are less ominous than one predictable, and perhaps intended, political consequence. The tax would effect a radical, and probably irreversible, change in the relationship of the individual to any government that enacts such a tax.

Laura Williams of the American Institute for Economic Research, writing for Reason, says the tax would give government a roving license “to inventory every item in our possession.” This would likely be a prelude to repeated confiscations of percentages of the possessions’ value. Even worse, the infrastructure for administering the tax would mean a permanent enlargement of the government’s intrusiveness. This would contract the sphere of individual autonomy, and subtract from the security of liberty.

Speaking of economically harmful policies in California, my Mercatus Center colleague Satya Marar makes clear that “California’s latest attack on big tech is BASED on bad economics.” A slice:

California has long been the global digital economy’s growth engine. However, Californian policymakers’ latest proposal to “promote fairness” for third-party businesses by importing European-style regulation would only hamper the goods and services that have made American tech companies like Google, Apple, Amazon and Meta so popular.

Introduced by Senator Scott Wiener, D-San Francisco, the BASED Act imports elements of the EU’s Digital Markets Act (DMA). It targets “self-preferencing,” that is where digital platforms like Amazon’s marketplace or Google Maps promote their own services or those of affiliates over third-party businesses that use their platform to reach customers. The BASED Act would treat many common product integrations, such as ranking, bundling, defaults, data use, and even some AI-driven recommendations, as presumptively illegal without asking whether they harm consumers.

Instead of promoting fairness, it would make digital tools less useful by tailoring their architectures and algorithms to regulators’ whims rather than user preferences. Far from promoting neutrality, it would “rig the game” by favoring some businesses over others.

Self-preferencing long predates the internet. Supermarkets, for example, give their own house brands prime shelf space, pushing name brands to compete on price or quality. This often increases competition, and can lead to lower prices by eliminating “double marginalization,” where multiple firms each add their own markups along the supply chain.

Eric Boehm reports this fact that should not be – but, apparently, to many people nevertheless is – surprising: “Trump ended free trade for Mexican tomatoes. Prices are up 23 percent in the last year.” A slice:

Tomato prices are now 23 percent higher than they were in March 2025, according to the BLS. That means tomato prices have risen significantly faster than overall inflation (up 3.3 percent in the past year) and food prices as a whole (which are up 2.7 percent). Even gas prices, which get more attention, are up just 18.9 percent in the past year.

So why are tomatoes suddenly much more expensive? In part, it’s because tomatoes imported from Mexico are now subject to tariffs. With the tomato trade agreement gone, Mexican tomatoes are now subject to a tariff of about 17 percent — and, like with many other products, the tariff gets passed along down the supply chain.

Linking to this Bloomberg report and quoting its headline, Scott Lincicome tweets:

“US Industrial Production Fell in March in Broad Decline”
Still waiting for that tariff boom….

Robert E. Wright details his experience as a plaintiff in a Fourth-amendment case.

The Washington Post‘s Editorial Board recounts how the Biden administration’s use of antitrust – allegedly to promote competition in the U.S. airline industry – wound up reducing competition in the U.S. airline industry. A slice:

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… is from page 39 of the manuscript of Deirdre McCloskey’s forthcoming book, Equality of Permission:

The underlying reason that modern politics in its implementation breaks bad is the unexamined though fervent belief in statism, the ancient and now nearly universal conviction that a statist top-down policy, rather than a liberal bottom-up permission, does the job of human flourishing promptly and securely, by plan. Caesar believed it, and thereby shattered the Roman Republic.

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This report on changes in the size and amenities of American houses – a report that features some of the work of GMU Econ alum Jeremy Horpedahl – is fascinating and important. Two slices:

In the past few years, online commentators have repeatedly noted how much more affordable homes were in the 1950s, citing statistics that show back then a new home typically cost about two to three times the median household income, while today one costs about six times the median household income.

They also point out that many families in the 1950s had just one household earner, while today it takes two incomes to afford a typical home.

But those statistics miss some key points. To start, American homes today are larger. Jeremy Horpedahl, an associate professor of economics at the University of Central Arkansas, recently told The Mortgage Note that new single-family homes are twice as big in terms of square footage compared to 1956.

“Believe it or not, it costs roughly the same per square foot,” Horpedahl said.

Beyond that, Horpedahl says it’s all about the amenities. For example, in 1956, only 50% of new homes were equipped with a garage. In 2024, 96% were. The percentage of homes with central air systems and appliances has dramatically increased as well.

…..

The typical amount of space required to please the average consumer has increased over the course of the last 70 years.

“Three or more bedrooms can accommodate a couple with two kids, which is considered the common family. It affords privacy for everyone in the home,” said Zaphire.  “Plus, people are doing a lot more in their homes – hosting BBQs and family gatherings. The size of homes may have doubled, but the space is being used.”

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Here’s a letter to a new correspondent.

Mr. S__:

You ask for my opinion of John Tamny’s latest expression of disagreement with those of us who warn that government borrowing poses serious problems for the economy.

John is correct about many things, but on this matter he’s deeply mistaken. And while his mind isn’t likely to be changed on this front, perhaps yours will.

Although John mentions James Buchanan’s classic 1958 book, Public Principles of Public Debt, it’s clear that he hasn’t read this pioneering work carefully.

Buchanan’s core point is that creditors do not bear the burden of paying for the spending undertaken by debtors. That burden is borne by whoever repays the creditors.

Consider a simple example. Suppose that in 2026 your sister borrows $50,000 from Acme Bank to upgrade her kitchen, promising to repay the principal and interest in 2030. To enable your sister to secure the loan, you agree to assume and honor her debt if she dies before 2030. Alas, your sister dies penniless in 2029, leaving you nothing in her will. One year later, you send to Acme Bank a check for $60,000 (principal plus interest) to retire the loan.

Who paid for your sister’s kitchen upgrade? To be consistent in his argument, John Tamny must answer either “Acme Bank” or “your sister.” But clearly, neither answer is correct. The person who paid for that kitchen upgrade is you.

And so it is with government debt. Government debt is taken out today to fund current spending, with the responsibility of repaying loaded onto future generations. The only essential difference between the Acme Bank example and real-world government debt is that, unlike you who voluntarily assumed responsibility for your sister’s debt, future citizens-taxpayers did not agree to be burdened with the responsibility of repaying the debt that they are nevertheless obliged to repay.

As for the example that John uses to discredit Buchanan’s argument, that example supports Buchanan’s argument. John writes:

[M]erely contemplate the debt run up in 2020 by the first Trump administration to subsidize ($3 trillion Cares Act) lockdowns across the country. Were he alive, could Buchanan seriously contend that the horrors of government consumption were somehow postponed solely because borrowing, not direct taxation, informed them?

Were Buchanan alive, he would point out that the orgy of government consumption that John rightly decries occurred because Americans in 2020 did not have to pay for that consumption. Had all Cares Act spending been required to be funded with current taxes, that spending would have been only a fraction of $3 trillion because Americans in 2020 would not have tolerated such a gargantuan increase in their taxes. The need to fund current spending with current tax revenue would therefore have reduced government’s access to many of the resources that, as matters actually turned out, government used to lockdown the economy and paper over the terrible consequences with deficit spending.

The argument against deficit financing of government spending isn’t limited to the very real dangers that such financing poses to government’s future fiscal stability. That argument also includes this important feature: By preventing today’s citizens-taxpayers from foisting onto future citizens-taxpayers the costs of today’s government activities, a prohibition of deficit financing would reduce the amount of resources to which governments have access. For this reason alone, friends of limited government, including John Tamny, should oppose deficit financing.

It’s distressing that a small but vocal minority of true liberals – most notably today, John Tamny – either cannot or will not grasp this reality.

Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030