Recently – but before the U.S. Supreme Court handed down its ruling in Learning Resources v. Trump – the great trade economist Doug Irwin delivered this splendid lecture at Duke University. (HT Bruce Caldwell)
The lightly examined nostrums of our day are different. Consider Secretary of State Marco Rubio’s recent, widely (and justly) praised speech in Munich. He claims that “we embraced a dogmatic vision of free and unfettered trade” while other countries took advantage of us.
Really? Here’s Scott Lincicome writing in 2016, during the supposed reign of free-trade dogmatism:
First, although the United States maintains a relatively low average import tariff of around 3 percent, it also applies high tariffs on a wide array of “politically-sensitive” (read: highly lobbied) products: 131.8% on peanuts; 35% on tuna; 20% on various dairy products; 25% on light trucks; 16% on wool sweaters, just to name a few. (Agriculture is particularly bad in this regard.) We also maintain a long list of restrictive quotas on products like sugar, cheese, canned tuna, brooms, cotton, and baby formula. . . .
Second, while America’s tariffs and other “formal” trade barriers have indeed been declining for decades, they are only a small part of the overall story. U.S. non-tariff barriers – export subsidies, discriminatory regulations, “buy local” rules, “fair trade” duties, etc. – have exploded in recent years. In fact, according to a recent analysis by Credit Suisse, when you add up all forms of trade barriers imposed between 1990 and 2013, the biggest protectionist in the world isn’t China or Mexico but none other than… the United States.
Sounds pretty fettered.
John Puri praises Justice Neil Gorsuch’s concurring opinion in Learning Resources v. Trump.
Also applauding Justice Gorsuch’s concurring opinion in Learning Resources is David Henderson.
The smart play after his legal defeat would be to take an off-ramp and forgo or pause new tariffs. Instead the White House this weekend dusted off Section 122 of the Trade Act of 1974 as a work-around. That provision lets a President impose tariffs of up to 15% across the board for up to 150 days “to deal with large and serious United States balance-of-payments deficits.”
What a relic, which wasn’t intended to manage a trade deficit per se. Instead it’s a holdover from a bygone era of the gold standard, fixed exchange rates and periodic panics about global liquidity.
The balance of payments is much broader than the balance in the trade of goods or services. It encompasses an economy’s total international position, including trade and capital flows. These days the U.S. balance of payments deficit is effectively zero because trade and capital flows exactly offset each other. The balance of payments is such a nonissue that the feds stopped publishing several data series about it in the 1970s.
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The larger reality is that Mr. Trump is so bull-headed about tariffs that he’s going to re-impose them any way he can. Along with Section 122, he’ll fire up more Section 201, 301 and 232 (national security) studies and tariffs. But as our friend Don Luskin points out, these are pea shooters compared to the IEEPA tariffs the Court struck down. They are limited in scope and duration.
That isn’t to say they won’t do harm. They’ll create more uncertainty for business, at least for a while. And with the midterm elections coming soon, this timing is fraught for Republicans. Amid an “affordability” panic, Mr. Trump says he is going to impose more border taxes on enough imports to make up for his lost emergency tariffs. Democrats must be thrilled at their dumb luck.
I would only add that Trump destroyed whatever legitimate argument his administration had by exercising his powers in ludicrously capricious ways, announcing he increased tariffs on Canada because he didn’t like a television commercial and when he increased tariffs on Switzerland because he didn’t like the tone of the country’s former president. We can debate what the Founding Fathers intended about the powers of the presidency, but they surely did not intend that. A lot of leaders might be tempted to exercise powers in arbitrary and capricious ways and some may do it, but Trump is unique in that he feels the need to publicly brag about doing it.
The oral arguments went badly for the administration; no one following the issue should have been that surprised that the Supreme Court ruled the way that it did.
And yet, it triggered a presidential meltdown at the White House, with the whole world watching. Besides the accusation of foreign influence, Trump raged that the Supreme Court majority is “just being fools and lapdogs for the RINOs and the radical left Democrats. And not that this should have anything at all to do with it, they’re very unpatriotic and disloyal to our Constitution.” Echoing his previous nonsense claims about his former Vice President Mike Pence and the certification of the 2020 presidential election, he fumed, “They don’t want to do the right thing.”
In Trump’s mind, everyone who disagrees with him is always corrupt, driven by sinister motives, and likely part of some shadowy conspiracy. Everyone who agrees is always the best.
It was my pleasure to be a guest yesterday on Duane Lester’s radio program.
Philip Hamburger argues that California’s proposed wealth tax is an unconstitutional taking. Two slices:
California’s proposed billionaire tax is unconstitutional. The ballot initiative calling for one-time retroactive 5% tax on the net worth of the state’s billionaires has prompted much unease, but the legal arguments against it have remained elusive. It’s therefore important to recognize that this tax is an uncompensated taking or at least a deprivation of property without due process, contrary to the Fifth and 14th amendments.
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axes can be targeted without being unconstitutional. They can take aim at particular events, goods and materials, and exceptions can excuse particular companies. California’s tax, however, targets a small class of individuals, billionaires, and doesn’t burden anyone else, even for small amounts. This is distinctive and worrisome—particularly when imposing massive payments.Similarly, retroactivity isn’t uncommon, and taxes don’t have to be recurring. But when added to the targeting, these considerations confirm that the California measure is confiscatory.
The combination of these features sets the billionaire tax apart. A retroactive nonrecurring tax that profoundly targets a small group and no one else is an uncompensated taking or at least a deprivation of property without due process. It should, therefore, be held unconstitutional.
Kristian Niemietz asks if a wealth tax would reduce wealth inequality.
Your editorial “Edward H. Crane, Libertarian Builder” (Review & Outlook, Feb. 14) rightly celebrates Ed’s extraordinary contributions to libertarian ideas and institution-building. But another dimension of his legacy is worth noting: his commitment to free speech.
Ed said that the “core of libertarianism is a defense of free speech,” and he often put himself on the front lines of its defense.
As a Libertarian Party official, Ed gave testimony on behalf of the party, one of the plaintiffs in Buckley v. Valeo, the landmark 1976 Supreme Court case that saved free speech in election campaigns.
Ed joined me as a plaintiff in SpeechNow.org v. Federal Election Commission, in which the U.S. Circuit Court of Appeals for the District of Columbia ruled in 2010 that Americans had a First Amendment right to pool resources for independent political speech without contribution limits.
Ed also played a consequential role in shaping the Federal Election Commission. It was through Ed’s encouragement that Bradley A. Smith—then an emerging scholar on free speech—came to the attention of policymakers. That connection eventually led to Brad’s appointment to the FEC as a commissioner, where he became one of the most consequential advocates for free speech in the agency’s history.
After Brad left the FEC in 2005, he founded the Institute for Free Speech, with Ed as an original director. Ed’s invaluable guidance and support through the rest of his life demonstrated his passion for free speech.
Ed Crane leaves behind a remarkable legacy. For those of us defending free speech, it is a legacy we carry forward with gratitude.
… is from page 97 of Thomas Sowell’s 1999 book, Barbarians Inside the Gates:
Those who fear that [if term limits for members of Congress were imposed] we would lose the great “expertise” that members of Congress develop after years of dealing with certain issues fail to see that much of that experience is in the arts of packaging, log-rolling, creative accounting and other forms of deception.
Here’s a letter to Bloomberg.
Editor:
You accurately report that economists dispute the Trump administration’s assertion that the U.S. today confronts “large and serious United States balance-of-payments deficits” (“Trump Pegs New Tariffs to a Payments Crisis Economists Doubt,” February 22). As Milton Friedman explained, when the dollar’s exchange rate isn’t fixed or pegged – that is, when the dollar’s exchange rate floats – there can be no balance-of-payments deficits. And the dollar’s exchange rate has floated now for more than a half-century.
But the accuracy of your report is compromised by your use of language that, although conventional, sows much confusion about international commerce. Specifically, you describe the $26 trillion excess of foreign investment in the U.S. over U.S. investment abroad as evidence that Americans are “now $26 trillion in the red.”
Not so. While much foreign investment in the U.S. is in the form of loans to Americans – especially to the profligate U.S. government – not all of it is loans. A good deal of foreign investment is in equity stakes, as well as in holdings of real estate and U.S. dollars. Americans are “in the red” to foreigners only for the funds we borrow from foreigners, not for the other foreign investments in the U.S.
In short, increased foreign investment in the U.S. doesn’t necessarily increase Americans’ indebtedness. Therefore, it’s simply wrong to write as if Americans are “in the red” for the full positive difference of foreign investments in America over Americans’ investments abroad. Indeed, such language is worse than wrong: By creating the misperception that we Americans are more indebted to foreigners than we really are, such language helps protectionists stoke unjustified fear of free trade.
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
I’m very happy to have been a guest on Scott Atlas’s podcast.
As they wait out the latest winter storm, Members of Congress ought to spend time reading Justice Neil Gorsuch’s concurring opinion in the Supreme Court’s rejection of President Trump’s claim of emergency power to impose tariffs (Learning Resources v. Trump). The Justice has more confidence in Congress than the Members themselves do these days.
Justice Gorsuch rides shotgun to Chief Justice John Roberts’s excellent majority opinion, and he mows down both the dissents and the concurring opinion by liberal Justice Elena Kagan. It’s an intellectual tour de force. But his main theme isn’t an assertion of judicial power. It’s an effort to encourage Congress to reclaim its proper authority under the Constitution’s separation of powers.
The Justice spends 46 pages explaining and defending the Court’s major questions doctrine, which says the executive must point to clear Congressional language to justify a regulation with significant consequences. The liberal justices try to duck the doctrine while joining the majority opinion, while the three dissenting conservatives try to carve out exceptions on foreign policy and tariffs.
Justice Gorsuch thoroughly rebuts both, but his larger effort is to explain that the major questions standard is meant to protect legislative authority. “The major questions doctrine is not ‘anti-administrative state,’” as Justice Kagan has asserted, Justice Gorsuch writes. “It is pro-Congress.” By holding agencies to a clear-statement standard from Congress, the judiciary protects against the usurpation of legislative power by Presidents.
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No political system is perfect, and Congress can run off the rails. The Smoot-Hawley tariff of 1930 showed how legislative logrolling can end in disaster when a President (Hoover) lacks the courage to veto. But Congress has since ceded too much tariff power to a President who refuses to use it with restraint. Putting limits on discretionary tariff authority would be a good start on reviving the proper role of Congress.
Justice Neil M. Gorsuch, concurring with Roberts’s opinion, delivered a lucid and combative explanation of the MQD’s history. But he comes to a limp conclusion: The crucial question about an executive branch claim to “an extraordinary power” is whether there is “clear statutory authority” for the claim.
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Roberts prudently husbands the court’s prestige on which its power depends. Prudence is not merely a virtue in governance, it is the foundational virtue on which the fulfillment of all others depends. But prudence, imprudently exercised, can vitiate other virtues. It does so when the court, hoarding prestige it should be wielding, flinches from telling Congress it cannot delegate some powers, regardless of how clearly it expresses its intention to do so.
Congress has suffered repeated humiliations from presidents — the current one especially, but many others, too. Increasing executive swagger, however, has not been primarily a consequence of presidents usurping congressional powers. Presidents have not needed to usurp what Congress has willingly — often by lackadaisical legislating — surrendered.
Also busting the Trumpian myth that the U.S. currently faces a balance-of-payments deficit is National Review‘s John Puri. Here’s his conclusion:
America is not suffering a “large and serious” balance-of-payments deficit because our balance-of-payments deficit is essentially zero, just as centuries of proven economic theory would predict.
And there’s this Bloomberg report that’s headlined: “Trump Pegs New Tariffs to a Payments Crisis Economists Doubt.” (HT Scott Lincicome) Two slices:
With his move to impose new global tariffs, US President Donald Trump isn’t just trying to repair a trade policy dismantled by a Supreme Court rebuke. He’s also declaring the world’s largest economy is facing a profound balance-of-payments crisis.
The potential problem for Trump and his administration with that argument: Many economists — and financial markets so far — don’t see the US teetering on any such precipice. That means his latest import taxes seem likely to lead to yet another legal challenge and more uncertainty for trading partners, companies, consumers and investors.
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Among the things Trump identified was a net international investment position — the difference between US investments abroad and foreign investments in the US – that is now $26 trillion in the red.
What he didn’t mention was that his use of levies to force US and foreign companies to invest more in the US would lead to that number ballooning further. Or that in its latest report in January on the position, the US Bureau of Economic Analysis pointed to the soaring valuations on US equities markets that Trump has hailed as a vote of confidence in the US as a major cause of the increase in the US’s negative investment position.
[DBx: Although conventional, some of the language in the above two paragraphs is highly misleading. It is, for example, untrue that foreign investment in the U.S. in excess of American investment abroad means that the U.S. is “in the red.” Yes, those foreign investors expect a positive return on their investments, but other than those foreign investments that are actual loans to Americans, Americans owe nothing to foreign investors; the returns on those non-debt investments, if they come, will come as increases in equity value. For the same reason, it is misleading to describe the disproportionate eagerness of global investors to invest in America as leading to a “negative investment position” for the U.S.]
Scott Lincicome decries what he calls “the conspicuous fist of Trump’s state corporatism.” Two slices:
As the left and the right increasingly agree that the government should embrace stronger economic intervention and industrial policy, they abandon the principles that made the United States the world’s most prosperous country and undisputed technological leader.
The most troubling development in this regard is the Trump administration’s rapid embrace of “state corporatism” across a range of companies and industries. As of this writing, the US government has taken permanent and direct equity stakes in 12 private firms, in most cases making Washington the company’s largest shareholder, with options for an even greater share of state ownership in the future. The government has also wrested a “golden share” in U.S. Steel, giving the state control over an array of corporate decisions and transactions, and has demanded a significant cut of Nvidia’s and other US semiconductor firms’ sales in China in exchange for lifting security-based export controls. Trump administration officials have also promised more of these moves in the months ahead.
The federal government’s state corporatism is unprecedented. Washington has long supported domestic firms with tariffs, subsidies, procurement preferences, tax and regulatory favoritism, and other interventions, but these measures are broad, provided at arm’s length, often authorized by law, and subject to limited government oversight. The policies raise economic and political concerns, of course, but they’re fundamentally different from state corporatist policies that give the federal government an ongoing, direct, and in most cases financial interest in a single company’s day-to-day business operations, its public share price, and its ultimate success or failure—and do so under the thinnest of legal authority (if any at all).
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Trump was soon publicly urging Intel’s board to fire Tan, baselessly alleging he was compromised by China and threatening to withhold CHIPS Act funding that the ailing firm needed to implement Tan’s turnaround plan. After frog-marching Tan into the Oval Office for a meeting in August, Trump agreed to back down on his attacks, but only if the company gave the government 9.9 percent of its public shares in exchange for $8.9 billion in CHIPS Act grants. The deal came with sweetheart terms, allowing the government to purchase shares at $20.47 instead of the $24.80 mark it closed at before the meeting, a discount at the expense of current shareholders. It also gave the government the right to purchase an additional 5 percent at $20 per share if Intel exits the manufacturing side of its business by scaling back foundries—clear pressure on the company not to divest, even if doing so makes sound business sense.
The government has leveraged other subsidies, as well as federal contracts, to acquire equity stakes in several companies involved in rare-earth mining and processing: MP Materials, Lithium Americas, Trilogy Metals, Vulcan Elements, ReElement Technologies, Korea Zinc, USA Rare Earth, and Atlantic Alumina. It has tapped the CHIPS Act to make a $150 million investment in the semiconductor manufacturer xLight, a start-up whose executive chairman is Gelsinger, the former Intel CEO and chief lobbyist for the very same CHIPS Act. The Commerce Department has murkily leveraged Trump’s “emergency” tariffs to convince Japan to fund the US government’s acquisition of up to 20 percent of domestic nuclear reactors built by Westinghouse. And the Department of Defense recently invested $1 billion in defense contractor L3Harris Technologies’ missile business, meaning that the Pentagon will have an ownership stake in a company that routinely bids on Pentagon contracts.
Even when the government doesn’t get an equity stake, it still gets a cut. In August, the Trump administration lifted export controls on Nvidia and AMD semiconductor sales to China in exchange for 15 percent of the revenue from the transactions, and did it again in December for more advanced chips (and a 25 percent cut). To avoid the Constitution’s ban on export taxes, Trump invoked Section 232 of the Trade Expansion Act—and “national security,” of course—to impose a 25 percent tariff on a narrow set of advanced semiconductors that are imported into the US for re-export abroad. (All other chip imports have been spared—for now.)
More of these deals, the administration promises us, are in the works, including in different industries. And with them comes rampant capital misallocation, with private investors chasing bureaucratic darlings instead of productive firms or promising start-ups.
Craig Richardson busts a myth about today’s first-time homebuyers in the U.S.
A system of floating exchange rates completely eliminates the balance-of-payments problem – just as in a free market there cannot be a surplus or a shortage in the sense of eager sellers unable to find buyers or eager buyers unable to find sellers. The price may fluctuate but there cannot be a deficit or a surplus threatening an exchange crisis. Floating exchange rates would put an end to the grave problems requiring repeated meetings of secretaries of the Treasury and governors of central banks to try to draw up sweeping reforms. It would put an end to the occasional crisis producing frantic scurrying of high governmental officials from capital to capital, midnight phone calls among the great central banks lining up emergency loans to support one or another currency.
DBx: I thank Phil Magness for reminding me of this piece by Friedman, which I’d first read as an NYU student in 1981 at the suggestion of Professor Fritz Machlup. Until Phil, at his Facebook page, quoted from this piece, I’d forgotten about it.
Scott Bessent, Secretary
U.S. Department of the Treasury
Washington, DC
Mr. Bessent:
Today on CNN you said that “the administration remains undeterred” at “getting rid of these massive trade imbalances” (“Treasury Secretary Scott Bessent: Tariff revenue projections ‘unchanged’ after SCOTUS ruling,” February 22).
What trade imbalances? U.S. trade deficits are balanced by U.S. capital-account surpluses. When exporting, importing, and foreign investing are all taken into account – as economics demands – there are no imbalances.
In short, every dollar that foreigners don’t spend buying American exports is a dollar invested, one way or another, in America.
Some of these invested dollars return to the U.S. as foreign direct investment. Is the administration undeterred in efforts to stop such investment? If so, why? Do you think that foreigners’ eagerness to invest in America is evidence that America is ‘losing’ – or being cheated – at trade? And why does the president brag about all the commitments that he allegedly extracts from foreign companies to establish or expand operations in the U.S. – investments that would increase foreign direct investment in the U.S. and, along with it, U.S. trade deficits? Has Mr. Trump changed his mind about these investments?
Some of these invested dollars return as purchases of shares of American companies, thus increasing the ability of these companies to expand and innovate as they also raise the value of Americans’ pension funds. Is the White House undeterred at obstructing American companies’ access to foreign financing and reducing the value of Americans’ savings?
Some of these invested dollars return as purchases of U.S. Treasuries, thus preventing the U.S. government’s fiscal incontinence from pushing interest rates to heights those rates would reach absent these inflows of dollars from abroad. Are you and your colleagues undeterred in your efforts to jack up interest rates by preventing foreigners from lending dollars to the government?
Some of these dollars circulate globally as the global reserve currency, thus allowing us Americans the enormous advantage of buying foreign-made goods, or investing abroad, for the price of printing (or, even better, digitally creating) dollars. Is the administration undeterred at stripping us Americans of this advantage? If so, can you tell us when Mr. Trump changed his mind about wanting the dollar to remain the global reserve currency? After all, if the administration is determined to ensure that the dollar remains the global reserve currency it simply cannot, as a practical matter, also be undeterred at “getting rid” of what you misleadingly call “massive trade imbalances.”
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
The Bureau of Labor Statistics released its annual report on union membership for 2025 on Wednesday, allowing for a complete appraisal of the Biden years. It shows that the union membership rate for all U.S. workers is 10 percent — down from when Biden took office in 2021. For private-sector workers, the rate is 5.9 percent, tied with 2024 for the record low.
It’s the continuation of a long-running downward trend in union membership. It has little to do with which party controls the White House or which labor policies a president pursues. The union membership rate has fallen during every presidential term since the 1980s. It fell by 0.4 percentage points during Donald Trump’s first term and by 0.3 percentage points during Biden’s term.
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The best proof, though, is that if joining a union got workers a big pay bump, the union membership rate wouldn’t be declining for as long as it has been, even when pro-union politicians are in office. Union membership rates have been falling across the developed world as the global economy becomes more competitive and outdated forms of organization no longer apply. Unions stick around in government, where there is no competition and outdated forms of organization are the rule.
George Will tells of the final stages of a case study of the warmth of collectivism: Cuba. Two slices:
The Museum of Socialism, a.k.a. Cuba, is plummeting in a tightening gyre. The 67-year-old Communist regime, which has existed during 14 U.S. presidencies (counting Donald Trump twice), might not survive into a 15th.
Its iron fist grips an island prison that has fewer than 11 million — perhaps under 9 million — inmates. In this decade, more than a million have escaped; the regime considers this partly a safety valve, exporting dissidents. Most have gone into America’s Cuban diaspora. “Cuban society is a rudderless, drifting hulk,” writes Juan Antonio Blanco, president of a Madrid-based think tank, in the Journal of Democracy. “Amid the institutional anomie, ordinary citizens endure a daily hell of ever-increasing hardships.”
Fidel Castro, who perhaps was a billionaire when he died in 2016, was proudly anti-bourgeois, telling Cubans: “We are not a consumer society.” He got that right. Cuba, a threadbare geopolitical irrelevancy, was once famous for cigars and sugar. It has had to import tobacco from Spain and sugar from Brazil.
The Financial Times reports that drivers wait hours to fill their gas tanks. Garbage accumulates in streets because refuse trucks lack fuel. Airlines avoid Havana because fuel is unavailable. Abandoned hotels, built for tourism that never materialized, line Havana’s waterfront. Soviet-era oil-fired electricity generators fail from lack of maintenance. People trek from the provinces to Havana to buy expensive candles that burn for about an hour.
Patients who need operations are told to bring to the hospital their own sheets, gauze, bandages, even scalpels. Writing in Foreign Affairs, Michael J. Bustamante, chair in Cuban and Cuban-American Studies at the University of Miami, says “an outbreak of dengue and other mosquito-borne viruses has reached epidemic proportions.”
In the 1930s, apologists for Joseph Stalin’s use of terror and engineered famine to produce socialism, complacently said, “You can’t make an omelet without breaking eggs.” George Orwell’s acid reply: “Where’s the omelet?” Mendicant Marxism, dependent for decades on Soviet subsidies, then on Venezuelan oil from the Hugo Chávez and Nicolás Maduro regimes, is discredited everywhere outside Western universities’ humanities departments.
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Eleven months before he was murdered by a Castro admirer, President John F. Kennedy, author of the feckless 1961 Bay of Pigs attempt to overthrow Castro’s regime, spoke in Miami to survivors of this fiasco. They gave him a Cuban flag. He vowed: “I can assure you that this flag will be returned to this brigade in a free Havana.” Planting that flag there will be easier than planting the institutional structures of freedom.
Speaking of socialism, David Henderson recently gave a lecture on it.
In his pique after the Court’s correct and easily foreseeable 6-3 decision in Learning Resources v. Trump, invalidating the tariffs he unilaterally, haphazardly imposed in purported reliance on the 1977 International Emergency Economics Act (IEEPA), the president announced that he is imposing tariffs in purported reliance on the 1974 Trade Act. Specifically, he is decreeing what are called “Section 122” tariffs, a provision of the Trade Act codified at Section 2132 of Title 19, U.S. Code. They are to take effect come Tuesday.
These new tariffs are even more clearly illegal than Trump’s IEEPA tariffs.
I can’t improve on our editorial’s explication of Learning Resources, in particular of the bedrock separation of powers principles by which the Constitution vests in Congress, not the president, the power to tax — and tariffs are taxes (in this instance, massive taxes, overwhelmingly paid by Americans, not foreign regimes). The president has no inherent tariff authority; he has only the statutory authority Congress gives him.
In Section 122, Congress endowed the president with narrow, temporary authority to impose tariffs “to deal with large and serious United States balance-of-payments deficits” (emphasis added). What Trump is complaining about — something he insists is a crisis but is not — is the balance of trade, not of payments. The United States does not have an overall balance of payments deficit, much less a large and serious one.
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There is no rationale under Section 122 to impose tariffs. Because President Trump has no unilateral authority to order tariffs, he must meet the preconditions of Section 122 to justify levying them. He cannot. Not even close.
Here’s the Cato Institute’s Clark Packard on the SCOTUS ruling against Trump’s IEEPA tariffs punitive taxes on Americans’ purchases of imports. Here’s his conclusion:
Unfettered use of Sections 122 and 338—along with better-known statutes like Sections 301 and 232—could essentially recreate the IEEPA predicament. In practice, this means the president can continue reshaping tax policy and the business environment on a whim, redistributing hundreds of billions of dollars and imposing pervasive uncertainty, without express congressional authorization.
The Court did important work by reining in the misuse of IEEPA. But judicial intervention can only go so far. Congress spent decades handing off its constitutional trade authority to the executive branch, and these delegations remain largely intact. Until lawmakers reclaim some of that authority and add serious procedural safeguards, the risk of arbitrary tariffs will continue.
The Court did its job. Now Congress needs to do its own.
Dave Keating tweets: (HT Scott Lincicome)
New data shows US is the only major destination in the world to see a decline in international travellers in 2025. So far 2026 getting worse.
Foreign airlines cutting the number of US-bound flights. Disney warning of “international visitation headwinds”
Here’s Wall Street Journal columnist Barton Swaim on immigration enforcement:
I have no sage counsel, other than to say this: If illegal migrants are performing lawful, remunerative labor, they are, at that moment, contributing to the welfare of mankind and ought to be left alone. Work is a sacred activity. Nabbing people as they wait for jobs as roofers or drywallers, or raiding hotels and farms as they do useful things and earn money for themselves and their families, offends natural sensibilities. A great many natural-born citizens won’t work. Many more won’t do their best while on the clock. To punish noncitizens for engaging in productive behavior is to persecute the righteous. No good will come of it.
… is from page 323 of the late University of Washington economist Paul Heyne‘s undated and previously unpublished manuscript titled “Teaching Economics By Telling Stories,” as it appears in the 2008 collection of Heyne’s writings, “Are Economists Basically Immoral?” and Other Essays on Economics, Ethics, and Religion (Geoffrey Brennan and A.M.C. Waterman, eds.):
We want to understand how markets work, and they do not work in isolation from political and ethical forces.
