One progressive fiction about the Supreme Court is that it’s busy serving billionaires and big corporations. Far more often its best work is defending individuals against state power, and on Monday the Justices agreed to hear the case of an Alaskan bush pilot who had his airplane seized over a few cases of beer (Jouppi v. Alaska).
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Governments increasingly use criminal and civil forfeitures and fines to pad their budgets. In 2023, 45 states collected nearly $300 million, according to the Institute for Justice, which represents Mr. Jouppi. This aggressive law enforcement diminishes American civil liberties, and the excessive fines clause should be a shield against such overreach. Mr. Jouppi’s plane sure looks like it qualifies.
In my new column at The Dispatch, I show why these tariffs have almost nothing to do with forced labor and instead are just “a ham-fisted way to reinstall Trump’s tariff wall and protect it from another IEEPA-like defeat in federal court.” Five issues stand out:
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The administration said the tariffs were coming before the investigation ended. President Trump, Treasury Secretary Bessent, and US Trade Representative Greer all publicly and explicitly promised that the tariffs and their revenue would replace the struck-down IEEPA regime before the investigations even started.
- The requisite report on “forced labor” is remarkably thin. USTR’s investigation only took 82 days and generated a 98-page report to cover 60 economies, devoting little more than half a page to each, much of it the exact same empty passages copied and pasted 60 times—far short of the rigor demanded of such a consequential and far-reaching trade action. The report also contained no evidence or analysis – none – of targeted economies’ forced labor policies causing actual harm to US companies or commerce. It’s all just assumed. Nor did the USTR explain why it applied the same punitive 12.5 percent tariff rate to Angola, Libya, Russia, Venezuela, and Kazakhstan—developing countries that rank low on the Walk Free forced labor index (and have other issues!)—as it did to developed, “good actor” countries like Norway, Japan, Switzerland, and Australia.
- The United States is hardly a forced labor angel. Section 307 of the Tariff Act of 1930 has prohibited imports made with forced labor, but was lightly enforced for over 80 years due to wide exceptions, and the Trump administration’s enforcement of the law has been much more lenient than the Biden administration’s efforts. Furthermore, the US ranks 19th among the 60 economies for the prevalence of forced labor.
- The tariff cure dramatically overshoots the forced labor disease. Some back-of-envelope math puts a proportionate tariff at 0.5 to 0.84 percent; Peterson Institute economist William Cline, using a different model, gets 0.23 to 0.25 percent. USTR is proposing 10 to 12.5 percent, a rate and resulting revenue (see figure below) that far exceed what could be considered a proportional response to the problem.
Eric Boehm explains that Trump’s new ‘forced labor’ tariffs are likely illegal. A slice:
Ostensibly, these tariffs are meant to combat “forced labor.” The Trump administration says the tariffs are the result of an investigation into 60 foreign economies that “fail to prohibit or to effectively enforce a prohibition on the importation of goods produced wholly or in part with forced labor.”
Immediately, a logical problem emerges. The announcement says that the 10 percent tariff will apply even to countries that “impose a forced labor import prohibition,” as long as the administration believes that prohibition is not being adequately enforced. It is unclear what, exactly, a foreign country would have to do to get removed from that list. That makes it fairly obvious that combating forced labor is a pretext for what the Trump administration really wants to do: have more tariffs.
After the Supreme Court struck down tariffs introduced under the International Emergency Economic Powers Act, the president responded by announcing a new global tariff of 15 percent. This was based on Section 122 of the Trade Act of 1974, which allows for the application of various Band-Aids to problems arising out of large and serious U.S. balance-of-payments deficits. The administration’s use of Section 122 to impose tariffs (which was unprecedented) has come under legal attack. But at this point that’s moot (apart from the tricky issue of the tariffs that have already been paid), as Section 122 tariffs could last no longer than 150 days, a period that has just expired.
Protectionists can relax, however. The administration will now be taking action under the Trade Act’s Section 301, a widely drawn provision that allows the U.S. to take action if its trade representative determines that an act, policy, or practice of a foreign country is unreasonable or discriminatory and burdens or restricts U.S. commerce, and that action by the United States is appropriate. It has been used to impose tariffs fairly frequently before. In this case, tariffs have been slapped on countries for failing to “impose and effectively enforce a prohibition on the importation of goods produced with forced labor.”
The timing is . . . convenient.
GMU Econ alum Erik Matson writes wisely about Alexander Hamilton. A slice:
The real tell for Hamilton comes in the “Report on Manufactures” when he considers potential counterarguments to his positions. He spends the opening sections of the “Report” establishing the point that manufacturing is no less productive than agriculture. He proceeds to make his case that a booming manufacturing sector would serve America well—and be incredibly profitable. He then takes on the natural question: If manufacturing would be so profitable in America, why does the government need to subsidize it? His answer is surprising, and in a way, it is the centerpiece of his entire outlook in political economy.
Americans—like all people—in Hamilton’s view are too much inclined toward agriculture, too averse to risk-taking, and too committed to the status quo. Americans want to move westward and be left alone. Americans are not sufficiently aware of or interested in profit opportunities. Americans for Hamilton can perhaps be captured with J.R.R. Tolkien’s description of hobbits: “[T]hey love peace and quiet and good tilled earth: a well-ordered and well-farmed countryside was their favourite haunt. They do not and did not understand or like machines more complicated than a forge-bellows, a water-mill, or a hand loom, though they were skillful with tools.”
In Hamilton’s own words: “The desire of being an independent proprietor of land is founded on such strong principles in the human breast, that, where the opportunity of becoming so is as great as it is in the United States, the proportion will be small of those… who would be diverted from it towards manufactures.”
“Experience teaches,” continued Hamilton, “that men are often so much governed by what they are accustomed to see and practise, that the simplest and most obvious improvements, in the most ordinary occupations, are adopted with hesitation, reluctance, and by slow gradations.” So, Hamilton believed the federal government ought to subsidize industrial activity as a way of inspiriting an overly conservative, agricultural population to take up profitable industrial activities.
The irony is that Hamilton himself was an incredibly entrepreneurial and ambitious man, surrounded by an entire cohort of entrepreneurial, ambitious men who rebelled against the most powerful empire in the world and forged a brand-new model of government. Hamilton had every reason to think that Americans, by virtue of self-selection, were of all people less inclined to the status quo than most people and more attuned to profit opportunities. Tocqueville certainly thought so when he visited America in the 19th century: “The American follows not only a calculation of his gain, but an impulse of nature” in trade. But for one reason or another, Hamilton was simply distrustful of the natural market process
Bob Gelfond writes insightfully about free-market money.
The Supreme Court is no “rubber stamp” for President Trump. Take it from liberal Justice Elena Kagan. “That is a bad rap,” she said, defending the honor of her institution and her colleagues this week at a Ninth Circuit Court of Appeals judicial conference. She cited especially this year’s 6-3 ruling against President Trump’s effort to aggrandize his tariff powers.
“Tariffs is probably the key policy issue for this President. I mean, something he campaigned on, he ran on, he cared an enormous amount about,” Justice Kagan said, according to Politico. “I don’t think that there are all that many decisions in the recent times, where a court strikes down such an important policy to a sitting President.” A glaring counter-example from 2012 is the High Court’s, uh, creative 5-4 decision to uphold ObamaCare.
Mr. Trump has pushed the bounds of executive power, but so did his Oval Office predecessors, and the current Administration’s record at the Court is mixed at best. Another big one for the loss column this term was Mr. Trump’s order trying to redefine birthright citizenship.
Rationality is not like a buyer and seller haggling over a price until they split the difference. After all, why should we expect reality to just happen to lie midway between the convictions of two people who find themselves in an argument?
Any one who says that it [a tariff] is not a tax must suppose that it costs nothing, that it produces an effect without an expenditure of energy. They do seem to think that if Congress will say: “Let a tax of—per cent. be laid on article A,” and if none is imported, and therefore no tax is paid at the custom house, national industry will be benefited and wealth secured, and that there will be no cost or outgo. If that is so, then the tariff is magic. We have found the philosopher’s stone. Our congressmen wave a magic wand over the country and say: “Not otherwise provided for, 150 per cent.,” and, presto! there we have wealth. Again they say: 
One of the grandiloquent phrases used to silence those who complain about the economic costs of government policies to reduce some remote danger is this: “It’s worth it, no matter what it costs, if it saves just one life!”
Protectionism bars the science of political economy with a dogma, and the only process of the art of statesmanship to which it leads is eternal trial and failure—the process of the alchemist and of the inventor of perpetual motion.
