Eric Boehm is correct: “The trade war caused exports to Canada to fall. Now, Trump is pointing to that fact to justify more tariffs.” Two slices:
Even by the standards of Trump’s second term—which once included the attempt to place tariffs on an island inhabited only by penguins—this latest move against Canada seems economically illiterate and legally dubious. Like with all his tariffs, it will primarily be Americans who pay the cost.
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The Trump administration promised that its more bellicose approach to trade would pay dividends for American businesses, but now it is pointing to declining overseas sales as justification for an even more bellicose approach to trade. It turns out that pissing off the people who live in a neighboring country—a country that’s full of customers for American businesses—is a shortsighted strategy for economic growth. Who could have guessed? But no matter what happens, the White House’s answer is always the same: more tariffs. This is no way to run an economy or engage in international relations.
And here’s the Wall Street Journal‘s Editorial Board on Trump’s latest round of tariffs punitive taxes on Americans’ purchases of goods from Canada. Two slices:
What do you know? President Trump is conceding that his blunderbuss border taxes are harming U.S. business as other countries retaliate. So now he’s whacking Canada harder for punching back. The trade brawl could leave both countries with more bruises than a hockey fight.
The White House on Monday exhumed Section 338 of the 1930 Tariff Act to impose 50% tariffs on hundreds of Canadian goods, including hockey sticks, honey, beer, down feathers, fishing rods and golf clubs. The tariffs are set to take effect in 30 days, which means he’s using tariffs as leverage to win concessions from Canada.
He may also enjoy showing off his new tariff bazooka. Section 338 lets the President impose tariffs up to 50% on countries that discriminate against “commerce of the United States, directly or indirectly” in relation to foreign countries. No previous President has used this power, which hails from the disastrous Smoot-Hawley Act.
The provision was intended to let the President retaliate against countries that impose tariffs on the U.S. Mr. Trump is using the law to punish Canada for retaliating against his tariffs. His tariff order cites Canada’s 25% tariffs on U.S. cars that exceed certain quotas, which were a response to Mr. Trump’s 25% duties on motor vehicles and parts. According to the order, U.S. motor vehicle exports to Canada subsequently fell 22%, while Canadian imports from other countries increased.
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That may be why Mr. Trump is justifying his tariffs as retribution for Canada’s treatment of U.S. autos and dairy, which are key industries in the Midwest. But Canada is the second largest U.S. trade partner after Mexico, and Mr. Trump’s tariffs are complicating cross-border supply chains, raising costs and creating uncertainty for business.
The more Mr. Trump keeps swinging recklessly, the more Americans are likely to think there’s only madness in his tariff methods.
Phil Gramm and Jeb Hensarling bust myths about the 2008-2009 financial crisis. A slice:
Gramm-Leach-Bliley, of which one of us was the principal Senate sponsor, amended the Depression-era Glass-Steagall Act to allow banks, securities companies and insurance companies to affiliate under well-capitalized financial-services holding companies. But it didn’t deregulate anything. It established the Federal Reserve as a new superregulator overseeing all financial services holding companies. All activities of banks, security companies and insurance companies continued to be regulated under the same laws and by the same regulators as before, and by any measure Gramm-Leach-Bliley holding companies held up better during the financial crisis.
Contrary to the popular narrative, for at least three decades preceding the housing crisis, financial regulators gained more power and larger budgets and hired more personnel than ever. The Mercatus Center has found that from 1970 until the housing bubble burst, regulatory restrictions increased 250% and the number of regulatory personnel grew about 77%. There is no evidence that things would have been different if financial regulators had more authority or resources.
Ilya Somin exposes a contradiction at the heart of today’s so-called “Democratic Socialism.” A slice:
There is a blatant but generally ignored contradiction between socialism and prison abolitionism. Socialism requires making a wide range of economic transactions illegal, and those laws have to be enforced by some system of punishment. If, like the DSA, you want to ensure that “[f]ood, education, energy, medicine, and transportation aren’t for-profit businesses,” but instead make them “common goods,” you will have to make it illegal to provide those goods and services for profit and punish people who violate the relevant laws.
Historically, attempts to do this created vast black markets, especially since government control of these and other industries routinely resulted in shortages and low quality, caused by knowledge problems and poor incentives. I was born in the Soviet Union. Almost all my adult relatives and their friends and acquaintances were involved in illegal black market transactions of various kinds. Often, it was the only way to get even minimally decent-quality goods and services, including food, medicine, and transportation. For example, my mother’s two cousins operated a black-market auto repair business, which prospered because the official state-owned auto repair shops were predictably terrible and unreliable.
Socialist governments sought to suppress these activities through massive coercion. If they did not, the extent of black market activity would have been even greater, and socialism would have been even further undermined.
Similar logic applies to sweeping economic regulations that fall short of complete socialization. If, like many socialists, you want to impose severe rent control or very high minimum wages, you will have to punish people who dare rent out housing at higher rates or hire workers at lower wages. And such black market activities are predictable, because high minimum wages price numerous lower-skilled workers out of the market (thereby increasing unemployment) and rent control predictably creates housing shortages.
Brad Birzer reviews Aeon Skoble’s remarkable book, Deleting the State. A slice:
The Founders were skeptical of political community and coercive power more generally. In every way, they sought to limit political activity. The Founders—all citizen-philosophers and reliant upon history rather than abstract theory—gave us an escape clause in the Declaration of Independence: “But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.” Note, it is not just a right, but a duty to throw off such government. Further, of course, the Declaration offered a beautiful but minimalist image of the human person—made in the image of the Creator, endowed with certain unalienable rights, among these are life, liberty, and the pursuit of happiness.
The Northwest Ordinance of 1787, the blueprint for the republic’s western expansion, represents the most radical limitation on the political sphere during the Revolutionary period. Its Article II notes first that the common law is to reign supreme (thus, a truly conservative aspect of the Founding), but, second, that no association—family, school, business, or church—freely entered into and devoid of fraud may ever, in any circumstances, be limited by the political body or the political will. The Congress, upon being created (or recreated) under the Constitution, immediately reaffirmed the Northwest Ordinance, giving it a status no other law in history has had.
The Constitution, of course, properly understood, is nothing if not a restraining document. In case anyone wondered exactly what the Constitution could do, Amendments 9 and 10 restrict it to just its most minimal functions, demanding, for all intents and purposes, a literal reading of the document. If one has to engage in speculative interpretation of the Constitution, he or she has already failed. Either the meaning is plain, or it cannot be implemented.
Thus, the Founders did everything possible to help civil society flourish by limiting the political sphere as much as possible. Thomas Jefferson, of course, stated what should have been so obvious in his first inaugural address: “A wise and frugal Government, which shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government, and this is necessary to close the circle of our felicities.”
And yet despite all of these limitations, the federal government metastasized, especially in the century and a half since the Progressive period (1890–1920) began. Under Woodrow Wilson, under Franklin Roosevelt, under Lyndon Johnson, under both Bushes, under Barack Obama, under Joe Biden, and under Donald Trump, the government has become a cancer, uncontrollable and swallowing everything in its path. As the republic became a democracy, arrogance, violence, and imperialism became the norm, with the political sphere a body of locusts devouring all before it. Today, our constitution is entirely distorted (with, arguably, only the Supreme Court serving its original purpose), with government claiming authority over practically every aspect of social life.
My Mercatus Center colleague Jack Salmon predicts that the cost of living in Great Britain will soon rise even higher.
Kamden Mulder reports on a case – to be heard next term by the U.S. Supreme Court – on the banana-republic practice of civil asset forfeiture.
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.
The impression is given that a worker’s “benefits” are financed by his “contributions.” The fact is that taxes currently being collected from current workers are being used to pay benefits to persons who have retired or to their dependents and survivors. No trust fund in any meaningful sense is being accumulated. (“I am You.”)
