Iain Murray debunks three arguments for tariffs. Two slices:
Moreover, tariffs are at least as much a threat to manufacturing as they are an opportunity. Much that America imports is not finished goods, but inputs, i.e. raw materials and parts, that domestic manufacturing needs to operate efficiently. With tariffs, fewer of these inputs will be imported, or the price of finished goods will go up. With fewer imports, American manufacturing jobs will suffer. With higher prices, American middle class households will see their standard of living fall. Neither is good for the American middle class.
Of course, tariff proponents will say that these duties will cause American industries to onshore supply chains, which means more jobs for Americans. Up to a point, Lord Copper, as Evelyn Waugh would put it. Some things must be sourced offshore as either lack of natural resources or things like American environmental law make them impossible to be sourced domestically. For those things that could be made here, the price differential will have to be addressed. In most cases that means that automation is the best option to keep labor costs down, which means once facilities are constructed, they will have few jobs. And the industrial robots that will staff those factories are mostly made in Japan, Germany, or Switzerland.
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Yet what about the other justification – that tariffs are useful tools in negotiations? Once again, a moment’s thought will reveal that this isn’t compatible with the other justifications. If tariffs are just a negotiating tool, they won’t bring in significant revenue and nor will that re-shore massive amounts of industry. Even the respectable academic argument for “optimal tariffs,” which suggests that large countries can drive down the price of imports through tariff policy, puts them in the low single digit range once other factors are accounted for, and they are about lowering import prices, not revenue generation or reshoring.
At first blush, that might seem counterintuitive. How can preventing a merger lead to greater consolidation?
The answer lies in the third party that played a major role in blowing up the U.S Steel/Nippon Steel deal: Cleveland-Cliffs, the Ohio-based steelmaker that lost to Nipponin the bidding war to buy U.S. Steel.
It is widely assumed that Cleveland-Cliffs will be able to purchase U.S. Steel (probably at a steep discount) if the deal with Nippon does not go through, and that likely explains why Cleveland-Cliffs has lobbied so hard to tank the deal. The company pulled together an unconventional alliance of politically connected allies, including labor unions and environmental groups, to bolster its own significant lobbying efforts.
GMU Econ alum Dave Hebert’s latest letter in the Wall Street Journal is spot-on correct:
Blocking the Nippon acquisition of U.S. Steel was indeed a bad move. Bureaucrats at all levels of government have done their level best to prop up U.S. Steel through special tax abatements, protective tariffs and mandatory purchasing agreements. Despite all this political largess, U.S. Steel seems determined to struggle financially. At some point, their struggles no longer reflect the scourge of foreign competition but instead poor leadership.
Nippon Steel’s bid to purchase U.S. Steel included several generous terms. It also offered a chance to avoid monopolizing the domestic steel industry. But more important, it included fresh leadership with a track record of successfully running steel mills and blast furnaces. This was a chance to revitalize an important American industry. In typical fashion, and bureaucrats bungled it.
Scott Sumner decries the increasingly monarchical powers of the U.S. president.
Wall Street Journal columnist Holman Jenkins reports on “the global EV calamity.” A slice:
EVs are “strategic” only for China, to reduce its reliance on imported oil in anticipation of military conflict with the U.S. For the rest of the world, including the U.S., electric cars are a consumer technology, albeit a fast-emerging and promising one. Sensibly, they’re also a technology that should have been left to consumers and carmakers to adapt and develop without distorting handouts and mandates.
The result is finally in view: a colossal self-destruction of the Western auto industry, with Germany’s at the forefront. Volkswagen is in a panic about Chinese competition to the money-losing EVs that Berlin forces the company to sell. Germany’s export-led economy is in free fall. Its bellwether auto giant, VW, is pursuing its first-ever domestic factory closures and layoffs.
Peter Suderman explains “why the race and gender politics of White Dudes for Harris failed.”
John Ellis rightly criticizes critical race theory. Two slices:
It’s a tribute of sorts to critical race theory’s success that the Trump administration will make its eradication a priority. The Biden administration had quietly implemented policies throughout the federal government based on this theory, and it is being taught in colleges and schools throughout the country. It has overrun much of the corporate world, and it has even secured a place in the training of many professions. The accusations made in closed training sessions are astonishingly venomous: Arrogant white supremacy is ubiquitous; white rage results when that supremacy is challenged; whites hold money and power because they stole it from other races; systemic racism and capitalism keep the injustices going.
All of this is based on categorically false assumptions about the past. We need only look at how the modern idea of our common humanity originated and developed to see that critical race theory has everything backward. A realistic history tells us that the thinkers and engineers of the Anglosphere, principally England and the U.S., are the heroes, not the villains, of this story, while the rest were laggards, not leaders.
For most of recorded history, neighboring peoples regarded each other with apprehension if not outright fear and loathing. Tribal and racial attitudes were universal. That’s a long way from the orthodoxy of our own time, which holds that we are all one human family. Before that consensus arose, a charge of racism made no sense. By today’s standards, everyone was racist.
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A series of British writers began to promote ideas about the conduct of life and the role of government. Among the most important was John Locke, who argued that every human life had its own rationale, none being created for the use of another. Another was David Hume, who wrote that all men are nearly equal “in their mental power and faculties, till cultivated by education.” These and many others were launching what would become the modern consensus that we are all one human family. The idea gained ground so quickly that in Britain, and there alone, a powerful campaign to abolish slavery arose. By the end of the 18th century that campaign was leading to prohibitions in many parts of the Anglosphere, while Africa and Asia remained as tribalist and racist as ever.
As this idea took hold it made the British see their empire differently. Like other European countries, Britain had initially sought empire to strengthen its position in the world—others would add territory if Britain didn’t, and Britain would be weakened. But if the peoples of the British Empire were one human family, how could some be subordinate to others? The British began to consider themselves responsible for the welfare and development of their subject peoples, and for giving them competent administration before they had learned to provide it themselves. That change inevitably led to the dissolution of empire, and to a consensus that the time for empires (of which there had been hundreds) was over. The world’s most influential anti-imperialists were British.
