Steven Kamin decries the harmful economic uncertainty being generated by Trump’s trade ‘policies.’
One of Lighthizer’s central arguments is that the US has “transferred” $20 trillion of its wealth to foreign entities. The implication is that the country has been drained of resources due to trade deficits, leaving it at the mercy of foreign creditors. But this is a misrepresentation of what these international investment flows mean in practice.
The $20 trillion figure he cites refers to the net international investment position (NIIP), which measures the difference between US-owned assets abroad and foreign-owned assets in the United States. When we look at gross versus net figures, they tell a different story: As of Q3 2024, US assets abroad totaled $37.86 trillion, while foreign-owned assets in the US stood at $61.46 trillion, resulting in a net investment position of -$23.60 trillion. This is not a one-way loss. It is a reflection of the US economy’s attractiveness to global investors. The “wealth” wasn’t transferred to foreigners; they bought it. Owning US stocks, bonds, and real estate has been a pretty good investment in recent years, and the US has long been the top global destination for foreign direct investment. If we flip this around and see US investors buying foreign stocks for their retirement portfolios, we wouldn’t say foreign wealth was transferred to US retirees.
If foreign ownership of American assets is framed as a failure, then logically should we conclude US ownership of $37.86 trillion in foreign assets is somehow exploiting the rest of the world? It’s just not a serious argument. American companies have invested heavily abroad—whether it’s Ford in Mexico, Apple in China, or Coca-Cola in Europe—and those investments are seen as a sign of US multinational firms’ economic strength. (They also, as my colleague Scott Lincicome recently noted, invest heavily here too, reflecting the often-complementary nature of US multinationals’ domestic and overseas investments.)
One need only look at the latest figures from the BEA (reproduced below) on outward and inward foreign direct investment to see this is a two-way street. The United States has over $6 trillion in outward FDI in Europe, the Asia-Pacific, and Latin America combined. Likewise, foreigners have invested in the US. For example, Japan’s Honda builds the Accord in Ohio, Korea’s Kia has manufacturing facilities in Georgia, and Germany’s BMW has operations in South Carolina and elsewhere.
…..
Lighthizer’s analysis focuses almost exclusively on bilateral goods trade deficits, reinforcing a narrative that the US is losing to countries that export more goods to America than they import. But this overlooks a major component of US trade: services. That’s a problem when your only solution to trade deficits is a tariff on goods.
The United States is a global leader in services trade, running large trade surpluses in key sectors such as finance, education, tourism, technology, and R&D. The same countries where the US runs a goods trade deficit—such as China, Korea, and Japan—import billions of dollars in US services such that the US runs an overall trade surplus in services with the world. In many cases, these surpluses offset the goods deficit, making the overall trade relationship far more balanced than Lighthizer suggests.
…..
Lighthizer’s policy prescription—a system where tariffs are automatically imposed whenever a bilateral trade deficit reaches a certain threshold—is deeply flawed. It assumes that trade imbalances are purely the result of policy choices, ignoring the role of investment, financial flows, supply chains, and consumer preferences.
Moreover, trade imbalances are inherently linked to capital flows. A country that runs a trade deficit—such as the US—must also run a financial account surplus, meaning it attracts investment from abroad. Lighthizer’s tariff mechanism would disrupt this balance, potentially reducing foreign investment in US businesses, real estate, and financial assets. It also, as economic theory and practice both show, would perversely reduce US exports.
Scott Sumner expresses his well-founded objections to Trump’s proposed “reciprocal” tariffs.
GMU Econ alum Jeremy Horpedahl busts the myth that foreign workers are denying jobs to Americans.
In Trump’s second administration, it has taken only three-and-a-half weeks to bring the DOJ to a mass resignation event. Yesterday, as the New York Times reported, Danielle R. Sassoon, interim US attorney for Manhattan, “quit after the Justice Department told her to withdraw corruption charges against Mayor Eric Adams.… Ms. Sassoon, 38, joined the Southern District in 2016. A graduate of Harvard College and Yale Law School, she clerked for Justice Antonin Scalia on the Supreme Court and is a member of the Federalist Society, the conservative legal group.” Earlier, Sassoon had clerked for noted conservative judge J. Harvie Wilkinson of the Fourth Circuit.
It was a high-visibility resignation. Handling a large volume of complex cases and high-level white-collar crime investigations, the Southern District of New York is regarded as a premier US attorney’s office. Sassoon, who had been named interim chief by the incoming administration itself, most recently co-led the district’s appeals unit and is perhaps best known for successfully prosecuting crypto founder Sam Bankman-Fried.
The background is the incoming administration’s decision to drop bribery and corruption charges against New York City Mayor Eric Adams. The case is complex, but Andrew McCarthy of National Review, who’s anything but a reflexive critic of Trump’s legal moves, dismisses as “ridiculous” and “laughable” the department’s cover story for dropping the charges, a decision he says was instead reached on “explicitly political grounds.”
Worse is the lesson for Administration lawyers. The message is that rather than exercise individual legal judgment, they’d simply better salute without cavil—or else the Administration will ruin their reputations.
National Review‘s Mark Antonio Wright rightly decries Trump’s disregard for Constitutional text, laws, and norms. Three slices:
There’s no need to overreact to the fact that the president of these United States casually tweeted out on a Saturday morning the statement, “He who saves his Country does not violate any Law.”
No — it’s sobering enough that the Chief Magistrate of our Republic would favorably repeat the words of Napoleon Bonaparte (the quote is perhaps apocryphal) on this subject and his excuses for the reality that he deformed his own republic into an empire, with himself as its monarch. Indeed, it should be sobering enough that such a statement from this president is no shocking event in our politics.
…..
In certain similar ways to the French emperor, Donald Trump is a Great Man too. He has changed history, and he may very well leave an enduring mark on it. And, I’m sure, he may do some good things while in office. But after everything we have seen of Trump these last ten years, no American ought be surprised by the fact that our duly elected president cares nothing at all for our Constitution, its Madisonian vision of separation of powers and check and balances, or his oath to protect it and defend it.
What Trump has declared is, indeed, antithetical to a republican form of government per se. As John Adams, our second president, once wrote, “A republic is the best form of government, a government of laws, not arbitrary rule.”
…..
But what Trump has declared is most certainly un-republican, and therefore un-American. There is no legitimate argument otherwise. To defend it is the road to serfdom.
While a president is cloaked in numerous awesome powers, he is in no sense above the law; he has no legitimate power to abrogate it. Indeed, his very office is a creation of law, of the Constitution. No matter the circumstances, no American — certainly no president — is above the law as such. No, not even to “save it.”
President Donald Trump’s exceedingly silly efforts to rename the Gulf of Mexico the “Gulf of America” became particularly obnoxious this week, as the White House announced that it would strip the Associated Press of access to presidential press briefings and Air Force One flights. The news organization’s transgression? Sticking with Gulf of Mexico in its official style guide.
There are obvious hypocrisies running in both directions here. Many liberal and mainstream media organizations have embraced the progressive push to rename various public locations, landmarks, sports teams, etc., or to use new and awkward naming conventions in an effort to appease social justice activist groups. The A.P. deciding in July 2020—in the midst of the summer of unrest following the killing of George Floyd—that its style guide would henceforth capitalize black but not white is a good example of this.
But in this case, the MAGA hypocrisy is even more galling. If Joe Biden’s White House had stripped a right-leaning news organization of Oval Office access because it refused to recognize the area in front of Lafayette Square in Washington, D.C., as Black Lives Matter Plaza, conservatives would have gone ballistic. Imagine a Biden surrogate asserting that any journalists who failed to properly respect the space’s new name were guilty of spreading misinformation—the opprobrium would be cacophonous and well-deserved.
Cato’s Michael Cannon warns of the dangers to ordinary Americans’ health posed by RFK, Jr.
