Ben Zycher – in this letter to the Wall Street Journal – hits the nail on the head:
Arthur Laffer and Stephen Moore are deceiving themselves if they believe that a trading world with reciprocal zero tariffs, barriers and subsidies would lead Donald Trump to reverse his assault on the international trading system (“A Win-Win Exit Strategy for Trump on Tariffs,” op-ed, April 8). For Mr. Trump and his trade warriors, the mere existence of a bilateral trade deficit with a given nation is prima facie proof of unfairness, cheating, “currency manipulation” and any other mindless rationale for tariffs.
Mr. Trump simply doesn’t understand that such bilateral trade deficits are the inevitable result of differing national savings rates, international investment opportunities, shifting demand and cost conditions and myriad other factors. “Balanced” trade with numerous nations is an impossibility with or without zero reciprocal barriers. Nor does the president appreciate that the foreign investment that he craves requires trade deficits. The economic ignorance and arrogance on display in the administration have no parallel in modern U.S. history.
Benjamin Zycher
American Enterprise Institute
Janet Bufton makes clear that Trump’s trade ‘policy’ would find no approval from Adam Smith.
Oompa Loompa doompadee-do, we’ve got a tariff puzzle for you: President Trump seems to think border taxes are a Willy Wonka golden ticket for the U.S. economy. But what does it do to America’s artisan chocolate businesses when huge duties raise the cost of cacao, an ingredient that only grows some 20 degrees above and below the equator?
“This is the sole income for my husband and me,” says Dahlia Graham, the CEO of Fruition Chocolate Works, a small bean-to-bar outfit in New York. “We employ people. We’re trying to make it work and to continue to grow our business, but it’s like we’re getting squeezed—and squeezed and squeezed.”
Hawaii and Puerto Rico are the only suitable regions in the U.S. for growing cacao, and they produce a bite-size quantity. In other words, American chocolate makers can’t function without imports.
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Whatever Mr. Trump thinks he’s doing with his global tariffs, this is the bitter reality for American chocolate businesses. The President is messing with prices and supply chains on a whim, and it isn’t as if the U.S. can repatriate the raw material. Not even Wonka’s Oompa Loompas could get cacao to thrive in Kansas.
GMU Econ alum Dominic Pino sensibly asks: “What is it with protectionists and tomatoes?” Two slices:
I wrote a post in September about a speech in the House of Lords by Daniel Hannan about U.K. tariffs on tomatoes. As anyone familiar with British weather could guess, the U.K. doesn’t grow anywhere near enough tomatoes to satisfy its people, and its largest source of imported tomatoes is Morocco. Yet the U.K. has tariffs and quotas on Moroccan tomatoes, raising costs for British grocery shoppers for no good reason. Hannan argued eloquently for repealing the trade barriers.
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As economist Jeremy Horpedahl pointed out, tomatoes were one of the few food categories that has not seen a significant rise in price since 2020. The suspension of tariffs on tomatoes from Mexico, the largest foreign source, the year before is probably part of the reason why.
Now the government has come to save the day: You won’t be allowed to pay too low of a price for tomatoes anymore. The government is straightforwardly promising to take money from you and give it to U.S. tomato growers. And that’s before the government uses your tax money to bail out farmers in general, as it did during Trump’s first term and will likely do again in response to the losses caused by Trump’s trade wars.
Demanding tariffs on tomatoes for countries that don’t grow enough tomatoes is the kind of thing that ruins protectionists’ credibility when they want to make “strategic” arguments for tariffs. Tariffs on tomatoes for the U.S. and the U.K. just make grocery shoppers a little poorer by making tomatoes a little more expensive, yet it seems impossible to entirely get rid of them.
Eric Boehm reports on a new lawsuit filed against Trump’s exercise of tariff-imposing powers. Two slices:
“No one person should have the power to impose taxes that have such vast global economic consequences,” Jeffrey Schwab, a senior attorney for the LJC, a nonprofit public interest law firm, tells Reason.
Since its passage in 1977, the IEEPA has been used dozens of times to impose sanctions on foreign countries, but it had never been used to set tariffs on imports to America until Trump invoked the law in February to tariff imports from Canada, China, and Mexico. (That use of the law has also been challenged by the LJC in a separate lawsuit.)
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More to the point: It is simply untrue that the wines Schwartz imports from France or Italy constitute an emergency that threatens Americans.
And even if Congress did intend to give the president such sweeping powers, that delegation of authority would be unconstitutional, Schwab argues. That’s because it would run afoul of the “major questions” doctrine, which requires Congress to decide issues of “vast economic and political significance” and which has recently been the basis of some prominent Supreme Court cases.
“I think having power over essentially the worldwide economy,” Schwab says, “if anything’s a major question, it’s that.”
Besides, Vargas Llosa ran on privatizing the economy, and Peru wasn’t ready for that. In an interview with this page in 2007, he said, “It was a very different era, because to speak of private property, private enterprise, the market—it was sacrilegious.” He lost because he was unwilling to dilute his message, unable—like Cordelia in “King Lear”—to fake it for personal gain.
John Stossel reports on three apocalyptic climate predictions that failed.
Kristian Niemietz defends capitalism. A slice:
Progress is systematically biased towards the more market-oriented economies.
You may have come across the so-called Economic Freedom Index, an index which tries to measure how capitalist an economy is, on a scale from 0 to 10. It measures things like the protection of private property rights, freedom of contract, freedom to trade across borders, freedom to use alternative currencies, and so on. In practice, all economies are mixed economies, so none of them get a score of 10, or even a 9. But some come closer than others. The index has Hong Kong, Singapore and Switzerland at the top, and Sudan, Zimbabwe and Venezuela at the bottom.
The index reveals a very clear pattern. Places that are higher up on that list are richer, they are doing better on all the indicators that I mentioned, and they are also doing better when it comes to environmental protection. They are unambiguously better places to live, on anything we can measures. The correlation is remarkably strong, especially if you bear in mind that the Economic Freedom Index and the outcome measures operate on different timescales. The Baltic states, for example, liberalised their economies very rapidly in the 1990s, but it took much longer for economic and social outcomes to reflect that.
