“Trump’s tariffs blow up the copper market.” Two slices:
President Trump likes tariffs for their own sake, and the latest evidence is his bewildering decision to slap a 50% tax on copper imports. How this will help the U.S. economy is a mystery, even as it has sent the copper market into turmoil, with chaotic results for American manufacturers that use the vital metal.
Copper prices are typically an economic benchmark because the metal is widely used in construction and industrial manufacturing. But prices this year have been rising despite slowing economic growth. Mr. Trump’s February order for a Section 232 national-security investigation into copper imports prompted businesses and traders to stockpile inventory.
The Section 232 findings haven’t been released, but Mr. Trump’s tariff announcement this week has set off a mad dash to accelerate imports. Copper prices hit a record on Tuesday after the President announced the 50% tariff, which he said Wednesday would take effect on Aug. 1. Consumers are scrambling for supply ahead of August.
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Mr. Trump says the tariffs will ensure that the U.S. can “once again, build a DOMINANT Copper Industry.” That will take more than tariffs. A major reason the U.S. doesn’t mine or refine more copper (and other critical minerals and metals) is the government permitting morass. Developing a new mine in the U.S. takes on average 29 years, the second longest in the world after Zambia.
Building and permitting a copper smelter can take more than five years. By all means, Mr. President, blast the permitting obstacles, and urge Congress to reform the National Environmental Policy Act that the left uses to tie up every new mining or refining project.
But in the meantime tariffs won’t spur companies to build new smelters that could get tied up in litigation. Mr. Trump is going to make U.S. firms pay 50% more for a vital metal while they wait five or more years for U.S. sourcing. How does making it more expensive to build aircraft, ships and ammunition promote national security? This is national insecurity.
Also warning of the damage that will be done by Trump’s tariffs on copper is Eric Boehm. A slice:
Newly announced tariffs on imported copper might be the Trump administration’s most foolish trade policy yet. It is a move that will force American industries to pay significantly higher prices for a metal that is essential for everything from tech manufacturing to homebuilding.
“Copper is necessary for Semiconductors, Aircraft, Ships, Ammunition, Data Centers, Lithium-ion Batteries, Radar Systems, Missile Defense Systems, and even, Hypersonic Weapons, of which we are building many,” Trump wrote Wednesday on Truth Social, as he announced a new 50 percent tariff on all copper imports starting on August 1.
It is exactly because of all those uses that this new tariff is a terrible idea. America has a lot of copper—it was the world’s sixth-largest copper producer last year, according to U.S. Geological Survey data—but American demand for copper is even higher. The U.S. imports about half the copper that it uses annually (mostly from allies like Chile and Canada).
Desmond Lachman decries Trump’s protectionism. A slice:
Yet another flaw in Trump’s import tariff policy is that it miscalculated our trade partners’ reaction. On April 9, when Trump paused the implementation of his reciprocal import tariffs for three months, he confidently predicted that many countries would come begging to the White House for trade deals. Yet three months later, only two partial trade deals have been struck, one with the United Kingdom and the other with Vietnam. Trump also totally miscalculated the leverage that rare earths and magnets afforded China in its trade negotiations with the United States. That leverage forced the United States to have to back off its 145 percent import tariff on China without getting very much in return.
For all of these reasons, Trump’s import tariff policy, along with his budget policy, will go down in history as among the more serious macro-economic policy mistakes in the post-war period. However, for economists, it will offer the opportunity to relearn the lessons of the shortcomings of an aggressive import tariff policy.
Economists: This brief is on behalf of a large group of prominent economists spanning the political spectrum. They include 2024 Nobel Prize winner Daron Acemoglu, Gregory Mankiw (Harvard, former Chair of the Council of Economic Advisers under George W. Bush), Jason Furman (CEA chair under Barack Obama), Kimberley Clausing (UCLA, leading expert on international economic policy), and many more. The brief represents the consensus view of the economics profession, and explains why trade deficits are not an “emergency” or an “unusual and extraordinary threat” of the kind needed to trigger IEEPA. It also describes why the massive Liberation Day tariffs are a major policy issue triggering application of the major questions doctrine. The brief was drafted by a team led by big-name appellate litigator Adam Unikowsky.
The administration has not made clear what law they will use to impose the Brazil tariffs. But reporters tell me officials have indicated Trump will use the International Emergency Economic Powers Act of 1977 (IEEPA), which is also the statute at issue in the lawsuit against Trump’s “Liberation Day” tariffs, filed by the Liberty Justice Center and myself, on behalf of five small businesses harmed by this massive trade war.
The Brazil situation exemplifies why Trump’s use of IEEPA is illegal and harmful. Brazil’s prosecution of Bolsonaro is pretty obviously not an “emergency” or an “unusual and extraordinary threat” to the US economy or national security. Both of these conditions are required to invoke IEEPA. This situation just underscores the danger of allowing the president to define those terms however he wants, without any judicial review, as the administration claims he can.
Scott Lincicome explains that state-run supermarkets are “a (bad) statist solution in Search of a problem.” Two slices:
As we discussed in February, moreover, the U.S. grocery market is dynamic, diverse, and full of innovative new entrants eager to gain new customers and steal market share. Thus, traditional supermarket giants like Kroger and Albertsons have been steadily losing ground to newer, less-traditional players like Walmart, Costco, dollar stores (including their grocery spinoffs), Amazon and other online players, and Aldi, which is now the third-largest grocery chain in the country. The idea that there’s a broad “market failure” in the U.S. grocery business is simply ludicrous.
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Almost anyone living in a control state can attest to ABC stores’ awfulness, yet the systems persist because, as the Manhattan Institute’s Jarrett Dieterle documented in Virginia, they employ thousands of people (who are also voters), generate hundreds of millions of dollars in annual revenue for state and local coffers, and—in classic bootleggers-and-Baptists fashion—are often supported by both Big Alcohol and pro-temperance religious groups (not to mention local socialists). That’s an irresistible combination for the vast majority of state and local politicians, so these Prohibition-era relics remain—regardless of their consequences or consumers’ preferences.
The entire state liquor monopoly model, of course, was never intended to deliver low prices, wide selection, high quality, and more convenience—in fact much the opposite. Yet those things are exactly what we want from our supermarkets, and they’re something private players eagerly and successfully provide for a very modest fee. Injecting the state into such a system makes no sense.
GMU Econ alum Jon Murphy reflects on law & economics.
Mark Mix exposes Sen. Josh Hawley’s (R-MO) Biden-esque economic ignorance. A slice:
Ms. [Lina] Khan’s view is that federal bureaucrats’ role is to put the brakes on “private concentrations of economic power,” even if there’s no evidence that legitimate competition is being suppressed or consumers or workers are being harmed.
Ms. Khan is no longer in a position to implement her distorted vision of antitrust law, but some Republicans are eager to continue her crusade against successful businesses and their employees.
Foremost among them is Missouri Sen. Josh Hawley, part of a one-vote GOP majority on the Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights. In recent years, Mr. Hawley has frequently denounced business “monopolies” in industries that are highly competitive.
During a June 24 antitrust hearing, Mr. Hawley complained that four companies—Tyson Foods, JBS, Cargill and National Beef—together control roughly 80% of the U.S. beef market. “That’s a modern-day monopoly,” he later tweeted. This characterization is nonsense. The University of Missouri’s Thom Lambert, an antitrust specialist called out Mr. Hawley: “A ‘modern-day’ monopoly is apparently when four highly efficient firms, none of which holds a majority market share nor has the ability to control prices on its own, collectively possess a high market share.”
While Mr. Hawley makes a show of being enraged over high market concentration when it comes to business, he simultaneously supports rewriting federal law to make it even easier for union officials to grab monopoly bargaining power over American employees.
