Jeff Jacoby eloquently argues that “the convictions that count are the ones that sometimes sting.” A slice:
What makes this problem worse is the increasingly common belief that only those who agree with us are legitimate participants in American life. Too many on the right write off their opponents as anti-American, while too many on the left see theirs as irredeemably bigoted or authoritarian. If you begin from the premise that dissenters are not merely wrong but illegitimate, then there is no reason to extend to them the rights or freedoms you claim for yourself.
But that mind-set drains principle of all meaning. Defending free speech only for your allies is like championing religious liberty only for your own faith: That’s not upholding a principle — it’s wielding a partisan cudgel, something that has become endemic in contemporary American life. So much of what bedevils our civic discourse these days, Goldberg writes, begins with “the premise that America is defined by our politics and, therefore, the people with the wrong politics are not Americans.”
The framework of a much-anticipated trade deal between the United States and the European Union was made public on Thursday. The deal locks in the 15 percent tariffs that Trump has imposed on most European goods imported into the U.S., but it also serves as a promise from the Trump administration not to target European goods with product-specific tariffs that could be announced in the coming weeks or months—including potentially huge new tariffs on pharmaceuticals, something the White House has been teasing for months. The deal also creates a pathway for the United States to reduce its tariffs on European cars to the 15 percent threshold, once the E.U. reduces some of its own tariffs on American industrial goods.
The international-trade economist Richard Baldwin appropriately excoriates Trump’s trade ‘policy.’ (HT David Levey) Two slices:
America is running a bold economic experiment. Call it “Economic Trumpism.” Its simplicity is breathtaking:
- Step 1: Put tariffs on everything from everywhere.
- Step 2: Hope the economy thrives.
No elaborate industrial policy. No bothersome planning. None of that old-fashioned stuff. Just a big, beautiful tariff wall to shield America from rapacious foreign competition.
Best of all? According to the administration, it costs not a penny! Just the opposite: it shovels billions into the Treasury’s coffers.
Now you know why President Trump thinks “tariff” is the most beautiful word in the dictionary.
Why didn’t anyone think of this before? Oh wait — they did. Economic Trumpism is not new. It has been tried before. And it has failed before. Not in recent times, but in ways that are well-documented.
Today’s Factful Friday argues that we shouldn’t think about Trump’s tariffs in the usual way. For half a century, tariffs have been used to protect particular sectors. The Trump tariffs, by contrast, stifle foreign competition across the entire goods-producing sector of the American economy. That difference matters. Tariffs that try to protect all sectors should not be thought of in the same way as a tariff that is aimed at protecting one sector.
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That brings us back to 2025. Unlike the developing nations of the 1960s and 70s, the US is already a fully industrialised, high-income economy. It does not need to “force” industrialisation behind tariff walls. Quite the opposite: it relies on global supply chains, advanced services, and integrated capital markets. Walling off the entire goods-producing sector is not just unnecessary, it is counterproductive. Especially harmful is the way the US is raising the cost of imported inputs like steel and aluminum. I’d guess that the US is now the most expensive place on the planet to manfacture many types of goods. The US is in the process of hobbling its own factories, raising prices for its own consumers, and pushing investment and innovation offshore.
National Review‘s Dominic Pino masterfully reveals some of the hidden damage done by Trump’s tariffs. Two slices:
Tariffs are a particularly destructive form of taxation that distorts market efficiency, raises prices, and reduces output. As you’ve no doubt heard many times by this point in Donald “Tariff Man” Trump’s presidency, economic theory demonstrates each of these effects clearly.
But maybe you think economists don’t know what they’re talking about and all those supply-and-demand graphs are witchcraft. What nonmarket reasons are there to oppose tariffs?
For one, they feed the swamp. Tariffs are a full-employment program for Washington attorneys and lobbyists. Analysis of lobbying disclosure forms by Advancing American Freedom (AAF) found that spending on tariff lobbying surged from $1.3 million in the second quarter of last year to $8.8 million in the second quarter of this year. That’s on top of $4.9 million in spending on tariff lobbying in the first quarter of this year, suggesting that more people are realizing that lobbying can pay off.
The number of tariff-lobbying disclosures has more than tripled since last year, AAF found. The average value of a tariff-lobbying contract has more than doubled. Cha-ching for D.C. steakhouses.
Who can afford to pay lobbyists? The big businesses that are probably going to make it anyway. If politicians create a system where a business can potentially make a $10 million or $100 million tax expense go away by paying some lobbyists $400,000 to knock on officials’ doors, the businesses that can afford it will do so. That’s a bargain, if you have the money, and worth a try even if it has a low probability of success. If your tax expense is only $400,000 to begin with because you buy far less than larger companies do, lobbying wouldn’t help.
What does help is being politically connected to Trump. A 2025 paper in the Journal of Financial and Quantitative Analysis found that during Trump’s first term, companies that donated to Republicans were more likely to receive tariff exemptions. It also found that companies that hired revolving-door lobbyists who had worked in the first Trump administration were more likely to receive exemptions.
If you care about manufacturing, you should care about small businesses. Ninety-eight percent of manufacturing companies in the U.S. have fewer than 500 employees, according to the Small Business Administration. They employ 4.8 million workers and are concentrated in the Midwest. Many of them import inputs for domestic production.
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The emergency that Trump claims as justification for tariffs is the existence of the trade deficit. Never before in American history has a national emergency been declared over a national accounting statistic. Even if you think tariffs are great, this is not a good way to do them.
If national accounting statistics can be national emergencies that unlock presidential powers, future Democratic presidents are going to have a lot of fun writing executive orders to lower the Gini coefficient, a measure of income inequality. There’s plenty of economic research to back up claims that income inequality is harmful to the country (much of it is bunk, but it nonetheless exists) — far more than there is research that says the same about the trade deficit. A presidentially decreed wealth tax or inheritance tax could follow the model of Trump’s presidentially decreed import taxes.
Taxes also interact with other taxes, especially in the United States, where every citizen lives in more than one tax jurisdiction. The spring 2025 Fiscal Survey of States, a report by the National Association of State Budget Officers, noted that many states revised their revenue estimates downward for fiscal year 2026 in part as a result of Trump’s tariffs. Trying to predict exactly how the tariffs will affect state finances is basically guesswork, as the tariffs have changed so frequently and are at levels not seen in nearly 100 years. But they certainly aren’t going to help.
Slower economic growth hurts state revenue across the board. Tariffs can hurt state corporate-tax collections by reducing profits. They can hurt state income tax collections by reducing jobs or hindering wage growth. They can hurt sales tax collections by reducing consumption.
William Baumol did many good things as an economist. But “Baumol’s Cost Disease” is a too-clever name for a matter of basic arithmetic: when productivity increases faster than demand in an industry, prices fall. And when demand increases faster than productivity in another industry, prices rise. It is simple arithmetic of relative prices, not a “disease” and not a profound discovery.
California gas prices could jump to $8 per gallon in 2026 thanks to the planned closure of two oil refineries in the state, according to an estimate by the University of Southern California.
Valero’s Benicia Refinery near San Francisco and Phillips 66’s Wilmington Refinery near Los Angeles are both slated to close in the coming year.
In explaining the company’s decision to close its Benicia refinery, Valero CEO Lane Riggs said on an earnings call that California’s tough “regulatory enforcement environment” was the main factor driving the closure of the state’s sixth-largest refinery.
The April announcement came six months after regional and state air regulators fined the company $82 million for exceeding toxic emissions standards for more than 15 years.
Meanwhile, Phillips 66 announced the closure of its Los Angeles refinery, the seventh largest in the state, just 72 hours after California passed ABX2-1, which requires refiners in the state to hold additional inventories of finished gasoline stock. The company attributed the closure not to any specific California policy but due to “long-term uncertainty” around the future of the refining business in the state.
Megan McArdle decries America’s escalating lawless lawfare, which is bipartisan. A slice:
This is a crisis for American democracy, because even if charges bear out in this case [against John Bolton], the fact remains that we cannot trust our officials to impartially administer justice. And if we can’t count on that, we are vulnerable to their punitive whims — a motivated prosecutor can usually find something to prosecute, even if they’re unlikely to win a conviction.
Those who believe in the value of neutral institutions must do everything they can now to protect the rule of law — and I’m afraid that doesn’t mean condemning just Trump. It also requires us to condemn Democrats who have violated norms of institutional neutrality in their zeal to get Trump.
