Before last week’s expanded tariff announcement, experts were sounding the alarm on the effect that Trump’s trade war could have on America’s power grid. The new list has industry leaders worried again about what lies ahead. “The updated trade policies have clearly added complexity and cost,” Ted Simpson, vice president of marketing at Hammond Power Solutions, the largest manufacturer of dry-type transformers in North America, told tED Magazine. “While we’ve developed a solid understanding of the new measures, we’re still progressing along the learning curve.” Simpson did add that he’s “confident” in his company’s ability “to adapt quickly.”
Vance Ginn explains “why Americans should fear Washington in Intel’s boardroom.” A slice:
Some conservatives defend these arrangements as “strategic.” They argue that America cannot afford to rely on foreign suppliers for semiconductors, rare earths, or steel. National security, they insist, justifies extraordinary measures.
But once government crosses the line into equity ownership, the game changes. It’s no longer about setting fair rules of the road—it’s about Washington joining the race as a participant. That undermines competition, politicizes corporate decisions, and exposes taxpayers to risks they never agreed to take.
It’s a good thing we have President Donald Trump and his administration to stop the spread of Mamdani’s socialist agenda. Instead of having the government take greater control of private companies the way Mamdani wants, the administration is having the government take greater control of private companies the way Trump wants.
In the spring, Trump negotiated “golden shareholder” status for the government in U.S. Steel in exchange for approving its takeover by Nippon Steel. With the golden share, the administration has the power to outvote all other shareholders on the issues of relocation, transferring production or jobs outside the United States, closing or idling plants, employee salaries, and sourcing raw materials outside the United States.
It’s a free market as long as U.S. Steel executives and board members get a permission slip from the president. Then they’re perfectly free to do whatever he wants.
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Remember, Mamdani wants the government to intervene in the decision-making of private corporations in the bad ways, but Trump wants the government to intervene in the decision-making of private corporations in the good ways. Mamdani wants to control the means of production; Trump just wants to be the largest shareholder in the means of production. It’s totally different!
Some conservative thinkers about economics, who are usually big Trump fans, are having a hard time with the Intel deal. Stephen Moore joined Larry Kudlow’s Fox Business show on Friday, and when Kudlow asked, “How about the U.S. government owning 10 percent of Intel?,” Moore threw his head back and erupted in laughter.
“I hate corporate welfare!” Moore said. “That’s privatization in reverse! We want the government to divest of assets, not buy assets! So terrible, one of the bad ideas that’s come out of this White House.”
Kudlow concurred: “I am very, very uncomfortable with that idea.”
But remember, Republicans: We’ve got to stop Mamdani because he’s a socialist — because the last thing we need is someone in power calling for even greater government intervention in the private sector. People might start to get ideas.
We know from history what happens to central banks that become arms of politicians. See inflation in Turkey under President Recep Tayyip Erdogan and in Argentina for decades. Richard Nixon jawboned then Chair Arthur Burns to keep monetary policy easy, and the result was the 1970s great inflation.
Mr. Trump doesn’t even need this legal brawl because he is already getting his way on interest rates. Mr. Powell signaled as much Friday in his Jackson Hole speech. The Fed has made many policy mistakes—not least being too late to raise rates when inflation heated up during the pandemic—and this is one reason it is politically vulnerable to Mr. Trump’s attack.
But if he wants to change the Fed, Mr. Trump has ample opportunity through appointments to the board, including a successor for Mr. Powell as chair next year. That doesn’t seem to be enough for Mr. Trump, who in his afflatus thinks he can run monetary policy. Has he considered what a politically malleable Fed might do when the progressive left takes charge under another President?
Burke Smith explains that “price controls are not the answer to high drug costs.” A slice:
But his May 12 executive order, which pledged to take “aggressive action” against high-charging drug firms, may not deliver on that promise. The order directs the Department of Health and Human Services to communicate to drug manufacturers the administration’s desire that they target most-favored-nation (MFN) pricing in the United States. That means that they must align U.S. prices with the lowest offered in “comparably developed nations.” If companies don’t make “significant progress” toward that goal, the order directs HHS to propose regulations “to impose most-favored-nation pricing.”
The White House hopes the order will cause other countries to raise prices, responding to drug-company pressure. Research suggests that if each drug had a single price across all high-income countries, U.S. prices would fall by half, while other countries’ prices would rise by between 28 percent and over 300 percent. But there are practical reasons to think that this may not happen.
First, the Trump administration is on shaky legal ground. During Trump’s first term, HHS promulgated an interim final rule to impose MFN-style price caps that was struck down in the courts due to noncompliance with notice-and-comment rules. Additionally, HHS may not have the statutory authority to impose price controls, particularly in private markets outside of Medicare, Medicaid, and CHIP.
Further, the MFN model may not actually lower prescription drug costs. The pharmaceutical industry could respond to the president’s order in several ways to mitigate the impact. Its options include limiting supply or manipulating prices in foreign countries, pursuing U.S.-only drug launches, and adjusting rebate agreements with middlemen. Agreements between drug manufacturers, private payers, and pharmacy benefit managers can be adjusted to change rebate structures, raising out-of-pocket costs with higher premiums and copays to make up for price reductions.
The order fails to anticipate dynamic market responses. Companies could delay foreign launches to avoid setting low reference prices, manipulate pricing across markets, or engineer artificial shortages. Most importantly, for the White House to enforce the order, it would need to master the intricacies of global pricing, fluctuating currencies, divergent policy frameworks, and varied health systems. Policing international pharmaceutical prices is nearly impossible—and only invites firms to game the system.
David Splinter looks at the taxes paid by the “top 400” richest Americans. (HT Tyler Cowen)
