In both legal filings and in public, President Donald Trump and his team have made fantastical claims about the calamities that would befall the nation should the Supreme Court curtail his authority to implement global tariffs under the International Emergency Economic Powers Act. They allege, in the government’s opening brief for a case that will be argued before the court in November, that an adverse decision would devastate the U.S. economy, the federal government’s fiscal position, and the president’s ability to effectuate trade and foreign policy. The goal, it appears, is to pressure the court into issuing a favorable opinion for prudential and institutional reasons, even if the law demands otherwise.
Given the legal deficiencies in the Trump administration’s case, this shock-and-awe approach is understandable. Yet it suffers from a serious flaw: The underlying policy claims are ridiculous.
First, a ruling against the tariffs would not “lead to financial ruin,” as the government’s attorneys asserted in a letter to an appeals court. Between May and September, the tariffs were only around 4.5 percent of federal receipts. But even this effect is overstated because it ignores the slower economic growth and smaller tax base that the tariffs create.
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Meanwhile, revenue from the tariff collections under consideration by the court are just $89 billion thus far — a rounding error in a $30.5 trillion economy. The tariffs’ modest fiscal effects mean that invalidating them would have a modest effect on the market for government debt and related securities.
And virtually all professional economic analyses have concluded that unilateral tariffs — and related policy uncertainty — harmed the economy during Trump’s first term. In short, it would be impossible for the “catastrophic consequences” warned of during an earlier appeal to result from invalidating the new tariffs. If anything, we should expect a small but real boost to the economy — a conclusion that rising equity markets confirmed when lower courts found the tariffs to be illegal.
The administration also errs when contending that the tariffs are critical to the conduct of trade and foreign policy. Since the 1977 enactment of the International Emergency Economic Powers Act, the United States has completed 14 comprehensive free trade agreements with 20 countries, as well as two massive multilateral agreements at the World Trade Organization. (This includes Trump’s own U.S.-Mexico-Canada trade agreement, and the Trans-Pacific Partnership he jettisoned on the first day of his first term.) The United States has officially ratified 538 treaties over the same period. None of these deals involved IEEPA tariffs or the threat of them, nor did the Abraham Accords, which Trump considers a signature foreign policy achievement and framework for broader Middle East peace.
Your editorial “Reagan vs. Trump on Tariffs” (Oct. 27) begins by pointing out that Ronald Reagan and his legacy still matter to Donald Trump. There’s nothing wrong with that. The 40th president still matters to me too.
I’m not American, but like millions of Canadians I admire Reagan and his commitment to free trade, free markets and closer ties between our two countries. His friendship with another great leader, Prime Minister Brian Mulroney, set the stage for decades of cooperation and shared prosperity on both sides of the border.
The numbers don’t lie: Last year cross-border trade between the U.S. and Canada hit nearly $1 trillion. Every day, millions of Americans wake up, go to work and earn a paycheck making something for or providing a service to a company based in Canada. Together we have built the most secure, prosperous and mutually beneficial partnership between any two countries in the history of the world.
I believe that is Reagan’s legacy—built on free trade.
It’s now at risk. Tariffs are threatening millions of American jobs. They’re making life more expensive for American families, raising the cost of everything from homes to gas and groceries. They’re driving a wedge between Canadians and Americans when we need to be united against external threats from such adversaries as Russia and China.
Our government ran an ad featuring the words of President Reagan because we all benefit from being reminded of his wisdom. As the Gipper said, “protectionism” is “destructionism,” and the “way to prosperity for all nations is rejecting protectionist legislation and promoting fair and free competition.”
In 1987, President Reagan celebrated the new Canada-U.S. Free Trade Agreement by saying that it would “strengthen the bonds between our nations and improve the economic performance and competitiveness of both countries.” The pact, he added, would “provide an enduring legacy of which both nations can be proud.”
Rather than tarnish that legacy, let’s build on it. Mr. Trump called our ad a “hostile act,” but it was meant as an encouragement to embrace what has made our nations great. Together the U.S. and Canada can usher in a new century of shared economic prosperity by dropping tariffs, rejecting protectionism and promoting free and fair trade.
From President Donald Trump’s aggressive tariffs and acquisition of government stakes in industrial and tech businesses to Zohran Mamdani’s avowedly socialist New York mayoral campaign, politicians in 2025 are not shy about central economic planning. That makes the work of the acclaimed economist F.A. Hayek, including the “knowledge problem” he exposed as a fundamental flaw in such enterprises, as relevant as ever.
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Prices are the conduit through which this vital knowledge is communicated, Hayek argued, making unencumbered markets an almost-miraculous telecommunication system that aids us all in changing circumstances.
Why? Because prices are the result of the relentless push-and-pull among what consumers value, what sellers seek, plus supply chains, technology changes, resource availability, and every other conceivable factor. Setting a true market price—not having one dictated from on high—is done only after these unknowable forces have been incorporated into the marketplace and felt, directly but more often indirectly, by the seller.
The price system works because of private property and freedom of contract, which are the antithesis of central planning.
Property ownership creates high-powered incentives to husband resources efficiently. We don’t waste what we—as opposed to someone else—pays for. Profits, enabled by the freedom to buy and sell our goods or labor to whom we choose at the price the market determines, lure us into attractive ventures. Losses discipline us when conjectures prove to be mistaken.
This system, always adjusting and unfurling, gives us, as economic decision-makers, constant feedback. It allows us to plan—to know whether to rent an apartment for the next year or buy a house that will last us a lifetime, go to trade school or college, hire five employees or 10, to build 100 cars or 200—and have the best possible chance of success.
The key point Hayek was trying to get across to his fellow economists was that the ability to mobilize the ordinary behavior of individuals in society, to make the most of our physical resources, and to utilize the knowledge and talent scattered throughout society requires not more.
Democrats keep voting against opening the government or even for GOP bills to pay some federal workers. They assume they can extort the GOP into extending enriched ObamaCare subsidies that were sold as temporary pandemic support. You can understand how Democrats got this idea.
Since the GOP failed to repeal the Affordable Care Act (ACA) in 2017, Democrats and the press have shut down GOP debate about healthcare by warning that those with a pre-existing condition will be uninsured and destitute without ever-growing subsidies. Yet this Democratic doom loop isn’t having its usual effect this time, and that’s in part because the party is unintentionally reminding voters of the law’s manifest failures and bad incentives.
Take a recent social-media post from Democratic Sen. Amy Klobuchar of Minnesota. If Republicans don’t extend the turbocharged subsidies, she warned, “early retirees like Bill & Shelly will see their health insurance premiums increase nearly 300%—from $442 to $1,700.”
Wait. Early retirees? This is a tacit admission that ObamaCare encourages Americans to stop working. The Biden subsidies turbocharged that incentive by making subsidies larger and available even to those with incomes above 400% of the poverty line. The couple in Ms. Klobuchar’s example had north of $130,000 of income in 2024, mostly from pensions, according to the media article.
Arnold Kling offers these sobering thoughts.
