The past decade has witnessed significant changes in U.S. international trade policy. In his first presidential term, Donald J. Trump moved the United States away from long-standing policies of lowering trade barriers to facilitate global commerce and replaced them with a more restrictive version not seen since the early twentieth century. President Trump’s more trade-restrictive policies were largely extended by his successor, President Joseph R. Biden. The first year of President Trump’s second term has indicated a strong desire to restrict imports further in an attempt to create U.S. manufacturing jobs and reduce reliance on Chinese imports. This Article seeks to (a) situate recent changes in U.S. trade law and policy in a historical context, (b) argue that free trade policies are more consistent with America’s traditions of individual liberty than protectionist ones, (c) argue that free trade policies on balance better serve U.S. economic interests, (d) recommend changes to U.S. trade policies to enable their benefits to be more broadly shared, and (e) argue that changes in certain non-trade policies are needed to address real and perceived problems with post-World War II trade policies.
Vance Ginn reports from last week’s AIER conference, in DC, on trade.
According to a recent study by New York Federal Reserve Bank economists, Americans bore 94 percent of the tariff cost in August 2025. In contrast, foreign exporters only bore 6 percent of the tariff incidence in the form of lower import prices. By the end of the year, that figure was up to about 14 percent—indicating that U.S. importers were having some modest success passing on a portion of their tariff burden to foreign suppliers.
According to the Yale Budget Lab, the pass-through of tariff costs to U.S. consumers has increased over time. By the end of 2025, it was about 76 percent, and as high as 100 percent for many consumer durables. At his press conference on March 18, Fed Chair Jay Powell said that tariffs were adding between half a percent and three quarters of a percent to the inflation rate. This accounts for much of the Fed’s overshoot of its 2 percent Personal Consumption Expenditures (PCE) inflation target. Estimated using another standard inflation metric—the Consumer Price Index (CPI)—the tariff contribution is slightly higher, averaging 0.87 percentage points in February.
Last September, the Trump administration imposed a staggering $100,000 fee for new H-1B visas via presidential proclamation—up from just a couple hundred dollars previously. Subsequent guidance from the U.S. Citizenship and Immigration Services clarified that the $100,000 charge applies only to new H-1B petitions filed on or after September 21, 2025, for workers outside the United States and lacking a valid H-1B visa (so-called “initial employment” petitions). The fee does not apply to renewals, extensions, amendments, or visa holders already here and switching over to an H-1B—a significant carve-out that limits the fees’ damage but certainly doesn’t eliminate it. The fee also must be paid before a petition is filed, with no guarantee of a refund even if the application is denied. (This hints at a broader problem with many immigration-related fees today, as my Cato colleague David Bier just documented.
As one immigration lawyer put it: “The easiest way to think of this fee is as a tariff on the importation of labor.” The analogy couldn’t be more apt.
For starters, the fee’s rollout was a chaotic mess. The proclamation dropped on a Friday evening and was so vague that it created immediate panic among H-1B holders and their employers, with some confused workers demanding to deplane flights out of the U.S. or cutting trips abroad short to rush back here before the Sunday deadline. Clarifications about the fee’s coverage and implementation tumbled out over the following days, and they continued for weeks thereafter, generating needless legal costs and uncertainty and disrupting hiring plans for thousands of U.S. employers.
Those problems, unfortunately, were just the tip of the iceberg.
The most obvious issue is that, contrary to White House claims in September that “all big companies” were on board with the new fee and that it’d raise lots of money, almost no one has actually been willing to pay it. As Bloomberg Law reported in late February, in fact, only 70 U.S. employers have thus far paid the fee for just 85 workers—an 87 percent decline in these H-1B petitions versus the same period last year, representing thousands of workers not getting hired.
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Big companies, meanwhile, have more options than the little guys do, and that includes moving work offshore. As we’ve discussed here, research consistently finds that large firms respond to U.S. restrictions on H-1B visas not by hiring more Americans but instead by expanding their operations in India, Canada, and elsewhere. History appears to be repeating, with news of large U.S. firms in tech/AI, retail, finance, pharmaceuticals, and other R&D-heavy industries responding to the new visa fee by freezing or restructuring U.S.-based hiring and by increasing headcounts in India, Canada, and elsewhere. Increasing the cost of foreign hiring doesn’t automatically increase demand for domestic hiring, and it appears we’re relearning this lesson again.
The Washington Post‘s Editorial Board warns against government subsidization of sports stadiums. A slice:
The usual argument for stadium subsidies is that they bring new economic activity to cities and help create jobs and revitalize neighborhoods. This argument is usually specious; football stadiums are empty most days of the year, and the money people spend at stadiums probably would have been spent at other businesses anyway. Economic research consistently finds that stadium subsidies are terrible public investments.
Arnold Kling encourages us to think in terms of the moral-dyad model. A slice:
If you think of Meta and Google as unfeeling, all-powerful agents and you think of the woman as helpless and hurt, then you are seeing the case in Moral Dyad terms. In my opinion, the Moral Dyad is the most under-rated model in all of social psychology. I think everyone should know about this model, which is why I am writing yet another essay about it.
The Moral Dyad model was propounded by Daniel Wegner and Kurt Gray in their book The Mind Club, published in 2016. (I reviewed their book here.) Their research sought to determine how we view the minds of other human beings.
What they found was that there are two clusters of beliefs that we hold about other humans. One cluster concerns agency. We think of other humans as having the ability to make choices, form plans, and work toward goals.
The other cluster concerns feelings. We think of other humans as having the capacity to experience sensations. We are especially inclined to notice when other humans feel pain.
Gene Healy makes clear that “there are far too few checks left on executive power.”
