The Editorial Board of the Wall Street Journal decries Trump’s destructive – and lawless – obsession with tariffs. Two slices:
Tariffs are an obsession for President Trump, much as climate was for the Biden Administration. How else to explain his imposition of yet another round of border taxes three months before the November election despite their political unpopularity and economic harm?
The Administration late Thursday unveiled new tariffs under Section 301 to replace the President’s Section 122 tariffs that were lapsing. These latest duties will affect some 60 economies, hitting nearly all U.S. imports, with rates from 10% to 12.5%, and they come on top of a slew of other border taxes. Wait, didn’t the Supreme Court strike down Mr. Trump’s tariffs in February? Only the emergency tariffs.
He later whipped out Section 122. A federal court this spring held that those are also illegal, but an appeals court allowed them to stay in place as litigation continues. But the law limits those tariffs to 150 days, and they expired Friday. Enter Section 301.
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Mr. Trump doesn’t seem to care about the damage since tariff costs are dispersed across businesses, consumers and workers. Customs duties have raised $163 billion in the current fiscal year through June, which excludes some $70 billion in emergency-tariff refunds. That’s a big tax increase.
Mr. Trump’s tariff defenders point to the buoyant stock market as evidence that his border taxes aren’t harmful. But last year’s tax bill—especially the business provisions like full investment expensing—has offset some of the damage from his tariffs. So has the AI investment boom.
Imagine how strong the economy would be without the tariffs and their uncertainty for business. Americans remain unhappy about the economy, and higher prices are a big reason. They know that tariffs are adding to their pain even if they don’t see the cost as a line-item on a bill. Republicans could pay the price in November.
Section 301 directs USTR to target foreign practices that injure U.S. commerce and to achieve a change to or the removal of the offending policy (some history here). If these tariffs really were about eliminating forced labor, USTR would offer to completely remove the tariffs if targeted countries implemented new laws or demonstrated tighter enforcement. (Indeed, Canada, the European Union, and Mexico all maintain or are implementing forced-labor import bans, and the EU’s arguably reaches further than America’s.) Yet USTR offers no benchmarks that a country could meet to see the tariffs eliminated. A country could even adopt the United States’ exact forced-labor framework and still see its imports tariffed—because tariffs are the point.
Arnold Kling writes insightfully about finance. A slice:
Think of economic activity as your body moving. Think of financial intermediation as your lungs breathing. Moving fast makes your lungs work harder to take in oxygen. That is causality going from your activity to your lungs. Having impaired lungs that do not work well will slow you down. That is causality going from your lungs to your activity.
Phil Magness writes insightfully about Marx and “alienation.” A slice:
Instead, bibliometric evidence, such as the word diagrams above, illustrates the obvious: alienation theory is a modern invention stemming from manuscripts that remained inaccessible and unknown until the mid-20th century. Marxist theorists in that era desperately needed to plug the hole from the collapse of surplus value theory in the economic realm, and the newly-available concept of Entfremdung became their improvised solution.
Rather than suffer the dual discrediting effects of scholarly rejection by most economists and the disrepute brought by the revelation of Stalin’s human rights abuses, Marxism gained a new life in the 1960s by way of a timely reinterpretation of its core doctrines. Untethered from the surplus value basis that the historical Marx imposed upon his own economic system, his followers reinvented him as a sociologist and philosopher of the human condition.
No longer bound by the judgment of peers and practice from the political–economic realm, today’s socialists proceeded as if Marx’s theories had emerged intact after almost a century of withering scrutiny by claiming to find a novel basis for them in alienation theory. It is sufficient for Zohran Mamdani, Alexandria Ocasio-Cortez, and other Democratic Socialists of America politicians to appeal to alienation as a pretext for a sweeping Marxist overhaul of the American economy. It matters not that socialism draws its strongest support from a niche segment of well-educated Millennials (recent survey data show that socialism’s favorability is higher among people who have college degrees and especially postgraduate degrees). Alienation theory makes Marxism available to anyone, even the bourgeoisie.
Milei made tacking inflation a top priority. When he took office, the monthly inflation rate hovered around 25 percent. Last month, it sat at 1.9 percent. Milei also tackled the country’s persistent fiscal deficits and reported a modest surplus just a year after his inauguration.
This makes life better for Argentines. It also offers a model for other stagnant economies looking to rebound.
