But there’s a far worse outcome from this that cannot be undone by courts, elections, or policy reversals. These new tariffs and their justifications have only served to further destroy the relationships with allies and trading partners that we had previously taken as given. The costs of this will outlast every tariff schedule, court ruling, and this administration. They won’t show up on BLS reports, BEA analyses, or Fed surveys. But they will be felt by every single American for years to come.
As a result of these tariffs, Japan, South Korea, and Australia now face 12.5 percent tariffs for their alleged complicity in using forced labor. China is in the same boat. Three of our closest allies are now accused of being just as negligent about slave labor as China.
Canada, the European Union, the United Kingdom, and Mexico now face 10 percent tariffs for their alleged forced labor practices. Canada and Mexico are, of course, also parties to the USMCA, a trade agreement that this very president negotiated, signed, and called “a colossal victory” only to then walk away from. That same week, the President hit Canada with an additional 50 percent tariff on goods ranging from “wine to hockey sticks to cement” regardless of whether or not those goods qualify under the USMCA.
So in the span of a week, the White House effectively told Canada, our closest trading partner and ally, that America’s word means nothing and then told them that they are complicit in forced labor.
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Foreign officials must now contend with an even clearer reality: not only is an agreement with the United States not worth the paper it’s printed on, but we will accuse you of horrendous practices if it means that an administration can re-impose tariffs. Our trading partners saw that the findings of investigations will be written to fit the desires of an administration instead of the facts on the ground. They learned that not only is America protectionist but that they will publish a serious moral accusation against a friend when doing so is politically convenient.
This changes how other countries will deal with us going forward.
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The trust that America enjoys took generations to build and is being spent at a record pace. In the meantime, the world is moving on and increasingly without us. Unfortunately, courts cannot restore what was actually lost this week. Judges can void tariffs and force refunds, but they cannot unsay an accusation.
Are Mercedes-Benz cars Chinese sleeper-cell spies? A bipartisan Senate bill treats the German luxury vehicles as such and would ban them from the U.S. market. This is political rent-seeking in the guise of national security.
The Senate Commerce Committee last week advanced a bill that would codify and expand Commerce Department restrictions on Chinese “connected” software in cars. This is a national-security concern, but self-serving union and corporate interests have hijacked the bill.
Most new cars are equipped with software that connects to the internet and scoops up data. This can include location data as well as audio and video recorded inside a car. Manufacturers and their software partners use these internet-connected systems to help drivers—say, by warning about road hazards ahead.
It’s not paranoid to worry that adversaries could exploit these systems. The Associated Press reported in 2018 that China had required electric-vehicle makers operating in that country, including foreign-owned companies like Tesla, to transmit real-time data on drivers for government monitoring.
Such concerns spurred the Biden Administration to ban the sale of “connected vehicles” if their manufacturers or software are controlled by Chinese entities. The regulation provides a process for manufacturers to appeal a ban and mitigate security concerns.
The Trump team last month barred new cars from EV maker Polestar (majority-owned by the Chinese Zhejiang Geely Holding Group and its founder) from the U.S. market. Volvo, which has the same majority owner, won an exemption for unspecified reasons. While political favoritism could bias national-security reviews, the Senate bill is more problematic.
It would ban manufacturers from selling cars in the U.S. if Chinese investors own more than 15% of shares unless they get a waiver from regulators. It would also prohibit “connected” software and hardware such as battery packs if they are supplied by Chinese companies or Chinese entities hold more than a 25% equity stake in their developers.
The first threshold targets Mercedes, which has two passive Chinese shareholders that together own 19.7% of shares. Commerce Committee Chair Ted Cruz says General Motors pushed for this threshold to hamstring a competitor for its Cadillac model. The United Auto Workers also wants to punish Mercedes for opposing the union at its plant in Alabama.
Mercedes employs some 7,500 workers in Alabama and South Carolina. This spring, it announced a $4 billion investment at its Alabama plant. The Senate bill would kill these jobs and investment. Yet it has drawn 32 co-sponsors, including 25 Republicans. As Mr. Cruz mused during the hearing, why do Republicans want to harm GOP-led states?
House Republicans left for summer recess on Thursday after passing a budget bill with as much substance as a beach novel. The tenuous GOP majority looks to have given up on serious spending and tax reforms this year.
Many Republicans seem content serving as tax collectors for Democrats’ welfare state and the bureaucrats whose jobs depend on it. They might consider that the rise of the socialist left coincided with an eruption in federal spending that began during the pandemic, with gobs of money flowing to state and local governments and left-wing nonprofits.
California is the biggest beneficiary of the lava of largess. Since 2020, federal Medicaid payments to the state have doubled to $134.5 billion, more than the general fund of any other state. The state also received hundreds of billions of federal Covid dollars in government aid, rental assistance, public transportation and more.
…..The GOP’s main “achievement” this year is a housing bill shepherded by Sen. Elizabeth Warren that creates a panoply of grant programs to funnel ever more taxpayer money to local governments and nonprofits. That means more power and employment for progressives like Ms. Raman and New York Mayor Zohran Mamdani’s housing czar, Cea Weaver (master’s in urban planning, New York University).
Republicans’ complaints about socialism will ring hollow as long as they persist in subsidizing them.
Kenneth Pringle writes that “Adam Smith’s ‘Wealth of Nations’ helped create the world’s wealthiest nation.” (HT Steven Kaufman). A slice:
Jefferson’s assault was political, arguing that a free people had the right to reject a tyrannical king. Smith’s was economic, asserting the right of all men to “truck, barter, and exchange”—that is, do business regardless of royal prerogatives.
To Smith (1723-1790), Wealth of Nations was a “very violent attack…upon the whole commercial system of Great Britain.” The market forces Smith unleashed would disrupt and shatter the mercantilist system practiced by Britain and the other European powers, a crown-directed strategy for hoarding gold. Free enterprise changed the equation.
A group of landlords has filed suit, arguing that the mayor’s office improperly interfered in what should be an independent regulatory decision. The board is also required to conduct an independent economic analysis before a vote, but the plaintiffs say the board had already made up its mind.
After her resignation in protest ahead of the vote, the board’s former landlord representative, Christina Smyth, said the members crossed a “legal line” because their vote wasn’t based on evidence.
A court overturning the rent freeze would be an economic gift for the democratic socialist, even if he doesn’t realize it.
New York’s rent-stabilized housing market is near its breaking point. Before the new policy, landlords were only allowed to raise rents 3 percent per year, which often did not cover maintenance costs. Nearly 60,000 rent-stabilized apartments in the city were vacant last year. That’s an increase of 8,000 from the year before.
Expect more vacancies when the freeze goes into effect in October. When San Francisco implemented rent controls in the 1990s, housing supply dropped by 15 percent.
