There he goes again. President Trump on Monday raged against Canada on the social-media heath, threatening it with 50% tariffs on autos and auto parts. What does he have against U.S. car makers?
Mr. Trump is angry that Canadian Prime Minister Mark Carney over the weekend vowed to retaliate dollar-for-dollar against his latest tariff barrage. “Canada has been ripping off the United States of America for years,” Mr. Trump wrote. “On January First, 2027, Tariffs on all Cars, Trucks, both large and small, Automotive Parts, and Steel, will be increased to 50%.”
The Jan. 1 date suggests that Mr. Trump probably isn’t serious. No doubt he understands that a 50% tariff would hurt U.S. auto makers more than it would Canada. Ford Motor CEO Jim Farley last year warned that Mr. Trump’s 25% emergency tariffs on Canada and Mexico would “blow a hole” in the U.S. auto industry, and he was right.
Thus the Administration exempted autos and other goods covered by the United States-Mexico-Canada trade agreement from his emergency tariffs. Mr. Trump’s 25% national-security tariffs on autos and parts also include carve-outs for U.S.-made parts and other emollients for U.S. auto makers with cross-border supply chains with Canada and Mexico.
Canada exports about $50.4 billion in vehicles and parts to the U.S. each year, notably to Michigan ($22.1 billion) and Texas ($14.8 billion). Mr. Trump’s 50% tariff would amount to a $25 billion tax on U.S. auto makers, their suppliers and customers—namely, buyers of large pickups assembled in Canada.
John Puri of National Review reports on Trumpians’ detachment from reality regarding tariffs and prices. Two slices:
Over the weekend, many Republican lawmakers found the one issue on which they could break with President Trump: beef taxes.
Trump announced on Friday that he would raise the longstanding quota for beef to enter the country under a reduced tariff rate. Previously, only 697,000 metric tons of beef could be imported from countries other than Mexico and Canada under a modest duty of 4.4 cents per kilogram. The administration is allowing 300,000 more metric tons under this quota for three months — coincidentally through the midterms. Above the quota, beef imports are subject to a 26.4 percent tariff.
If the president were capable of embarrassment, he might be bashful about cutting tariffs to bring down costs for American consumers. (What does hiking tariffs do, then?) Regardless, he is recognizing what I wrote months ago: Beef tariffs exist to increase beef prices.
Republicans from ranching-heavy states also recognize this. Because every price is someone else’s income, cattle producers have greatly benefited from the higher beef prices that are angering grocery shoppers. Members of Congress who represent those ranchers don’t want those prices to fall because of foreign competition.
Senator Deb Fischer (R., Neb.) says she is “extremely disappointed by this decision from the White House. We all want lower grocery prices, but as I’ve said for months, we cannot do it at the expense of American producers.” Translation: She would like beef prices to be low and high simultaneously.
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Protectionism is so politically seductive — and so vehemently defended once implemented — because its benefits are highly concentrated and its costs, though they are often far greater, are diffuse. Lower beef prices may benefit every American a little bit, but they would more visibly hurt the small percentage of Americans who raise cattle. Forced to choose between them, politicians will usually serve the squeakiest wheel. That becomes a political problem, however, when a thousand different price-increasing policies add up, making the public inclined to vote on affordability writ large.
Clark Packard reviews the long, sorry record of U.S. tariffs on steel. A slice:
Writing in the fall issue of American Affairs, Rep. Riley Moore (R‑WV) argues that American deindustrialization was a choice—that Washington refused to protect the steel industry and that a West Virginia steel mill and others like it died because of choices made by policymakers. He proposes much higher tariffs, direct federal investment through a new industrial bank modeled on the Development Finance Corporation, the enactment of the Defense Production Act to speed up permitting, and a requirement that the Defense Department buy more specialized domestic steel.
History supports neither the argument nor the remedy. Protection has virtually never been withheld from the steel industry. It was granted continuously for six decades, and the legacy mills declined anyway.
Also discussing the U.S. government’s fiscal incontinence are some of the top minds at Reason.
In the early 1900s, when Congress was figuring out how to regulate broadcasting over a newfangled invention known as radio, it faced a crossroads. It could extend existing ideas about private property to a new domain. Or it could reject that in favor of a quasi-socialist system prone to government efforts to restrict speech and freedom.
ABC can tell you which one it chose.
Under the system set up a century ago, a government agency, initially the Federal Radio Commission and since 1934 the Federal Communications Commission, issues licenses for broadcast frequencies. Who gets these is based not on market forces but rather on what the FCC deems the public interest. Broadcasters don’t actually own their frequencies — licenses must be renewed after a set term — and they can’t transfer them without FCC approval. This system has long since been expanded beyond radio to broadcast TV.
When it created this regulatory regime, Congress was guided by the premise that broadcast frequencies are scarce and many people want to use them. There was a need, the thinking went, for an orderly way to assign frequencies so that multiple users wouldn’t overlap on the same one.
But allocating scarce resources is what markets do. When radio pioneers broadcast programming on a certain frequency, they were transforming a sliver of the electromagnetic spectrum — something owned by no one — into a valuable resource. Remove the hand of intrusive government, and this first-mover claim ought to have conveyed ownership. Left alone, a market for frequencies would have developed naturally, with prices determined by supply and demand.
In this alternate reality there would still be a role for government, which would use its enforcement power to punish interlopers and facilitate the functioning of the market. Broadcast on a frequency owned by someone else? You’re trespassing. Attempt to gobble up a critical mass of frequencies? Welcome to an antitrust lawsuit. But Congress was spooked by the powerful new technology of radio, and the heavy-handed speech-policing system America has today was born.
A 1959 paper by renowned economist Ronald Coase isolated the fallacy at the heart of the FCC regime. Every valuable resource is scarce, Coase noted, but scarcity doesn’t give government a right to control it — at least not in the United States. Coase traced the history of FCC licensing and found that skeptics of government control were ignored as the FCC got rolling; after that regulators couldn’t imagine doing things any other way. Bad economic reasoning got government off on the wrong foot, and then it stepped into cement, which hardened around the mistake.
The Trump administration’s apparent attempt to use the lever of FCC licensing to move the broadcaster’s coverage in the direction it wants, now the subject of a federal lawsuit, lies directly downstream from that.
In the process of issuing and renewing licenses, the FCC has the power to review broadcasters’ content to ensure it is serving “the public interest.” It’s this eye-of-the-beholder requirement that the agency uses to take steps that would be obvious violations of the First Amendment in any other context.
My Mercatus Center colleague Alden Abbott warns of the perils of backdated antitrust.
John McWhorter writes wisely about the tragic saga of Jason Arday. Two slices:
But Arday ended up retailing his fictions in modern academia, a world with a burning desire to celebrate blackness and demonstrate its antiracism. No one is on record having chuckled in the corner that hiring Arday at Cambridge University will “give the place a little color,” in the fashion of the old sitcoms. Nonetheless, it’s impossible to avoid the reality that Arday’s color was the crucial factor in his elevation. His scholarly work was insubstantial, a judgment that would be fair even if it hadn’t turned out to be plagiarized to such a degree. Yet he was granted a Ph.D. (the title of his dissertation has a glaring typo) and several honorary degrees, asked to give various keynote addresses, regularly invited on radio and television, and made the equivalent of a full professor at Cambridge University at 37. It’s inconceivable that a white person would be elevated to the pinnacle of the profession—especially a Cambridge professorship—with such a thin record.
Then there was his wildly improbable life story: suffering both a brain tumor and a stroke, yet passing his dissertation defense immediately after recovering from them, despite having lost all memory of what he wrote; suffering from epilepsy, autism, and Asperger’s; not speaking until 11 and not reading until 18; playing championship-level ping-pong despite his many handicaps; being threatened at his Cambridge office by masked, armed men, mysteriously unrecorded by CCTV cameras; discovering that a pig’s head had been sent to his parents; running marathons at world champion-level, including doing so with a leg swollen to twice its size; and so on. Frankly, all of this is so incredible, in the literal sense, that a white scholar making these claims would almost certainly have been instantly dismissed as a fabulist. But Arday was black, and the whites around him considered it more important to be seen elevating him—especially as he was someone claiming past hardships—than viewing his claims as the fables they were.
This was tokenism.
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Today’s wokenism is no more justified than yesterday’s tokenism. We must face reality. If there are no truly excellent black candidates for a post, giving it to one more white person may feel frustrating—but it is always better than the dehumanizing patronization of naming a token black person.
Fifty years ago, this was conventional wisdom. It’s one of those cases where we should heed our elders.
