GMU Econ alum David Hebert explains that “tariff exemptions are big business for big business.” A slice:
What Apple and scores of other companies make clear is that extra profits from excluding foreign competition (costs paid by American buyers) isn’t the only prize industry lobbyists are after. The largest companies run through the exact same rent-seeking process again. The second time through, they argue for exemptions from the very tariffs they backed. And this is where the real money can be made.
First, tariffs make importing goods more expensive. This, in turn, allows domestic firms to raise their prices without fear of losing market share. A tariff on steel, for example, leads to higher domestic prices for steel. Then, industries adversely affected by the tariffs lobby for exemptions for themselves. Apple has done this, but so too have other industries. On June 1, President Trump signed a proclamation that adjusted the Section 232 tariffs on steel, aluminum, and copper to help relieve farmers of some of their burden. One industry gets the protection of the tariffs while another gets exemptions, protecting them from the tariffs. A firm that wins an exemption can continue buying its inputs at the lower, world price while their rivals pay the higher, domestic price.
This isn’t a new phenomenon. During President Trump’s first term, the Commerce Department created a process by which firms could request exclusions from the Section 232 tariffs on steel and aluminum. By January 2021, 153,831 such requests had been filed by just 941 firms. Why such a small number of firms? Consider what it takes to actually file a request. You’ll need lawyers and trade consultants who know how to actually put together a well-formatted request and staff who know their way around a federal docket to make sure that the request reaches the correct person. Larger companies, with their Rolodex of contacts in Washington, can make sure that their requests reach certain people with whom they already have a standing relationship. Smaller firms have none of these. What’s more, domestic producers were allowed to object to a competitor’s request, meaning that not only were firms able to request exemptions for themselves, but they were able to sabotage one another’s requests as well.
Emily Ekins and Jonah Messinger report that working-class Americans aren’t sold on tariffs.
But even if we look past the mismeasurement issue inherent in the income share data, there is good reason to be upbeat about what the data is fundamentally pointing towards: a growing capital stock.
Importantly, the period of declining labor share has coincided with rising real wages, higher living standards, greater worker ownership of capital, and significant improvements in technological progress. But sadly, optimism doesn’t sell as well as doomerism.
CBO just released its latest “Distribution of Household Income” report (for year 2023), and the findings are – as usual – a narrative violation.
Real incomes up across the board.
Income inequality basically flat for decades.
Taxes falling for everyone except the rich.
The Washington Post chats with Reason‘s Stephanie Slade about the right’s wrong turn.
My insistence that my children get a good education is neither tawdry nor a bargain. It’s called being a good parent, and Ms. Hannah-Jones could and should have done it for her own child. Now, instead of asking hard questions about why her approach failed, she doubles down on her original thesis: racism.
Ms. Hannah-Jones and I both have children who are juniors in the New York City public schools. I also have two older children who graduated in 2024 and 2026, as well as a fifth-grader, so I have some comparison points Ms. Hannah-Jones lacks. My two eldest graduated from a school system that required Regents exams—subject-matter competency tests that measure students’ baseline proficiency and stress-test whether the system itself is serving students. My youngest two, like Najya, won’t have to take those exams because the “equity” movement Ms. Hannah-Jones champions won the day: The state Education Department has decided that the class of 2027 is the last that will have to pass the Regents to graduate.
I have also seen the effect of replacing state test scores, grades and attendance as admission rubrics for middle school and high school with lottery numbers. It did lessen the number of white and Asian kids in “good” schools and increase black and Hispanic enrollment. It also fueled the exodus of families of all colors from the school system. Ms. Hannah-Jones calls that racism in action. But city data don’t support her claim. The school system asked families why they left. Forty-one percent wanted a more rigorous education than the city’s public schools could provide. Of families who switched to charters, which overwhelmingly serve minority students, 46% cited the need for greater academic rigor. For families moving to private schools, 42% did.
Racial animus is Ms. Hannah-Jones’s blind spot, and it runs through everything else she won’t look at. The Mississippi Miracle—a decade-long, low-cost literacy overhaul that took the poorest state in the country from 49th to ninth in the nation in reading—never makes it into her articles. Neither do the charter schools that routinely outperform their district counterparts with similar students and less money.
If you care about improving outcomes for black students, you ought to ask how that happened. Ms. Hannah-Jones doesn’t, because she is sure she already has the answer to what ails New York’s schools: “wealthy white parents.” Najya figured out that parents like me were on to something when we championed meritocracy and selective schools. Her mother has a lot of lessons to learn.
