The last defense of tariffs is the manufacturing renaissance, but we should check the dates. Of the roughly 72,000 manufacturing jobs added this year, some 57,000 came after May, when the Court of International Trade ruled against the Section 122 tariffs the president implemented immediately after the Supreme Court struck down his International Emergency Economic Powers Act tariffs in February. The last time this pattern happened, businesses found themselves eligible for tariff refunds. In June, Mr. Trump walked back tariffs on steel, aluminum and copper. The job growth credited to “tariffs” happened as the tariff agenda was being dismantled by courts and abandoned by the president himself. And the growth in manufacturing is concentrated in areas that face the lowest tariffs, while the most protected industries grew little or even shrank, as Cato’s Scott Lincicome found.
Republicans will spend the next two years arguing about what went wrong. They could start with their failure to listen to what they were told. Economists spelled out the cost of tariffs in advance, and voters paid for them with every purchase. The only people who missed the warnings were the ones who preferred not to look.
Introductory Economics students likely remember, for example, that demand for labor depends on the productivity of labor. When labor is more productive, employers are willing to pay more (raise wages). But what boosts productivity? Most notably, task specialization! And specialization depends to a great degree on how big the market is. The more economic participants there are, the more we can support specialization and upskilling, raising the productivity of each hour of labor, whether immigrant or native-born. By increasing the market’s size, immigration can increase specialization in ways that make the demand for labor shift more. But that requires open markets and low barriers to entrepreneurship, so people can rapidly move to invest in their own productivity and comparative advantages.
One lesson, though, maybe hasn’t been learned well enough, even despite the education that Vladimir Putin’s Russia has put us through. Much of what authoritarian states consider worthwhile intelligence activity has nothing to do with information-gathering. It has nothing to do with recruiting agents. It has everything to do with sowing social-media and news-media confusion, exploiting our algorithmically compliant publics and politicians to create turmoil in Western societies.
AI technology has exited the barn irretrievably, rendering many flavors of AI doom academic. The job of humanity is to keep stepping forward with all the care and foresight it can muster in the name of civilization, which at last report is known to exist on one planet. Mr. Trump and Nvidia’s board may well decide the next job is saving Mr. Huang’s CEOship. Unfortunately he doesn’t have an Al Gore on his board. Mr. Gore, at a crucial moment, intervened with a whitewash report in late 2006 to save Apple’s Steve Jobs from the options-backdating furor then taking down many less-protected or more-dispensable CEOs.
The U.S. press is in full-tilt hysteria. Congressional members of both parties clamor for a chance to bank TikTok-ready clips of themselves grilling Mr. Huang about his connections to China and Mr. Trump, as if this would somehow advance U.S. national interests. Don’t overlook the possibility that China’s government, whatever it intended when starting out, will consider this a useful outcome from its Jensen Huang caper.
John Puri argues that “the China-Nvidia chip Deal is even dumber than you think:
Dan Foster writes about how the president’s possibly extortionate “deal” with Nvidia has allowed ostensibly commercial Chinese firms to acquire the company’s advanced AI chips. Spoiler alert: These ghost firms are almost certainly fronts for the Chinese military and its contractors.
Trump’s agreement, which I fully lambasted last year, allows Nvidia to sell its H200 semiconductor to companies in China — circumventing U.S. export controls also imposed by the Trump administration — in exchange for the federal government’s receiving 15 percent of the sales revenue. Sounds like a horrible deal to me, but at least we’re getting something out of it, right?
Except maybe we aren’t. While the formal regulations needed to green-light Nvidia’s exports have been finalized, no regulation implementing the revenue-sharing agreement has been codified — probably because it’s so unheard of that no one knows how to write such a rule that could withstand scrutiny. So the government has not been receiving 15 percent of Nvidia’s China sales after all.
Instead, the administration has imposed a 25 percent tariff on advanced AI chips, and mandated that Nvidia’s H200 chips be routed from Taiwan to the United States to pay the duty before going to China. Whether this tariff revenue equates to 15 percent of ultimate sales is unclear.
Here’s what we do know: A “policy” that needs to jump through such ridiculous hoops to be implemented is one that mocks itself.
David Rose is right: “America would not exist without our strong culture of entrepreneurship.”
