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Ilya Somin, a GMU colleague from over in the Scalia School of Law, explores the Trump administration’s petition to have the U.S. Supreme Court quickly consider the appellate court’s ruling that the tariffs that Trump imposed under IEEPA are unlawful. Two slices:

Earlier this week, the Trump administration filed a petition for certiorari urging the Supreme Court to review the Federal Circuit decision in the case challenging the president’s massive “Liberation Day” tariffs, brought by the Liberty Justice Center and myself on behalf of five small businesses harmed by the tariffs (we were later joined by leading constitutional law scholars and Supreme Court litigators Neal Katyal and Michael McConnell). The government also submitted a motion for expedited review.

Today, we submitted a response to the petition, in which we agree the Supreme Court should hear the case and resolve it quickly, so as to put an end to the harm caused by the illegal tariffs as quickly as possible. We previously prevailed in the Court of International Trade, and on appeal in the Federal Circuit, and I hope the Supreme Court – should it take the case – will rule the same way.

…..

We have presented an assortment of more detailed reasons why “no” is the right answer to the central question raised by this case: the fact that IEEPA doesn’t even mention tariffs and has never previously been used to impose them, that there is no “unusual and extraordinary threat” of the kind required to invoke IEEPA, the major questions doctrine, the constitutional nondelegation doctrine, and more. These points are covered in much greater detail in our various legal filings (see the Liberty Justice Center site for a compilation), and in some of my earlier writings about the litigation.

Reason‘s Eric Boehm explains that “Trump’s tariffs face a major ‘Major Questions’ problem at the Supreme Court.” A slice:

But if that’s true, IEEPA could be read to allow the president to do literally anything in response to any declared “emergency,” no matter how much of a threat it actually poses—and by declaring trade deficits to be an emergency, Trump has already stretched the meaning of the word to new limits.

The situation is not much different than when the Biden administration claimed the power to forgive all student loans because Congress had once passed a law allowing limited student loan forgiveness for 9/11 first responders. The Supreme Court, in that case, leaned on the major questions doctrine in ruling that executive power should be construed narrowly, not broadly.

It should do the same here. Rather than tying itself into knots to affirm nearly unlimited executive powers over commerce, the Supreme Court should tell the Trump administration to get permission from Congress before imposing new tariffs.

Pierre Lemieux argues that “the whole protectionist doctrine is a sham or an absurdity.”

Scott Lincicome shares evidence that, while the promise of AI is buoying some parts of the U.S. economy, Trump’s tariffs are battering other parts: “areas of the domestic economy most affected by tariffs from factories to retailers have actually been shedding workers since May.”

The Wall Street Journal‘s Editorial Board reports that Trump’s tariffs punitive taxes on Americans’ purchases of imports and import-competing products (most of which are inputs used in production) are beginning to inflict harm on U.S. automakers. A slice:

President Trump says that foreign countries, not Americans, will pay his border taxes. But a new analysis by Anderson Economic Group shows how his auto tariffs on Mexico and Canada are starting to bite U.S. auto makers and will soon hit consumers.

Mr. Trump in March slapped 25% tariffs on autos and parts in the name of protecting national security. Oh no, an invasion of Mexican Chevys! Manufacturers rushed to import parts and stockpile inventory to dodge the tariffs, but they started to face the full tariff impact in July.

Anderson Economic Group reports that tariffs on Canadian and Mexican cars and parts totalled $1.4 billion in July alone, about two and a half times the monthly average through June. Tariff costs jumped even as imports of some product categories fell. The share of Mexican cars exempt from tariffs fell to 20% in July from about 90% before Mr. Trump’s border taxes took effect.

The biggest victims are U.S. auto makers because they rely heavily on North American supply chains.

To see just how economically ignorant are Trump’s advisors on trade, read this piece from a few months ago by John Lettieri on White House trade shaman Peter Navarro’s dismaying comments about the BMW factory in South Carolina’s Upstate. (HT Bryan Riley) Two slices:

So why would one of the president’s top advisors — arguably the person who best reflects Trump’s thinking on trade — describe such a textbook success story as a scam and a threat to national security? Absurd as it may sound, Navarro believes that the profound benefits BMW has delivered to the U.S. economy are somehow outweighed by its reliance on a global supply chain.

That’s literally it. We’re supposed to ignore everything else because — hey, wait, is that a German engine?

And this, in a nutshell, is the logic behind a sweeping new tariff agenda designed to make every foreign input in the American manufacturing process more expensive and harder to obtain.

…..

What about the company’s supply chain? Like every automaker, BMW does indeed source parts from abroad. But it also relies on a massive U.S. supplier network that it helped to establish, including over 500 suppliers in South Carolina alone. Roughly 70 percent of the steel and aluminum used in BMW’s U.S. production is domestically sourced. (Last year, the company opened a new press shop where it takes raw steel coils and stamps them into sheet metal for its vehicles.)

And the company’s U.S. presence has been a magnet for other companies in the supply chain. Just last year, ZF, another German manufacturer, announced a $500 million investment in the state to build transmissions for BMW and other customers.

Tyler Cowen shares GMU Econ alum Eli Dourado’s wise twitter-thread on trains.

Not that further evidence is necessary to establish the point, but here’s further evidence of the continuing failure of government-supplied “education.” A slice:

American high-school seniors’ scores on major math and reading tests fell to their lowest levels on record, according to results released Tuesday by the U.S. Education Department.

Twelfth-graders’ average math score was the worst since the current test began in 2005, and reading was below any point since that assessment started in 1992. The share of 12th-graders who were proficient slid by 2 percentage points between 2019 and 2024—to 35% in reading and 22% in math.

There also were drops in the proportion of students who were able to reach at least a basic level of performance, a tier below proficiency.

[DBx: Apologists for the current system of K-12 government schooling will shout “This evidence proves that these schools need more taxpayer money!” Many people will unthinkingly agree. These schools will then get more money. The people who run the schools have hit the cronyist jackpot: They get more of other people’s money the more they fail to do their jobs as educators.]

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… is from page 82 of Anne Krueger’s 2020 book, International Trade: What Everyone Needs to Know:

When tariffs are imposed on goods that are used in the production of both domestic final goods and exportable items, the tariff can improve the foreign producers’ position relative to their US competitors because the foreign producers pay a lower price for their inputs. For example, when the tariff was put on American steel imports, foreigners could obtain steel at a price equal to, or lower than, the US domestic price of steel.

American producers of steel-using goods such as tractors, refrigerators, and washing machines then found that their foreign competitors’ costs had fallen while theirs had risen. The result was a reduction in American producers’ share of foreign markets and an increase in the share of foreign producers in US markets.

DBx: Yep. And – to be clear – what Krueger means when she writes that U.S. producers of tariffed inputs “found that their foreign competitors’ costs had fallen while theirs had risen,” she means that the U.S. tariffs raised U.S. producers’ costs of production relative to the costs of production of their foreign competitors.

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Here’s a letter to a long-time reader of my blog who is unhappy with what he describes as my “knee jerk opposition to America First policy.”

Mr. M__:

Thanks for your email.

You’re unhappy with my pointing out that protectionism is the bizarro theory that says that people gain greater access to goods and services the more their government shrinks their access to goods and service. Accusing me of engaging in “extreme oversimplification,” you write that you “can imagine how reducing our imports leads us eventually to produce so much more at home that we end up richer than before.”

With respect, policy should not be guided by what you, I, or anyone else can imagine. I can imagine winning the lottery, but this image doesn’t prompt me to quit my job and rush out to buy a Lamborghini. Policy should be guided by what is probable, not by what is merely imaginable.

If you dislike my lottery example, here’s a different example that’s more closely connected with trade. I can imagine that your standard of living would rise if neighborhood thugs were to routinely destroy some of your property. They steal your 2018 Camry: you respond by working harder to earn enough income to buy a 2026 Mercedes S-class sedan. They burgle your dining room: you respond by working harder to earn enough income to replace your stolen Ikea-bought dishes and utensils with fine China and exquisite silverware. They vandalize your outdoor deck: you respond by working harder to earn enough income to build a new deck twice the size of your old one. They rip to shreds your above-ground swimming pool: you respond by working harder to earn enough income to install a built-in swimming pool.

I have no trouble imagining what I just described. But I do have trouble imagining that you’d feel yourself to be enriched by being a victim of such thugs even if you responded as I describe.

If you’re confident that such thuggery would reduce your standard of living, you should be equally confident that thuggery of the sort called “U.S. protectionism” will reduce Americans’ standard of living. I can’t imagine why any sensible person would think otherwise.

Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030

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George Will strongly, and rightly, criticizes today’s lapdog GOP Congress. Two slices:

The Democrats’ House and Senate minorities have no power — the ability to achieve intended effects. The Republican majorities have no power because they are not permitted intention independent of this president’s preferences.

He refuses to enforce the law that strictly required the TikTok app to be sold or banned, at the latest, by April. He believes Congress’s spending power is merely the power to suggest spending ceilings. Try to cite a long-standing tenet of conservatism he has not traduced. Federalism? To end voting by mail and impose voter identification requirements, he would truncate, by executive order, the states’ constitutionally enumerated power to conduct elections. He would commandeer state and local governments with an executive order banning no-cash bail. Free markets? See “state capitalism,” below.

The Constitution’s architecture presupposes legislative and executive powers not merely separated but somewhat rivalrous. “Ambition,” wrote James Madison, “must be made to counteract ambition.” The architecture collapses when, as today, the controlling ambition of most members of the congressional majorities is reelection requiring sycophancy toward today’s president. Individual and institutional pride have vanished, supplanted by unapologetic and undignified fear.

…..

Presidents are mistakenly accorded vast discretion in foreign policy, so Congress can do little when today’s president, for no discernible strategic reason, uses insults and economic coercion to propel the most populous nation, India, into closer collaboration with the second-most populous, China.

Congress could, however, inhibit this administration’s primary domestic policy.

It is frequently, and illogically, described as “state capitalism,” an oxymoron coined to avoid candidly calling it “socialism”: government supplanting markets in the allocation of capital and, hence, of opportunity. Many business leaders in what should now be called “the quasi-private sector” have responded to presidential bullying with groveling.

Intel, for example, has given the government a 10 percent interest in it. This dilutes the value of other shareholders’ portions of the company — an unconstitutional, because uncompensated, taking of property.

Writing at The American Spectator, GMU Econ alum Dave Hebert makes clear that “tariffs have created the monster we fear.” Two slices:

Where I had previously warned that our tariffs were driving friends away, the latest developments show that now we’re uniting our enemies into a formidable economic trade bloc that could reshape global trade patterns for decades in a decidedly anti-American way. While Trump might want to put “America First,” it is becoming increasingly clear that the rest of the world is trying to put “America Last.”

…..

But are we doing more things ourselves? The evidence is starting to come in, and the only defensible answer is a resounding “no.” The latest BLS reports suggest that times are tough for manufacturing in the United States. While job openings continue to rise in manufacturing, this is almost entirely driven by the increased rate at which people are quitting their manufacturing jobs.

Lest we rely on statistics from the BLS, we can look at local newspapers to get a more granular picture of what’s going on. In Michigan alone, manufacturing plants are closing left, right, and center, and established firms, like Ford, General Motors, and Stellantis, have incurred losses in the billions of dollars in just the first six months of 2025 alone — enough to hire another 88,000 workers. Even Alcoa, the aluminum-producing firm, is experiencing massive losses thanks to tariffs, and the US Steel situation was so dire that they had to be sold to Nippon Steel on the condition that President Trump receive a “golden share” of the company.

Kenneth Griffin and Anil Kashyap warn of “Trump’s risky game with the Fed.” A slice:

The U.S. benefits from strong economic fundamentals, yet it faces two challenges: an unsustainable fiscal trajectory and unacceptably high inflation. Elevated long-term interest rates reflect growing market doubts about the stability of inflation and the sustainability of public finances. Without resolution, the government will pay more to finance deficits, young families will struggle to afford homes, and companies will invest less.

Runaway inflation during the Biden administration cost the Democrats in the 2024 elections. Rightfully, President Trump and his administration have made controlling inflation a priority. Lower inflation should naturally produce lower interest rates. But statements and actions that undermine the independence of the Fed risk stoking both higher inflation and higher long-term rates. The president’s strategy of publicly criticizing the Fed, suggesting the dismissal of governors, and pressuring the central bank to adopt a more permissive stance toward inflation carries steep costs. These actions raise inflation expectations, increase market risk premiums, and weaken investor confidence in U.S. institutions.

Mr. Trump’s interventions and his dismissal of the head of the Bureau of Labor Statistics have damaged the credibility of official economic data. Together, these developments highlight risks that recall experiences in emerging markets where political influence eroded institutional credibility. While the U.S. benefits from a large stock of credibility accumulated over decades, it isn’t limitless. If eroded, markets will demand far higher interest rates for longer-term debt.

Harassing, and hostility toward, foreigners is no way to attract foreign investment. (HT Scott Lincicome)

The National Rifle Association takes a correct, principled stand against the Trump administration’s assault on the 2nd amendment.

GMU Econ alum Bryan Cutsinger reviews George Selgin’s brilliant new book, False Dawn. Here’s his conclusion:

One of the book’s many strengths is Selgin’s evenhanded approach. This is no polemic. He readily credits the Roosevelt administration’s successes—recognizing the policies that aided recovery—and engages seriously with scholarship that challenges his account. Rather than dismiss opposing views, he addresses them directly and thoughtfully, making his case all the more persuasive for its fairness. False Dawn is a remarkable contribution that will undoubtedly stand as the authoritative account of the New Deal for years to come.

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… is from page 113 of Historical Impromptus, a 2020 collection of some of Deirdre McCloskey’s work on economic history; this quotation, specifically, is from McCloskey’s Spring 2001 review, in The American Scholar, of Niall Ferguson’s The Cash Nexus:

Britain, the first industrial nation and the champion of free trade, went from $1,800 in per capita income in 1820 to $3,300 in 1870, the figure nearly doubling despite a population explosion – and during the half-century in which the European avant garde, with Marx and Engels, turned against free markets.

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September 7, 2025

Mr. Scott Bessent
Secretary, U.S. Treasury
Washington, DC

Mr. Bessent:

This morning on “Meet the Press” you confidently claimed that Pres. Trump’s tariffs are sparking a manufacturing revival in the U.S. Minutes later, and with equal confidence, you claimed that these tariffs are not causing, and will not cause, Americans to pay higher prices. Companies, you assert, are ‘eating’ the tariffs by not passing along their costs to consumers in the form of higher prices.

Let’s here ignore the fact that the data contradict both of your claims (a reality that you evade by insisting that the data aren’t “good”). Instead, let’s examine the internal (in)consistency of your argument.

If – as Mr. Trump and protectionists have long asserted – U.S. manufacturing has been “hollowed out” by unfair trade, the only way that tariffs can increase U.S. manufacturing output is to raise the prices paid by American consumers in order to enable American manufacturers to raise their own prices to ‘fair’ levels that allow them profitably to increase their outputs. But if, as you also insist, the tariffs aren’t raising the prices paid by American consumers, American manufacturers face the same prices that prevailed before the tariffs. With no tariff-induced hike in prices, American manufacturers will not increase their outputs.

Either the tariffs do raise prices paid by American consumers, thus allowing some American manufacturers to profitably increase their outputs, or the tariffs don’t raise prices paid by American consumers, thus providing no opportunity for American manufacturers to profitably increase their outputs.

Which is it? It must be one or the other; it cannot be both.

This point isn’t one of ideology, politics, or ‘elite’ opinion. It’s a point of simple logic that not even a successful politician or investment banker can escape. You inadvertently insult Americans’ intelligence by insisting on the truth of both of your claims.

Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030

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Here’s a follow-up note to a correspondent who describes himself as a “recovering free trader.”

Mr. H__:

Thanks for your reply to my last note.

You write: “When other countries reduce their imports from us it injures our economy and President Trump is fully justified in trying to stop them from injuring us like this.”

I disagree. First, even if your argument were correct, it doesn’t describe the actual pattern of Trump’s willy-nilly tariffs.

Second and more fundamentally, your argument is fraught with pitfalls. It’s true that some U.S. producers lose sales because of other countries’ tariffs, and these lost sales can shrink the scale of these producers’ operations, causing their per-unit costs of production to be higher than these costs would be absent the foreign tariffs. But what reason have you to suppose that the benefits that we’d reap tomorrow if our tariffs eventually pressure foreigners to lower their tariffs would be greater than the costs we incur today to exert this pressure? Do you trust politicians to have such knowledge?

Further, as Adam Smith warned, it’s unlikely that there is much overlap of those of us who would pay the bulk of the costs of our government’s retaliation with those of us who would reap the benefits of this retaliation. What ethical principle justifies the U.S. government picking your pocket with tariffs, however temporary, in order to swell my pocket with increased export sales?

Finally, what’s the limiting principle of this too-convenient justification for protective tariffs? Foreign tariffs are not the only source of reduced U.S. exports. Another source, for example, is the fact that foreigners in many countries don’t work on weekends and holidays. Should our government, therefore, impose tariffs on such countries until and unless their governments mandate that all adults in those countries work 365 days each year? Such a mandate, after all, might very well increase our exports.

Foreigners aren’t ethically or economically obliged to buy our stuff. It follows that we are not ethically or economically justified in attempting to force them to buy our stuff – especially when such attempts involve using force to prevent our fellow citizens from spending their incomes in whatever peaceful ways they think best.

Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030

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Sen. Rand Paul (R-KY) rightly calls out J.D. Vance for glorifying government slaughter of people not convicted of any crime: (HT Phil Magness)

Vance says killing people he accuses of a crime is the “highest and best use of the military.”

Did he ever read To Kill a Mockingbird?

Did he ever wonder what might happen if the accused were immediately executed without trial or representation??

What a despicable and thoughtless sentiment it is to glorify killing someone without a trial.

Kathleen Parker calls on Trump to press China’s authoritarian government to release the heroic Jimmy Lai. A slice:

Lai lost his freedom, his now-shuttered newspaper and much of his fortune for protesting China’s crackdown on Hong Kong and for defending democracy and human rights. He was charged with two counts of conspiracy to collude with foreign forces and one count of collusion under Hong Kong’s relatively recent national security law for publishing pro-democracy views. He also was charged with sedition under a law passed when Hong Kong was still under British rule that originally was used to silence critics of colonialism.

Fareed Zakaria explains that Trump’s tariffs are strengthening foreign alliances against the United States. Three slices:

What was surprising were the images from the days before, when the Shanghai Cooperation Organization hosted leaders from India, Turkey, Vietnam and Egypt, among others. All these regional powers were generally considered closer to Washington than Beijing. But a toxic combination of tariffs, hostile rhetoric and ideological demands is moving many of the world’s pivotal states away from the United States and toward China. It might be the greatest own goal in modern foreign policy.

…..

The governments and people in these countries are outraged at their treatment. India used to be overwhelmingly pro-American. Now it is rapidly shifting toward a deep suspicion of Washington. In Brazil, President Luiz Inácio Lula da Silva’s sagging poll numbers have risen as he stands up to Trump’s bullying. In South Africa, President Cyril Ramaphosa gained stature when he politely responded to Trump’s Oval Office hectoring. It is worth remembering that other countries have nationalist sentiment, too!

…..

While Washington has been alienating these countries, China has been courting them. It has outlined a plan with Brazil for a transformative railway network connecting its Atlantic coast to Peru’s Pacific one. Xi managed to get Indian Prime Minister Narendra Modi to visit China for the first time in seven years. China has courted South Africa with trade and aid, and public sentiment in that country has moved to be quite favorably inclined toward Beijing.

Pierre Lemieux continues to write wisely about trade and industrial policy. A slice:

In passing, let’s note that in the roaring ’60s, it was popular among the ruling establishments of underdeveloped countries, supported by the Western intelligentsia, to impose large tariffs on foreign manufactured goods in order to help domestic manufacturing. Only when, a few decades later, it was realized that such an industrial policy was a fool’s errand, were the poor people of underdeveloped countries able to jump on the bandwagon of free trade and to escape dire poverty.

A basic economic reason why “unfairly traded steel” or the underlying ideal of mercantilist and industrial policy is a fool’s errand is that it presupposes a central economic planner possessing what he does not and cannot possess, that is, the information of time, place, costs, and preferences that is carried by prices determined by supply and demand on free markets. Friedrich Hayek explained that in the 1930s and 1940s (see Hayek’s American Economic Review article “The Use of Knowledge in Society”). A central planner cannot even know many intricate effects of his resource-allocation decisions, especially in a complex economy. Thus, government intervention begets government intervention in the greatest political disorder. That the US government only realized after imposing steel tariffs that they should be imposed on steel products too provides a rather funny illustration.

Another important lesson from protectionism—empirically confirmed a thousand times—is how rent-seeking special interests will try to exploit the general public, or part of it, each time the state offers them a means to do so. The requests for tariffs on steel-containing products are already flooding the government.

Alex Cole tweets: (HT Scott Lincicome)

64% of Arkansas farmers voted for Trump, at the present rate because of tariffs, one third of them will be bankrupt by this time next year. Their solution? They want money from the government. So again, it’s not socialism when I get money, just when everybody else gets it…

Brian Albrecht asks if tariffs will cause an outbreak of “greedflation.”

Here’s David Henderson on GMU Econ alum Romina Boccia’s and her co-author’s, Ivane Nachkebia, new book titled Reimagining Social Security: Global Lessons for Retirement Policy Changes.

Reason‘s Nick Gillespie talks with Richard Dawkins about science.