I am very pleased to have been again a guest on Drew Benson’s podcast. (This was recorded before “Liberation Day.”)
Imagine the following scenario: A world leader who many consider an adversary, perhaps Vladimir Putin or Xi Jinping, uses his country’s military to institute an embargo around the United States. This invariably limits American’s access to valuable materials and products, increasing prices, and causes customers to scramble for substitutes or go without. The S&P 500 drops by 18% from the news of the build-up to the actual event, with 11 percentage points of that coming in just a few days after the embargo. Economists predict a resulting recession. Financial chaos ensues.
How would we regard this action on the part of Vladimir Putin or Xi Jinping? Most Americans would see it as an act of war with the likely goal of weakening and ultimately subjugating the U.S.
Now add a further twist. This embargo doesn’t arise from the actions of these adversaries, but instead from commands within the White House. How should we think about this now?
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Tariffs on materials such as steel and aluminum are equivalent to shooting oneself in the foot. For each American worker “helped” by the tariffs, there are many more American workers who are hurt. This is a result of the mathematical fact that more workers use steel and aluminum to produce products than the number of workers required to produce the raw material. One study concluded that, on net, Americans paid $900,000 for each steel job that was “saved” by prior tariffs.
The economic case against tariffs is neither novel nor subtle. Trade restrictions raise prices for both producers and consumers stifle competition, and invite retaliatory measures from outside nations. A tariff, in plain terms, is a tax on domestic prosperity masquerading as patriotism.
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The problem isn’t a deficit of knowledge or sentiment — it’s a surplus of power.
Montesquieu, writing in 1777, argued that liberty depends not on the virtue of those who govern, but on the dispersion of power among them. Madison, in crafting our constitutional architecture, advanced that insight by embedding friction into the process of governance — not to ensure that good policies would prevail, but to make it institutionally difficult for any single actor to impose their preferred policies unilaterally.
But over time, the institutional guardrails that once restrained executive discretion have been steadily dismantled. Section 232 of the Trade Expansion Act of 1962 and Section 301 of the Trade Act of 1974, for example, have furnished presidents with broad authority to impose tariffs without congressional approval — often under the vaguest invocations of “national security” or “unfair trade.” Under Section 232, the Secretary of Commerce can initiate investigations — sometimes at the president’s request or even unilaterally — into whether imports threaten national security. If such a threat is deemed to exist, the president has nearly unfettered discretion to act, free from oversight by the ITC or Congress. Section 301, originally intended to enforce US rights under trade agreements, likewise allows the president to retaliate against foreign practices deemed “unjustifiable” or “unreasonable.”
Everyone wants Main Street to prosper, but pitting Wall Street against the rest of the country is one of the hoariest pages in the faux populist handbook. See Mr. Moneybags in the Monopoly board game. It’s a favorite trope of the political left, with its claim that rich financiers are exploiting the proletariat, aka these days “the working class.”
It’s also nonsense. Wall Street as defined by the stock and financial markets is integral to prosperity on Main Street. Some 60% of Americans own stocks either directly themselves, or indirectly through their pensions or 401(k) plans. When stocks fall, as they have since Mr. Trump unveiled his tariff agenda, these investors suffer more than Goldman Sachs partners because their safe retirement margin is so much less.
The business of finance is also crucial to growing the businesses that employ workers. This is a remedial economic point, but investors with capital take risks on the growth of companies. When companies succeed, financiers get a return. When they fail, they can lose their investment or loan. One problem in recent years, since Sarbanes-Oxley passed in 2002, is that regulations have kept too many companies from floating equity in public markets so mom and pop can share in the upside.
Professor Peter Grossman’s letter in today’s Wall Street Journal is excellent:
President Trump likes to tout America’s late 19th-century economy as justification for high tariffs on foreign-made goods (“Trump and His ‘Little Disturbance’,” Review & Outlook, April 4). The economy then was growing rapidly, and the U.S. was fast becoming the most prosperous nation on earth. That, Mr. Trump implies, means tariffs aren’t barriers to prosperity and that a redo is welcome.
As some have pointed out (Letters, April 3), U.S. tariffs were declining in the late 1800s, and the link between tariffs and economic growth is illusory at best. But the real problem with Mr. Trump’s analysis is that another crucial element of prosperity was at work here, which he wouldn’t countenance now: open immigration.
There are several things that can move across borders: goods (imports and exports) and factors of production (capital and labor). Ideally a country should be open to receiving each of them. Most economists oppose trade barriers but acknowledge that, should tariffs exist, they ought to be low to allow for prices to reflect the costs of production, not government’s visible hand.
If goods are restricted by tariffs, the factors of production need to be free to move. In other words, if a good made in country A is sought by consumers in country B but is taxed by tariffs, then capital should be able to move to the consumers along with the labor that makes the product. Blocking the free flow of both goods and either of the major inputs means the consumers in country B—in this case, the U.S.—are the losers.
Nineteenth-century America permitted virtually unimpeded flows of capital and labor. That had more to do with American prosperity than any tariffs did. The claim that such levies sparked the growth of the American economy and can do so again is nonsense.
Em. Prof. Peter Z. Grossman
Butler University
Countries hold dollars to facilitate world trade, and this benefits the United States. By “selling” dollars—which we can produce at minimal cost (albeit it does help that we spend on the military to keep the sea lanes open)—we acquire real goods and services in exchange, realizing an “exorbitant privilege.” Does that privilege impose a hidden cost on our manufacturing sector? Not really.
In the short run, increased global demand for dollars can push up the exchange rate, making exports more expensive. Yet this effect arises whatever the cause of the increased demand for dollars. If foreigners want to buy more US tractors this appreciates the dollar and makes it more expensive for foreigners to buy US computers. Is our tractor industry a nefarious burden on our computer industry? I don’t think so but more importantly, this is a short-run effect. Exchange rates adjust first, but other prices follow, with purchasing power parity (PPP) tendencies limiting any long-term overvaluation.
To see why, imagine a global single-currency world (e.g., a gold standard or a stablecoin pegged to the US dollar). In this scenario, increased demand for US assets would primarily lead to lower US interest rates or higher US asset prices, equilibrating the market without altering the relative price of US goods through the exchange rate mechanism. With freely floating exchange rates, the exchange rate moves first and the effect of the increased demand is moderated and spread widely but as other prices adjust the long-run equilibrium is the same as in a world with one currency. There’s no permanent “extra” appreciation that would systematically erode manufacturing competitiveness. Notice also that the moderating effect of floating exchange rates works in both directions so when there is deprecation the initial effect is spread more widely giving industries time to adjust as we move to the final equilibrium.
None of this to deny that some industries may feel short-run pressure from currency swings but these pressures are not different from all of the ordinary ups and down of market demand and supply, some of which, as I hove noted, floating exchange rates tend to moderate.
Ensuring a robust manufacturing sector depends on sound domestic policies, innovation, and workforce development, rather than trying to devalue the currency or curtail trade. Far from being a nefarious cost, the U.S. role as issuer of the world’s reserve currency confers significant financial and economic advantages that, in the long run, do not meaningfully erode the nation’s manufacturing base.
There are some concepts that seem so obvious as to need no explanation. But once in a while I discover that not everyone views the world in the same way, and the obvious may require a bit of explanation.
Let’s start by considering a world with no money, relying on barter. Suppose Australia wishes to buy some big Caterpillar tractors and Boeing jets. Unfortunately, the US is not particularly interested in buying the stuff that Australia exports, such as iron, coal and beef. We already have plenty of those commodities. So no trade occurs.
Now let’s introduce money. Australia can pay for those US exports with money. The US can use that money to buy clothes, consumer electronics and home appliances from China. China can then take that money and buy iron, coal and beef from Australia. The use of money facilitates a three-way trade that would have been almost impossible under a system of barter.
You might also notice that each of the bilateral trade relationships is unbalanced, with one country in deficit and one country in surplus. But for the world as a whole there’s no obvious problem. Those bilateral deficits and surpluses are no more meaningful than if I had a deficit with my grocery store and a surplus with the students I taught. Individuals, cities, states and entire nations always have lots of bilateral deficits and surpluses. That’s what it means to move beyond barter.
Some are now advocating that we move back closer to barter, that we try to balance every bilateral trading relationship. Well, not every relationship, but at least every trading relationship between countries.
David Henderson reminds us of an important feature of spontaneous order.
Trump’s tariffs will inflict great damage on the guitar industry. (HT Emmanuel Martin)
… is from page 605 of Deirdre McCloskey’s new paper “Globalization, Long May It Reign,” which is a chapter in the collection Free Trade in the Twenty-First Century (edited by Max Rangeley and Daniel Hannan, 2025):
Words matter. Words like “self-sufficiency” and “protection” and “balance of payments deficit” lead us far astray, and make us poor.
Here’s a letter to National Review.
Editor:
Rob Atkinson blames Trump’s trade war on “globalists” (“Globalists Brought Trump’s Trade Revolution on Themselves,” April 9). “Globalists,” he asserts, have stubbornly ignored what he alleges are the many problems visited on Americans by free(r) trade over the past few decades. Chief among these alleged problems are “the massive U.S. trade deficit” and the “the loss of manufacturing.”
It’s good that Mr. Atkinson admits that we “globalists” – that is, those of us who believe that Americans should be free to spend their incomes in whatever peaceful ways they choose – offer arguments to calm fears of trade deficits as well as to rebut the claim that U.S. manufacturing has been hollowed out. But he feels no need, in his National Review piece, to bother to explain just why our arguments and evidence are mistaken. Instead, he directs your readers to a lengthy earlier piece of his that, he declares, rebuts the “globalists” claims.
So I read his earlier piece. I was eager to see what evidence he musters to challenge data showing that, after a half-century of annual U.S. trade deficits, America’s industrial capacity and output are today at all-time highs, while the narrower categories of manufacturing output and capacity, which hit their all-time highs at the beginning of the Great Recession (more than three decades after America last ran, in 1975, an annual trade surplus) are today just shy of their all-time highs – the real value of the capital stock in the U.S. is at an all-time high – worker productivity and real wages are at all-time highs – unemployment is low – value-added per-manufacturing worker is at an all-time high and the highest in the world – real per-capita GDP is at an all-time high – the real net worth of nonfinancial corporations is at an all-time high (and 417% higher than it was in 1975) – and the real net worth of the average American household is at an all-time high (and 232% higher than it was in 1975).
Alas, though, I found in his earlier piece no such data. Amidst often embarrassingly bad economics, Mr. Atkinson serves up only anecdotes, tales of the travails of particular industries, and vague comparisons the likely meanings of which are irrelevant, such as “U.S. advanced industry output as a share of U.S. gross domestic product (GDP) has significantly declined compared with other nations.” Apart from one lone, evidence-free assertion (“But presumably some of that [foreign] investment should have gone into manufacturing and advanced industries and grow it. But it declined instead”), he doesn’t even pretend to offer economy-wide evidence that alone can refute the “globalists’” argument that international trade over the past half-century has indeed been a blessing for Americans.
He is long on assertion; short on relevant empirical evidence.
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
Phil Magness describes the several different and competing factions of protectionists in the Trump administration. Three slices:
President Donald Trump’s tariff agenda exhibits no signs of a popular mandate. Recent polling found that 61 percent of the public believe raising tariffs will hurt average Americans, compared to just fourteen percent who see them as helpful. Seventy-six percent expect tariffs will produce increased prices at the store. Clear majorities also oppose Trump’s specific tariff measures against Canada and Mexico. Mainstream economists have panned the administration’s claims that their tariff program will “substantially reduce the US trade deficit.” Unlike past tariffs, which usually drew their support from special interest groups in the beneficiary industry, there does not even appear to be a concerted lobbying effort behind Trump’s current agenda.
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This formula mistakes the existence of a trade deficit for external trade barriers, and then calculates a meaningless “rate” by dividing the net difference between exports and imports by the value of imports and halving the result. It is an exercise in economic alchemy informed by stunning economic incompetence and no intelligible underlying principle. Navarro allegedly devised it himself and has since become its leading exponent in the media, revealing in the process that he does not understand grade-school arithmetic, let alone trade economics.
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The antics of the “tariff men” are beginning to imperil other policy priorities, such as deficit reduction. Future objectives such as renewing the income-tax cuts of Trump’s first term will likely face similar headwinds as long as the trade wars continue to dominate the president’s economic agenda. But there’s another lesson to be learned from the assortment of competing goals and competing tariff men in Trump’s orbit. When pursued together, their conflicting objectives become an incoherent mess of contradictory policies and chaotic vacillation. The result is tariff uncertainty and tariff chaos with a commensurate toll on the health of the US economy.
Wall Street Journal columnist Barton Swaim counsels GOP Senators to resist Trump’s lunatic protectionism. Three slices:
Some Republicans on Capitol Hill may argue that Mr. Trump promised such a tariff regime during the 2024 campaign. But that is wildly to misread his victory. Many, maybe most, voters neither know nor care what a tariff is. Mr. Trump’s narrow victory over an abysmal opponent—49.8% to 48.3% in the national popular vote—may reasonably be interpreted as permission to repair the left’s many fiascoes at home and abroad. What it didn’t signify was the public’s readiness to see the American economy reordered.
Congressional Republicans didn’t win their elections by calling for a new tariff regime. One GOP officeholder or another may favor a tax on a particular imported good (usually produced in his own state). Still another may argue that some country’s unfair trade practices, typically China’s, deserve punishment by countervailing tariffs. But until recently all Republicans everywhere understood that tariffs—a form of central planning like any other—are taxes that create webs of injurious consequences for everyone.
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Utah’s GOP Sen. Mike Lee is another onetime exponent of the benefits of free trade. He also voted for those trade agreements with Colombia, Panama and South Korea. Mr. Lee’s criticisms of the protectionist mentality are many and honorable.
And now? “If I were the leader of a foreign government with tariffs against the United States, I would be scrambling to sign a free trade agreement—as several are already,” Mr. Lee told me in a statement. “As the dominoes fall, I am optimistic that Americans will end up with even freer trade than before.” I salute Mr. Lee’s optimism, but you have to work hard to imagine that Mr. Trump’s goal is freer trade rather than a sealed off, self-sustaining America.
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In fact, the Senate Republican conference teems with people who, whatever they may say or not say in public, possess a measure of common sense on economic questions. They know that tariffs harm the country that imposes them by provoking retaliation, coddling domestic industries and alienating allies. What’s unclear is whether they will deem the ongoing implosion of markets and attendant economic chaos sufficiently ruinous to save the president from his worst idea.
Imagine an alternate reality where President Donald Trump’s top trade adviser was a bulging Hefty trash bag stuffed with discarded bricks.
No, really. Picture it. When Trump gathers his cabinet together for an important meeting, inexplicably, there is a large bag sitting in the corner of the room. Its black polyethylene sides stretch at awkward angles as it tries to contain the sharp edges of what appear to be dozens of bricks piled within. Some red clay dust that has escaped from the drawstring top lingers on the floor. A White House intern struggles to move it from place to place. The bag doesn’t speak or communicate in any way. It has no thoughts. It does not opine on the meaning of trade deficits or invent false data to tell misleading stories about the state of America’s economy.
And then ask yourself: Would the country be better off if Trump was seeking counsel from that literal sack of bricks rather than from Peter Navarro?
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Navarro might be part of the MAGA tribe now, but he’s still a socialist at heart. During the COVID-19 pandemic, he waxed poetic about how “beautiful” it was to see “the power of the federal government merging with the power of private enterprise.” His vision for America’s trade policy is the sort of autarky that would make Vladimir Lenin proud.
The Editorial Board of the Wall Street Journal explains why Musk vs. Navarro matters. A slice:
Broadly speaking, Mr. Musk represents a segment of Mr. Trump’s 2024 coalition—call it Silicon Valley MAGA—that is libertarianish and believes in freeing the U.S. economy to grow and dominate the future, benefiting all Americans. It favors pro-growth tax and regulatory policy and robust legal immigration to attract the world’s brightest minds.
Mr. Navarro is part of the Steve Bannon wing of MAGA, which wants to put U.S. industries behind the high tariff walls that Mr. Trump is now imposing. This faction distrusts corporations, especially Big Tech and pharma, and it doesn’t mind higher taxes and using government power to punish political enemies.
Michael Chapman reminds us of Frédéric Bastiat’s brilliance at exposing the lunacy protectionism.
Joe Bishop-Henchman reviews the history of very high tariffs in the United States. A slice:
Thus, claims that high protective tariffs were a mainstay of past American policy are wrong, as they only existed for four brief periods (1828–32, 1842–46, 1890–94, and 1930–34). The harmful economic effects resulted in landslide wins for the opposition party after each of those enactments (which, as it turns out, was the Democratic Party in all four instances). Notably, peaks in US revenue from tariffs were not in those years but in 1826 (2.7 percent of GDP) and 1871 (again 2.7 percent of GDP), during years of comparatively lower tariff rates. Tariff revenue rose after 1842’s enactment but fell after 1828 (from $23 million to $22 million in 1830), after 1890 (from $229 million to $177 million in 1892), and after 1930 (from $587 million to $327 million in 1932).
Also, surveys show that young people’s preferences for employment are in the service industry, healthcare, and tech in particular. After all, that’s why so many high school graduates choose to go to college. [Jack] Salmon points to various surveys, including this: “According to one survey of Gen Z respondents by Soter Analytics, only 14 percent of respondents said they might consider a job in manufacturing.”
GMU Econ alum Dominic Pino imagines the conversation between the U.S. Trade Representative and a foreign ambassador. Two slices:
White House Trade Negotiator: Hello, Mr. Ambassador, welcome to the White House. We’re so glad you could make it. We want to start the process of negotiating a free trade deal with your country.
Foreign Ambassador: Thank you so much for having me. We’ve wanted a free trade deal with the U.S. for years. But we were under the very strong impression that you weren’t interested, so we didn’t bother.
WHTN: Why is that?
FA: Well, I mean, you guys haven’t signed a new bilateral free trade agreement since 2007, the one with South Korea, and efforts with other countries since then have been scuttled. If you couldn’t even get one with the United Kingdom, given that you’re both rich countries and share so much history and speak the same language, then we didn’t think there was a chance for us. Or the Trans Pacific Partnership, which made perfect sense given your geopolitical interests in constraining China — which is in our interest as well, by the way — but still didn’t get done.
WHTN: Don’t tell us what our interests are! We know what they are, and they don’t concern you.
FA: I was trying to find common ground in our shared interests—
WHTN: Well, Mr. Trump won’t take kindly to that. This is about America First! The Trump White House wants free trade, and we’re willing to tariff anyone to get there!
FA: I’m glad you brought that up, because I have to admit I have been a little confused about—
WHTN: Are you questioning Mr. Trump’s judgment? Because I’ll tell you right now, he takes great offense to that, and we won’t be able to talk any further if you do.
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WHTN: Those deals were negotiated by globalists, and they sold out American workers. In our America First administration, we need real free trade, like I said before, and that means new deals with everyone.
FA: But, with all due respect, Mr. Trump negotiated the trade deal with Canada and Mexico, and those were among the first countries he went after with his trade war. Why should we believe you?
WHTN: Because we’re the United States of America, and we’re more powerful than you, and we’ll do what we want.
FA: So this isn’t a negotiation, then?
… is from chapter 2 of William Graham Sumner’s 1885 volume, Protectionism: the -ism Which Teaches that Waste Makes Wealth (original emphasis):
If, now, it was possible to devise a scheme of legislation which should, according to protectionist ideas, be just the right jacket of taxation to fit this country to-day, how long would it fit? Not a week. Here are 55 millions of people on 3½ million square miles of land. Every day new lines of communication are opened, new discoveries made, new inventions produced, new processes applied, and the consequence is that the industrial system is in constant flux and change. How, if a correct system of protective taxes was a practicable thing at any given moment, could Congress keep up with the changes and readaptations which would be required. The notion is preposterous, and it is a monstrous thing.
So today the Dow Jones Industrial Average closed 15% below its mid-February (Feb. 14th) close. The S&P 500 today closed 19% below its level on that same day.
Investors clearly are not keen – to put it mildly – on Trump’s calamitous trade policy.
The U.S. economy is a formidable source of exports. According to the Office of the United States Trade Representative, America was the world’s second-biggest goods exporter and the biggest services exporter in 2022. Directly and indirectly, U.S. exporters supported about 10.2 million jobs that same year.
Crude and refined petroleum, gas turbines, cars, aerospace products, pharmaceuticals, and soybeans are among America’s biggest exports. Contrary to economic nationalist mythologies, the U.S. still makes plenty of “stuff” (including manufactured goods) that millions of people around the world want to buy—if the price is right.
That’s where today’s problems begin for American exporters. Thanks to Mr. Trump’s tariff spree, U.S. export prices are about to go up.
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Some exporters will lobby the federal government for subsidies to offset their losses. That’s a recipe for cronyism. The exporters most likely to get assistance will be those with the best political connections. So much for draining the swamp.
The Trump administration has created a new monster—one of unpredictability and erratic behavior. We simply cannot predict with any degree of accuracy what will happen next. By the time you are reading this article, there will probably be some newer report about the tariffs or threat of tariffs, and then another report after that.
Even if the White House winds up instituting a pause on the proposed tariffs—or ultimately adopts much better economic policies—this seesawing may plunge the American and perhaps also the global economy into recession.
Sen. John Kennedy (R., La.) criticized the conflicting messaging coming out of the White House on tariffs, saying it is difficult to discern whether the tariffs are meant to raise revenue, as trade adviser Peter Navarro has championed, or negotiate away other nations’ tariffs, as Treasury Secretary Scott Bessent said Monday.
“They went on television this weekend and all offered different scenarios,” Kennedy said. “It just seemed to me that they ought to talk to each other, and, more importantly, talk to their boss.” Sen. Ron Johnson (R., Wisc.) echoed those concerns saying that “very few’’ people know if this is for revenue or negotiations.
Sen. Rand Paul (R-KY) “is leading the charge against Trump’s tariffs.” A slice:
But the senator from Kentucky is issuing a stark warning to fellow Republicans that Trump’s tariff policies could lead to a generational political loss for the party. And he’s raking in surprising praise from his Democratic colleagues as he pushes back relentlessly on the airwaves and the Senate floor against what he describes as Trump’s executive overreach and infringement on Congress.
In an impassioned floor speech ahead of his vote to roll back Trump’s Canada tariffs Wednesday, the senator said members of Congress had “abdicated their power” over decades, and he placed the blame on both parties.
Here’s the Editorial Board of the Wall Street Journal on how the damage from tariffs spreads. Three slices:
Stocks took another header Monday as trade uncertainty continues to unnerve investors, and President Trump threatened China with an additional 50% tariff on top of the 54% already promised. One certainty is that his tariffs will inflict sweeping and hard to predict costs on businesses and consumers.
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Used car prices will also climb, AEG predicts, as demand increases among consumers who don’t want to pay higher prices for new cars. If tariffs also cause car makers to reduce their U.S. inventory, car prices will rise even more. Volkswagen said last week it would stop rail shipments to the U.S. from Mexico.
The auto tariffs will cause Americans to pay $30 billion more for cars in the first year while “investors and employees of manufacturers, suppliers, and dealers in the automotive industry will absorb at least another $30 billion in tariff costs,” AEG predicts. Over time, manufacturers will pass more of their tariff costs onto consumers, including the higher costs of reworking supply chains to produce more cars and parts in the U.S. So much for the claim that foreigners will pick up all tariff costs.
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In other words, companies will try to mitigate their higher costs by various means, including by raising prices on products and services not subject to tariffs. The impact of Mr. Trump’s tariffs will ripple through the economy, especially if they cause consumers to pull back their spending.
This may be why shares in U.S. steel and aluminum makers have also plunged. Even the purported beneficiaries of tariffs inevitably become victims as an ebbing tide maroons all ships.
Here’s the bad news: That’s not the end of the bad news.
As ugly as the stock market losses have been, the big hit from Trump’s tariffs probably haven’t even arrived yet. As always, the stock market is not the economy—it’s an aggregated indicator of what investors think the economy will look like in the future. Right now, they think it will be bad. Really bad.
It’s hard to blame them. In addition to crashing Americans’ retirement accounts and wiping out huge amounts from American companies (Apple and Nike were among the biggest losers in Friday’s rout), Trump’s move will soon raise taxes, wreck supply chains, and make basic goods more expensive or difficult to obtain.
In other words, even if you aren’t affected by the stock market sell-off, you’ll feel the effects of the tariffs before long.
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“A trade war triggered by Trump’s chaotic tariffs is the same type of aggregate shock as the Covid crisis, but worse,” warns Ben Golub, a professor of economics at Northwestern. As the tariffs degrade the ability of modern international supply chains to function, he wrote on X, the results will be “supply shortages and price spikes.”
Phil Magness reveals the flimsiness – to put it politely – behind Trump & Co.’s case for tariffs.
Pierre Lemieux describes “the ugliness of the great protectionist state.”
Good pt here from @RameshPonnuru: achieving Trump’s balanced trade goal requires a massive increase in government control over the economy – in the US and abroad.
Damon Root explains that “Trump’s tariffs violate the constitutional separation of powers.”
“We have a bad globalization narrative, not bad economics” – so explains economist Kyle Handley.
There has been much media hype likening Mr. Milei to Mr. Trump. The Argentine enjoys the attention, perhaps thinking it might help get favors from the White House. But Mr. Milei is an economic liberal. Mr. Trump is not, as this latest effort to stop Americans from buying foreign-made goods demonstrates. Rather than seeking favor with Tariff Man, Mr. Milei would be better served enhancing Argentina’s economic and financial independence by repairing the country’s broken monetary system. Dollarization is the best way to get there.
The good news is that Mr. Milei’s success isn’t dependent on an enlightened U.S. president. Sixteen months after he took office, the self-described libertarian has made important strides toward freeing his nation from the death grip of peronism. Inflation is expected to end this year below 25%, down from over 210% in 2023. Deregulation has slashed the cost of doing business, and the economy is on track to grow at 5%.
Liberals are prepared to sacrifice much for a peaceful and co-operative world order, which can come about only by the exercise of great self-control and a talent for compromise.
DBx: By “liberals,” Minogue here refers to persons much more akin to the likes of Adam Smith, the American founders, and John Stuart Mill than to modern American ‘progressives.’
