Economists have long understood that, because the US trade balance is determined by global macroeconomic factors (i.e., savings and investment at home and abroad), its size and trajectory would be generally unaffected by discrete national trade policies—even global tariffs. And because the causes of the trade balance vary from benign to problematic (or both), economists generally don’t think it’s a useful scorecard for US trade policy or the economy more broadly. 

On each account, the data keep proving them right. 

As Figure 1 shows, despite more than a year of historically high tariffs and after wild pre- and post-tariff gyrations, the nominal US trade deficit was actually higher in August than before this administration’s grand tariff experiment began last spring—just as trade economists and other experts predicted before the tariffs began.

Read the rest of this post →

In a recent MarineLink op-ed, maritime consultant Rik van Hemmen argued that the Jones Act is a cost-effective means of meeting the country’s national security needs and that further debate on the law is a waste of time. Neither is true. The Jones Act is both a costly and ineffective means of addressing defense requirements, and debate over the law’s future—to be followed by profound policy changes—is long overdue. 

The national security case for the Jones Act, which restricts domestic waterborne cargo shipments to vessels that are US-flagged, US-built, and US-owned, is fairly straightforward. Theoretically, such measures provide the United States with ships in wartime to transport equipment and supplies for the military, the trained mariners to crew them, and shipyards that can both build new vessels and repair existing ones. The problem is that the law delivers only a fraction of its advertised benefits, at a wildly disproportionate cost.

Read the rest of this post →

In his recent article, “The Strange Death of Libertarianism,” conservative Daniel McCarthy argues that libertarianism has lost its raison d’être and is no longer relevant. Free markets, he says, triumphed in the 20th century; marijuana and pornography are mainstream; and Americans are supposedly demoralized by “anti-government ideology.” Libertarianism apparently has nothing new to offer, so it’s time to move on with “right-wing populism” in the fight against a resurgent “socialism.” Mr. McCarthy also makes clear that Vice President JD Vance and Secretary of State Marco Rubio, potential 2028 presidential candidates, prefer “common-ground” capitalism and align with right-wing populists.

Two things strike me about his argument. First, libertarianism is much more than a list of policies, such as free markets and legal marijuana. It is a theory of individual liberty and political power, centered on a timeless question: Who decides—the individual or the government? Second, libertarian ideas do not become obsolete because they succeed. Their success shows their power—and why the struggle for individual liberty, limited government, free markets, and peace never ends. The ominous rise of socialism and right-wing populism, both of which share some economic and political views, only makes libertarian ideas more relevant.

Read the rest of this post →

A new Congressional Research Service (CRS) report contains a startling fact: it’s cheaper to ship phosphate rock to Louisiana from Peru (~2,300 nautical miles away) than Florida (~500 nautical miles). And it’s not even close. According to an official with phosphate producer Mosaic, the Peru route is almost half the cost of shipping from Florida despite its much longer distance and Panama Canal fees.

The reason for this disparity is the Jones Act, a federal law that restricts the transportation of goods between US ports to vessels that are US-flagged, US-built, and US-owned. Those vessels cost roughly four times as much to operate as foreign-flagged ships and four to five times as much to build. And sometimes the ships simply don’t even exist. As the CRS report points out, the most cost-effective vessel for moving phosphate rock is a dry bulk ship. But of the thousands of such ships in the world, not a single one complies with the Jones Act.

Read the rest of this post →

Two months ago, when the Office of the United States Trade Representative (USTR) imposed new Section 301 tariffs on 60 economies for failing to ban imports made with forced labor, the agency followed up with a press release highlighting praise from certain American firms, advocacy organizations, and trade associations—including Big Steel. Among those quoted was Nucor Steel’s chair and CEO Leon Topalian, who said that the steel company “has long supported strong trade enforcement to level the playing field for American manufacturers in the face of global overcapacity and unfair trade.” He added that USTR’s actions “target areas where American manufacturers have been harmed while preserving critical supply chains.” Nucor’s definition of unfair trade driven by forced labor must not include the conditions at one of its Brazilian suppliers, detailed earlier this week by Bloomberg. 

Read the rest of this post →

When the Trump administration announced broad, high tariffs in early 2025, importers rushed to bring goods into the United States before the duties took effect. The impact of this import “rush” went beyond causing a brief spike in monthly US imports; firms’ stockpiling of imports helped mitigate cost increases for importers and delay price increases for final consumers. In other words, in the absence of stockpiling, the administration’s import taxes would have proven even more costly for Americans, and consumers would have likely shouldered a higher share of those costs. 

The administration is cracking down on importers stockpiling imports of polysilicon and polysilicon derivatives (most notably solar cells and modules) that will be subject to new tariffs and price floors beginning on December 4. Though narrow in scope, this measure—published in the Federal Register two days after its effective date (September 22)—may pave the way for more expansive restrictions in the future, given the legal basis the administration is relying on to pursue it. 

Read the rest of this post →

Some political elites hold the longstanding view that pursuing a protectionist trade policy could help bolster the American working class. For instance, as Katherine Tai, Biden’s US trade representative, put it: “Tariffs and trade can—and in our view must—be used as part of a strategy for growing the middle class and empowering the working class.” The Trump administration has a similar perspective and has pursued a trade and tariff policy that it claims will help American workers.

However, recent polls from the Cato Institute/​Morning Consult in March of 2,002 registered voters and in August of 4,150 registered voters found that tariffs have not been well received among working-class American voters.