Dani Rodrik on the CHIPS Act

A skeptic might object that Biden’s policies have not fully borne fruit and are not yet captured in official statistics.  But the fact is that hugely capital-intensive semiconductor plants generate few jobs, relative to the physical investment they require.  TSMC’s three fab investments in Arizona are expected to employ a mere 6,000 workers – which works out to more than $10 million per job.  Even if the projected tens of thousands of additional jobs in supplier industries materialize, that is a paltry return for employment.

~ Dani Rodrik, "America's manufacturing renaissance will create few good jobs," Project Syndicate, April 22, 2024

TSMC fab under construction in North Phoenix

Dani Rodrik on manufacturing productivity

Labor productivity in US manufacturing has grown nearly sixfold since 1950, compared to a mere doubling in the rest of the economy. The result has been a striking increase in the manufacturing sector’s ability to produce goods, but also an equally dramatic decline in its capacity to generate jobs. While value added in manufacturing (at constant prices) has broadly kept pace with the rest of the US economy, six million manufacturing jobs have been lost since 1980, while 73 million non-farm jobs have been created elsewhere (mainly in services).

When Donald Trump took office in January 2017, the share of US manufacturing in non-farm employment was 8.6%. When he left office, that figure had fallen to 8.4%, despite his attempt to shore up employment through import tariffs. And despite Biden’s significantly more ambitious efforts, manufacturing employment has dropped further, to 8.2%. The decline in manufacturing employment as a share of total employment (even if not in absolute terms) seems to be an irreversible trend. 

~ Dani Rodrik, "America's manufacturing renaissance will create few good jobs," Project Syndicate, April 22, 2024

Barron's on gold's limited value in a portfolio

Our top tip on how gold behaves is this: It doesn't.  People do the behaving, and they are appallingly unreliable.  Use bonds as a stock market hedge.  If they don't work, fall back to patience.  For inflation protection, think of assets that are a better match than gold for the goods and services that you buy every week.  A diversified commodities fund has precious metals but also industrial ones, along with energy and grains.  Treasury-inflation-protected securities are explicitly linked to the consumer price index, which measures inflation for a theoretical individual whose buying patterns differ from your own, but are close enough.  Own a house.

~ Jack Hough, "Stash Some Gold in Your Portfolio - But Not Too Much," Barron's, April 26, 2025

Rick Santelli on globalization

I think it is pretty simple: globalization was deflationary.  Reversing it is the opposite.

~ Rick Santelli, CNBC, April 3, 2025

Kenneth Pringle on President McKinley's China agenda

China was also on McKinley’s agenda. 

The Middle Kingdom had been divided into “spheres of influence” by the European powers.  American business feared missing out on this huge untapped market. 

On Sept. 6, 1899, McKinley issued the Open Door Note, demanding the Europeans allow China to become “an open market for the commerce of the world.”  This wasn’t free trade in the modern sense, simply a right for all to share in the pillaging of China’s dying Qing dynasty. 

Today, the Chinese consider this era part of its “Century of Humiliation.”  It drives leader Xi Jinping in his dealings with the West.

~ Kenneth G. Pringle, "McKinley Is a Conservative Darling. Why Trump Admires the 25th President," Barron's, February 2, 2025

Kenneth Pringle on President Biden's mercantilism

In slapping tariffs of 100% on Chinese electric vehicles, and 25% to 50% on products from semiconductors to surgical masks, Biden expands a trade war started by predecessor and self-proclaimed "Tariff Man" Donald Trump.  The U.S. wants Europe to join, and China is threatening retaliation.

Biden is actually following a much older trading strategy, one favored by George Washington, Abraham Lincoln, Herbert Hoover - and Queen Elizabeth.

From the 16th to 19th centuries, trade was a national competition to protect industry, improve world standing, and pursue politics by other means.  A zero-sum game, with winners and losers.

War, colonialism, great wealth, and poverty were the consequences.  Adam Smith dubbed it the mercantile system, or mercantilism.

Now Biden, who once championed China's entry into the World Trade Organization, is using punitive tariffs against China to "make sure American workers and American business and corporations can compete and win in the industries of the future."

Welcome to Mercantilism 2.0.

~ Kenneth G. Pringle, "Biden's Tariffs Are Nothing New for U.S.," Barron's, June 17, 2024

Shaun Rein: "Hi Scotty Bessent, it's been 12 years since we last met to talk about investing in China"

Hi Scotty Bessent, it's been 12 years since we last met to talk about investing in China when you were still CIO over at Soros (btw, amazing how you moved from Soros' right hand to Trump's side despite MAGA hating Soros).

At the time, it was clear to me you underestimated China's economic rise & support for the CPC among everyday Chinese.  You were uber bearish on China because it adopted a communist political system, and you didn't think the growth rates were sustainable. You took an ideological rather than a data based view at analyzing China.  There was also a whiff of American superiority (let's be real and call it bigotry) in your analysis.

Boy, you were wrong obviously.  You should have listened to me then.  China became the world's largest retail market, powering the profits of American firms from Boeing to Nike, Apple, Estee Lauder, Buick, KFC.  It now rivals us in technology from DeepSeek to Huawei to BYD.

[...]

Now you're US Treasury Secretary. Congrats!  Again, you'll have to tell us how you switched from Soros to MAGA.

But now your underestimation of China is dangerous - it doesn't just hurt your returns for your LPs, now you're hurting the economic well being of me and my fellow Americans for being so arrogant and blind about China.

China has the resolve to push back hard against Trump's tariffs even though you think China doesn't have the cards.  Xi Jinping won't yield.  China views this as a once in a century opportunity to change the world order forever, at our disadvantage.  And the CPC's legitimacy doesn't come from a Democratic vote, it comes from making China strong again after a century of humiliation from American and European imperial powers.  In other words, the CPC has been preparing for a showdown like this since it's very existence.

China has derisked from America since 2017.  They are selling well into ASEAN and Africa.  Your America First strategy has alienated Europe and Canada so they are pivoting back to China.  We are isolated and friendless, just like you, JD Vance and Trump intended.

Xi Jinping, Wang Yi and He Lifeng won't take your call, but I will.  Maybe you'll listen to me to figure out how to extricate America from the economic and geopolitical mess you've gotten us in. 

Shipping volumes are down to covid era levels, farmers are demanding subsidies and Walmart and Apple's CEOs are telling you there will be shortages come the summer.  Our stock markets are like a casino, waiting for word from you or Trump that your tariff stupidity won't go on forever.

America and China both benefit from cooperation and mutual respect.  Let's get back to Bush era respect.  I'll even take the Obama era.

You ignored my advice once 12 years ago, don't ignore it again. 

~ Shaun Rein, Twitter/X post, April 23, 2025

Eric Schliesser on the likely cronyism from Trump's tariffs

From my own, more (skeptical) liberal perspective tariffs are an expression of mistrust against individuals’ judgments; they limit and even deny us our ability to shape our lives with our meaningful associates as we see fit.  And tariffs do so, in part, by changing the pattern of costs on us, and, in part, by altering the political landscape in favor of the well-connected few.  

Of course, in practice, tariffs are always hugely regressive by raising costs on consumer products.  This is, in fact, a familiar effect of mercantilism and has been a rallying cry for liberals since Adam Smith and the Corn league.  That is, some of the most insidious and dangerous effects of tariffs are evidently political in character.  They create monopoly profits for the connected few, who can, thereby, entrench themselves against competitors, regulators, and consumers.  It is well known that once a tariff is entrenched it is incredibly difficult to remove.  They create permanent temptations to bribe the executive and those with access to him.  

Watch for stories about import-quotas, tariff holidays, and ad hoc tariff exemptions to appear in the press and subsequent policy.  Political and economic uncertainty is generally a self-reinforcing process.  To undo it more and more actions by the executive are demanded by a scared public manipulated by profit-seeking adventurers.  It’s entirely predictable we’ll see the rise of a system of selective subsidies and cartels as Trump Tariffs are entrenched. 

~ Eric Schliesser, professor of political science at the University of Amsterdam

(Quoted by Lew Rockwell in "Trump's Insane Tariff Policy," April 17, 2025

Shaun Rein on Scott Bessent's view of China

It's not going to be an easy win for Trump's tariffs and trade war.  Scott Bessent, the U.S. Treasury Secretary, says that China isn't holding the cards and is going to fold quickly.  Now on a slight personal anecdote, I've actually advised Scott in the past when he was still at Soros Investment Management and he was investing in China.  He has been bearish and negative on China for 12-13 years, ever since I met him.  Basically, his view of analyzing the Chinese equity markets was "It's a communist country.  Thus, from an ideological standpoint, China will fail."  Well obviously in the last dozen years since I advised Scott, China's economy and political system has grown.  So Scott was not looking at data, was not looking at facts about China's strength then and he's not looking at facts and strengths now.

~ Shaun Rein, "'Made in USA:' A Wishful Scheme Dressed Up As Policy," 4:00 mark, Thinkers Forum, April 23, 2025

Shaun Rein: manufacturing is not coming back to the U.S.

Don't get me wrong, this is definitely going to bring pain to the Chinese economically.  You're already seeing scores of cheap manufacturing already closing shop and relocating to Vietnam and Cambodia. Let me also be clear, they're moving to cheaper destinations.  They're not going to bring jobs or manufacturing back to the United States.  It's just not going to happen.  American doesn't have the manufacturing ecosystem: workers, land, laws that help promote strong manufacturing.  

You're already seeing TSMC, Taiwan's big semiconductor company, has spent billions of dollars trying to build semiconductor factories in Arizona and they've had huge problems, from a human resource standpoint, from a quality control standpoint and from a regulatory standpoint.  This was supposed to be Joe Biden's baby.  So it's a pipe dream, to use a word that Janet Yellen, the former U.S. Treasury Secretary, said.  It's a pipe dream to bring all this manufacturing back to the United States.

It's much better for China to make what it's good at and the United States to make what they're good at.

~ Shaun Rein, "'Made in USA:' A Wishful Scheme Dressed Up As Policy," 9:55 mark, Thinkers Forum, April 23, 2025

Shaun Rein on China's resolve in the trade war with the U.S.

In the United States, a lot of people think that China's nervous about the trade war and is going to kneel down and fold and give in to all of Trump's demands.  That's just not going to happen.  I want to remind my fellow Americans of one word, and that's the R-word: "resolve."  Right now Xi Jinping and the Chinese people are coalescing together.  They're not scared about the United States.  They're going to push back really hard.

You have to remember two points.  First is China underwent a century of humiliation at the American and European colonial powers when they forced China to open up their borders to sell opium and to pay huge taxes to the Western colonial powers.  Because of this, China suffered for a hundred years before the rise of the CPC in 1949.  So Xi Jinping and the Chinese people are resolved not to give in a second time to imperial powers.  They're going to push back a lot harder than most Americans think.

The second this is the Chinese can eat bitter a lot more than Americans.  You have to think, even Xi Jinping himself lived in a cave for many, many years during the Cultural Revolution.  He knows what it's like to endure hardship.

[...]

What Trump is doing now, threatening our allies, threatening our adversaries, is just doing damage to the United States.  For instance, China is no longer buying American beef; they're buying beef from Australian.  China is no longer buying oil from the United States; they're now buying oil from Canada.  China is no longer buying American soybeans; they're now buying soybeans from Brazil.  China is no longer buying Boeing airplanes.  Xiamen Airlines refused to accept a Boeing airplane that had just arrived in China.  They're now buying Airbuses from France or they're expanding COMAC [Commercial Aircraft Corporation of China], the Chinese indigenous homegrown domestic airplane brand which they just signed a deal to sell several COMACs to Malaysia.

So what's happening is the entire world's [trading] system is shifting.  China can basically buy everything that America sells, except for semiconductors, from other countries.  The United States can only buy antibiotics, refined rare earth, iPhones, computers from China.  And that's why China right now has the upper hand in the trade war.

~ Shaun Rein, "'Made in USA:' A Wishful Scheme Dressed Up As Policy," 0:55 and 8:40 mark, Thinkers Forum, April 23, 2025

Augusta Saraiva on the likely decline of international tourists visiting the U.S.

International travelers spent a record $254 billion in the US last year, according to ITA figures. Coming into 2025, the outlook was positive: The ITA projected in early March that the US would welcome 77 million visitors this year, just shy of the 2019 record, before pushing to a new high in 2026.

But those estimates came out just before stories of harsh detentions at US airports, ensnaring travelers from countries like France and Germany, started making headlines. Canadians, meanwhile – the largest group of foreign tourists in the US – are choosing to stay put as Trump ramps up attacks on the country’s economy and sovereignty.

Almost $20 billion in retail spending from international tourists in the US may be at risk, according to a Bloomberg Intelligence analysis.

~ Augusta Saraiva, "US economy is set to lose billions as foreign tourists stay away," The Economic Times, April 14, 2025

Vitaliy Katsenelson on Tesla: 80% of Tesla's value is based on Elon Musk's dreams

Tesla has a market capitalization as of this writing of $780 billion.  It made around $14 billion of profit in 2023 and $7 billion in 2024.  A good chunk of profit comes not from selling cars but from regulatory credits.  It sold fewer cars in 2024 than in 2023. Unless we see a significant shift change in battery capacity, speed of charging, and improved quality and availability of charging infrastructure, we have reached peak EV penetration (I wrote about this earlier). 

However, today Tesla is not trading based on car sales but on future dreams of self-driving robo-taxis, robots, semis, and whatever else Elon dreams up.  The car company may be worth $100–180 billion; the rest is what investors are willing to pay for Elon’s dreams.

[...]

China looked like a great opportunity for Tesla, but may turn into a liability if the trade war intensifies. Finally, though at times he seems superhuman, Musk is constrained by the number of hours in the day.  As of today he is running Tesla, SpaceX, Twitter (x.com), xAI (the maker of Grok – a ChatGPT competitor), The Boring Company, Neuralink, and oh, yes, DOGE.  The EV market is getting more, not less, competitive.  Tesla needs an undistracted Musk. 

~ Vitaliy Katsenelson, "Current thoughts on Tesla," The Intellectual Investor, April 23, 2025

Ludwig von Mises on Milton Friedman

Friedman is not an economist.  He’s a statistician.

~ Ludwig von Mises

WSJ editors on Trump's bullying tactics

Mr. Trump thinks he can bully everyone into submission, but he can’t bully Adam Smith, who deals in reality.  Markets know tariffs are taxes, and taxes are anti-growth.  The Trump tariffs are the biggest economic policy mistake in decades, and extending the 2017 tax reform and deregulation may not compensate for all the damage. 

There are also fears that if tariffs fail to reorder the global trading system, Mr. Trump might impose a fee on Treasury debt as chief White House economist Stephen Miran has proposed.  This would amount to a partial U.S. default since it would cut the rate of return.  Think Treasury yields are rising now?  Watch what happens if a Miran fee is imposed. 

All of this is tempting economic fate and contributing to a global “sell America” narrative in financial markets.  That’s why the dollar is under pressure.  Smart Presidents pay attention to market signals and adapt.  The adaptation now would be to negotiate a quick end to the tariff barrage.  Claim some trade-deal victories, and call it a day. 

But markets are spooked because they don’t know if Mr. Trump listens to anyone but his own impulses. 

~ The Editorial Board, "The Fire Jerome Powell Market Rout: Investors render a verdict on tariffs and politicizing the Fed.," The Wall Street Journal, April 21, 2025

President Trump meeting in the Oval Office with Japanese Minister of
State for Economic and Fiscal Policy Ryosei Akazawa on April 16, 2025

Patrick Barron on U.S. competitiveness and need to return to the gold standard

As long as America can print fiat money to pay for imports it will print fiat money.  But under the discipline of the gold standard, Americans will have to produce good quality products at world market prices in order to earn the foreign exchange (gold) needed to settle international trade.  It’s the only way. Erecting tariffs, as desired by President Trump, solves nothing and merely exacerbates the situation.  America must learn to compete in the world on equal terms; i.e., it cannot simply print fiat dollars.  It must produce goods that foreigners wish to buy at prices that foreigners are willing to pay.  Becoming an autarkic nation, a la North Korea, will condemn Americans to poverty.  America needs to become an honest, commercially oriented nation.  If not, the world will pass it by just as has happened to other great nations in the past. 

~ Patrick Barron, "David Hume’s Insight Explains America’s Economic Decline," Going Postal, April 16, 2025

Tom Woods on creative destruction and human progress

I think everybody has to acknowledge, if we're being realistic about this, that any kind of free economy is going to have that outcome [winners and losers] because there will always be new developments.  There will be changes in peoples' tastes, preferences, resource availability, all kinds of things that change on a dime.  As Mises said, "We all, on some level, recognize that in order to get to the standard of living that we had, some things had to go by the wayside because they were taking up resources that were better used for other things."  But when we are involved with the thing that has to go by the wayside, we consider it the greatest injustice in mankind's history.  

But we all know on some level that if we don't do that, then we would be, let's see, we would be sitting in a society overflowing with rotting food because we would be producing so much, we couldn't consume it all, we'd still have the sanitary problem of horse fecal material all over the streets because we would be transported that way.  There are big changes that come in any kind of free economy, whether or not you have free trade.  And the thing is, in general, that works out for everybody.  But it can mean short-term displacement for some people.  You can try to mitigate that through social welfare and voluntary contributions and various services you can provide, but you would never want to just simply stop it because that's the way progress occurs.  That's the way progress that we all want occurs.

~ Tom Woods, "Is China Guilty As Charged?," 38:00 mark, The Tom Woods Show, April 18, 2025

Mike Adams on the coming collapse of the Trump administration (2025)

Prediction: We're going to start seeing resignations from the Trump administration.  It will start with people being FORCED out, possibly with Hegseth.  And then it will escalate as people FLEE the chaos and try to get far from the (political) blast damage radius.  The Trump administration is on the path of total self-destruction, and he's going to inflict trillions of dollars of irreversible damage on the U.S. economy and small businesses as he goes down with the Titanic.  This isn't 4D chess.  It's 2D cartoonish stupidity.  It takes a real idiot to do worse than the Democrats, but Trump is somehow managing it, not even 100 days into his new administration.  If he doesn't turn this ship around, it's over, and it won't be long before Trump is impeached and marched out of the White House as the U.S. economy collapses.  And no, I didn't vote for him.

~ Mike Adams, founder of Natural News, Twitter/X post, April 21, 2025

Bill Strong and Stephen Rahl on comparative advantage, trade deficits and reserve currency status

“The reality... is that the international trade system is designed to cheat us... every country around the world cheats us.” 

~ Peter Navarro, Counselor to the President of the United States 

“Navarro is dumber than a sack of bricks... Navarro is truly a moron.  What he says is demonstrably false.”

~ Elon Musk, Senior Advisor to the President of the United States

David Ricardo was not “dumber than a sack of bricks.”  Rather, the brilliant, early 19th-century British economist developed the theory of comparative advantage, in opposition to the then, widely accepted, mercantilism.  In his “Principles of Political Economy and Taxation” (1817) he proves that countries running trade surpluses are not “cheating” their trade partners and that free trade benefits both parties, regardless of which runs a surplus/deficit. 

Since Ricardo’s era, in the modern globalized trading world the country that has the world reserve currency must, by necessity, sustain a current account deficit.  This is because the extra demand for its “international” money must overvalue its currency.  This ensures that said country sustains more imports than exports, penalizing its net trade balance into long-term deficit.

Hence, the American dollar’s global trade dominance status provides the US with an “exorbitant privilege”—permitting only Americans to enjoy a permanent trade deficit and allowing us to live better than we otherwise would.  The idea that eliminating our current account deficit would “make America wealthy again” is exactly backwards. 

Rhetoric surrounding the radical “Liberation Day” tariff regime ignores Ricardo and harkens back to the good-old-days of tail fins and American manufacturing dominance.  We remember Dad’s made-in-Detroit 1957 Chrysler Windsor, and “good” as those days seemed at the time (real GDP per capita was about one quarter of today’s), they pale in comparison to the 21st century—partly because consumer goods were inferior and much more expensive then.  The idea that Trump’s (now paused) drastic tariff regime would improve Americans’ standard of living is a complete fantasy.

~ Bill Strong and Stephen Rahl, Eschaton Opportunities Fund Quarterly Letter Q1 2025

1957 Chrysler Windsor

Andy Kessler on U.S. trade with Asia: "we think, they sweat"

Mr. Trump’s America-first policy, as hallucinated by trade adviser Peter Navarro, is this: Make in America.  Invest in America.  Everything done by Americans.  A self-sufficient, stand-alone country.

It’s more of a political agenda than an economic one—more about protectionism and isolationism.  Trade?  Globalization?  Increased living standards?  How quaint.

Look, I’m all for America on top, but America first isn’t how you get there.  America first is a vertical model: Do everything.  But vertical always fails.  Vertical IBM made chips, wrote software, assembled computers and wrapped plastic around them.  Vertical AT&T provided phones, wires and both local and long-distance calls.

Fortunately, vertical gave way to horizontal: industries organized into layers of expertise, sorted by value added.  Intel and Microsoft owned layers in a horizontal stack that made up personal computers, leveling IBM mainframes.  The internet became a horizontal stack of routers, servers and applications, upending AT&T’s network.  Even the artificial-intelligence revolution is horizontal—Silicon Valley’s OpenAI uses Nvidia chips made by Taiwan’s TSMC using Dutch ASML’s equipment...

Globalism and trade also became a horizontal model, with the U.S. sitting on top of what I call a horizontal empire, sorted by value added.  Apple designs iPhones in California but assembles them lower down the stack in China—now shifting toward Vietnam and India—where living standards also increased.

Sadly, this horizontal model causes freak-outs over U.S. trade deficits.  But who cares?  Forget actual trade numbers.  Focus on the margin of the products flowing cross-border.  Apple has 34% operating margins.  Foxconn, which assembles trade-deficit-boosting iPhones, has operating margins of 3%.  Which would you prefer?

TVs, cars, clothes, toys and lumber that we import are all low-margin and usually labor-intensive businesses.  We export high-margin software, financial services, drugs and AI applications, all intelligence-intensive businesses.  I like to say, “we think, they sweat.”  Meanwhile, Commerce Secretary Howard Lutnick says, “Human beings screwing in little screws to make iPhones, that kind of thing is going to come to America.”  You first, Howard.

[...]

So why would you ever want to go back to a vertical, isolationist model for the U.S., leading to higher-rate mortgages and expensive cars?  A margin surplus means we let low-margin jobs move overseas and become a high-margin nation.  Living standards rose across the globe.  Smartphones and autos everywhere.  Why go back?

~ Andy Kessler, "Trump’s Protectionist Bunker: The U.S. prospers atop a horizontal empire, not as a vertical island.," The Wall Street Journal, April 13, 2025

Keyu Jin: "China is not interested in a trade war"

China is not interested in a trade war.  China is not interested in engaging more financial, economic confrontations with the United States for one reason, which is it's not going to be good for China.  It's not going to be good for the U.S. either.  The majority of China's economic challenges remains within the country.  It's internal, not external.  The focus of China is not on the U.S.  Contrary to the other way around, there is no dangerous obsession with the United States in China, unlike the dangerous obsession with China in Washington, DC.

But moreover we've heard, multiple times in the last couple months, the premier saying emphatically that China's going to be the world's opportunity, meaning China is going to open up widely, deeply, broadly and even unilaterally, if needed.  China is going to impose zero tariffs on the least developing countries.  That is a symbolic gesture of a big country trying to be part of a global story, trying to lift up the other countries in the network as well.

~ Keyu Jin, "Keyu Jin: China Doesn't Want a Trade War with the US," 7:45 mark, Rise of Asia, April 9, 2025

Keyu Jin on technology transfers to and from Chinese companies

There's a great deal of irony here.  When I was writing my book, the discussion was still about technology transfers that Chinese companies demand of international companies, and now the tape has completely turned around.  What's China's response?  Well, first of all, the Chinese government's response is first, "let the companies decide."  If it's a mutual beneficial thing, they will go ahead with it.  That's up to them.  It shouldn't be imposed from the government top down.

This is economics, right?  This is capitalism.  You're trading one thing for another, which is trading technology for market access.  I think the Chinese companies understand that very well and they're not the first to say "no" to that, because if you look at the EV sector or the batteries, Chinese companies are heavily investing in Europe, they're setting up factories, joint ventures, shifting some of the production or research centers into Europe.  Not into the U.S., by the way, but in Europe, and that is good for both the Chinese companies and for Europe.

Keyu Jin, "Keyu Jin: China Doesn't Want a Trade War with the US," 6:25 mark, Rise of Asia, April 9, 2025

Kevin Duffy on national defense

The best, most efficient defense is a strong economy (i.e., must be free and open) and commercial ties (interconnectedness, your neighbors have too much to lose by going to war with you).  Neutrality is also important to avoid entangling alliances.  High gun ownership levels provide a second line of defense.  This is basic Founding Fathers stuff. 

The U.S. also has the enviable position of friendly neighbors to the north and south and oceans to the east and west.  This is probably the most defendable place on earth.  There is no way the U.S. needs to spend 3.5% of GDP on its military, i.e. 40% of the world total with 4% of the world's population. 

The military industrial complex is a problem.  They are not exactly an impartial assessor of global threats.  They're a protection racket that constantly needs to justify their own existence.  Like all government entities, they want to grow.  They can't be trusted and they're constantly creating external enemies and making us less secure.

~ Kevin Duffy, April 20, 2025

Kevin Duffy on export subsidies

Exports subsidies are wealth transfers from the exporting country's taxpayers to the importing country's consumers.  The importing countries should welcome and encourage them. Instead of complaining, send thank you notes.

~ Kevin Duffy, Twitter/X post, April 21, 2025

Murray Rothbard on how foreign aid subsidizes exports

Another crucial feature of post-World War II establishment trade policy in the name of "free trade" is to push heavy subsidies of exports.  A favorite method of subsidy has been the much beloved system of foreign aid, which, under the cover of "reconstructing Europe," "stopping Communism," or "spreading democracy," is a racket by which the American taxpayers are forced to subsidize American export firms and industries as well as foreign governments who go along with this system.  Nafta represents a continuation of this system by enlisting the U.S. government and American taxpayers in this cause.

~ Murray Rothbard, "The Nafta Myth"

(Article appeared in Making Economic Sense, p. 308.)

Murray Rothard on free trade

The major point is that genuine free trade requires no negotiations, treaties, super-power creations, or presidential jetting abroad. All it requires is for the United States to cut tariffs and quotas, as well as taxes and regulations. Period. And yes, unilaterally. No other nations or governments need get into the act.

~ Murray Rothard, "'Free Trade' in Perspective"

(Article appears in Making Economic Sense on p. 304.)

1995

Kevin Hassett on Trump's tariffs (2025)

I don't believe that the tariffs are going to be very inflationary at all.

~ Kevin Hassett, FOX Business interview, 6:10 mark, April 18, 2025

John Tamny on US government threat to business in China

As always, I so badly want Americans (Fox watchers in particular) to visit China.  It would so WIDELY open their eyes.  Oh, the love the Chinese have for all things American.  It sickens me that we're so blithely turning what's beautiful into governmental warring, and perhaps warring of the shooting kind.

~ John Tamny, personal note, April 18, 2025

Eunice Yoon on Xi Jinping's willingness to negotiate on trade

I think that the Chinese have shown that they are willing to negotiate, that they do eventually want to have some sort of meeting... The rhetoric from the Chinese perspective out of the White House is not actually that helpful because the way things are being set up is that President Trump is the kingmaker and that all these countries around the world are going over there and groveling and asking for deals.  From the Chinese perspective, this cannot happen because for President Xi Jinping it is so politically dangerous for him to be seen as crawling over to the United States asking for a deal.

~ Eunice Yoon, CNBC's Beijing Bureau Chief, "China’s Xi Jinping Sends Trump a Message as His Trade War Spirals," 3:30 mark, The Daily Beast, April 14, 2025

Xi Jinping: "There are no winners in a trade war"

There are no winners in a trade war, or a tariff war.  Our two countries [China and Vietnam] should resolutely safeguard the multilateral trading system, stable global industrial and supply chains, and open and cooperative international environment.  Trade war and tariff war will produce no winner, and protectionism will lead nowhere.

~ Xi Jinping, editorial jointly published in Chinese and Vietnamese official media, April 14, 2025

Phil Gramm and Larry Summers on the "hollowing out of American manufacturing"

The primary argument for the implementation of broad-based tariffs is that they will reverse the hollowing out of American manufacturing and reduce the trade deficit, which is causing a "hemorrhaging of America's lifeblood."  Contrary to the repeated claim, there has been no hollowing out of American manufacturing.  Industrial production in the U.S. is at an all-time high.  The U.S. is producing 2.5 times as much real industrial output as it did when we last ran a trade surplus in 1975.  We are producing that record output with the smallest percentage of the labor force since America became fully industrialized.  The percentage of the civilian nonfarm labor force employed in manufacturing peaked in World War II and has been in secular decline ever since.  This has been a great success for productivity and not a failure of trade, as today's full employment attests.

It is telling that the Trump tariffs implemented in mid-2018 and the Biden expansion of those tariffs didn't stop the secular decline in manufacturing employment as a percentage of total employment.  The decline in manufacturing employment is being driven by the same secular forces that caused employment in agriculture during the 20th century to fall from 40% to 2% of the labor force: a vast increase in labor productivity and a decline in manufactured products relative to services.  This is a worldwide phenomenon occurring in both developed and developing economies.

~ Phil Gramm and Larry Summers, "Gramm and Summers: A Letter on Tariffs From Economists to Trump," January 30, 2025

Dan Ferris on DOGE

DOGE will wind up hot having nearly as much teeth as people want it to, spending will stay high, the bombs will keep dropping and the debt will keep rising.

~ Dan Ferris, "Expect Corporate Bankruptcies and a Recession This Year," April 7, 2025

Janet Yellen on President Trump's tariffs

I’m afraid I could not give it a passing grade, I’m sorry.  This is the worst self-inflicted wound that I have ever seen an administration impose on a well-functioning economy.  So we had a very well-functioning economy, and President Trump has taken a wrecking ball to it.

~ Janet Yellen, CNN interview, April 11, 2025

Kevin Duffy on the trade war with China

Trade is win-win. This is Econ 101. If you understand that, you don't mess with trade. 

I don't understand all the anti-China sentiment in this country. What did they ever do besides ship us inexpensive goods in return for our government bonds which will end up worthless? They raised our standard of living and financed our deficits. We should be sending them thank you notes. The attack on China started a long time ago in the '90s. In fact, in 1996 a younger Nancy Pelosi warned about rising trade deficits with the Chinese. She sounded like Donald Trump. Feel free to fact check me on this.

The Chinese are smart and resilient. When they were targeted by Trump's first trade war in 2018, they adapted and de-risked from the US economy. That's why they're one of the few countries that is standing up to the bully. Bravo. I applaud them.

When Biden took office, many expected him to back away from Trump's trade war and anti-China rhetoric. Instead, he amped them both up.

Btw, US multinationals (Starbucks, Apple, Tesla, Shake Shack, etc.) do about $500 billion a year of business in China. That doesn't show up in the trade deficit. China's BYD is the biggest producer of EVs in the world, but it's locked out of the US market by 100% tariffs imposed by the Biden administration. But you don't hear that because it doesn't fit the narrative.

As a result of Trump's first trade war, trade with China has declined. So has the trade deficit. In fact, it's the lowest it's been since 2010. Doesn't fit the narrative.

This trade war risks blowing up the global economy and taking our 401Ks with it. Who is to blame? Both parties, but honestly, we're all to blame.

~ Kevin Duffy, Facebook post, April 10, 2025

Mark Skousen on President's 2018 steel tariff

Q: President Trump did say all of this will really lead back to the American dream being attainable again...  Do you see that happening?

A: No, absolutely not and in fact I think the president is delusional and I think he's making a major mistake.  Look, I'm a professional economist and one of the things I teach at Chapman University - and I've taught at Columbia and other big schools - is cost-benefit analysis.  Don't just look at the benefits that we're achieving through these tariffs, you have to look at the costs.  The rise in the cost to consumers: you're not going to see cheap clothing and toys and sports, and even automobiles are going to increase dramatically in price.  So what is the cost?

Well in 2018, President Trump imposed a 25% tariff on steel.  It created a thousand jobs in the United States, but it also lost 75,000 jobs.  Why?  Because steel is an import and that raises the cost and causes trouble.  You have to remember, the automobile industry has 30,000 different parts and do you know how much comes from outside the United States in imports?  40%!  So even U.S. cars are going to see a dramatic increase in price.

~ Mark Skousen, "Trump Unveils Sweeping Tariffs Plan," 2:15 mark, Newsmax, April 3, 2025

Scott Bessent: "Our trading partners have taken advantage of us"

This has been years in the making, this unsustainable system.  Our trading partners have taken advantage of us.  We can see this through the large [trade] surpluses.  We can see this through the large budget deficit.

[...]

After 20, 30, 40, 50 years of bad behavior, you can't just wipe the slate clean.

~ Scott Bessent, Treasury Secretary, "Treasury Sec. Bessent says ‘there doesn’t have to be a recession’: Full interview," NBC News "Meet the Press," 2:50 mark and 9:30 mark, April 6, 2025

Kevin Duffy on trade deficit accounting

There is no "trade deficit" any more than your family runs a chronic trade deficit with the local grocery store.  Trade is mutually beneficial.  You value the food more than the money, the grocery store values your money more than the food it gives up. 

Outside of barter, there are all kinds of money exchanges in an economy.  Employees run a money surplus with their employers.  Businesses run money deficits with their suppliers and employees.  There are also exchanges that have nothing to do with goods and services, such as a depositor putting money in the bank (depositor runs a deficit, bank runs a surplus) or the government borrowing money (government runs a surplus, lender runs a deficit). 

So anytime someone claims Americans are getting ripped off by foreigners, consider perhaps the most successful company in the history of capitalism, Apple.  Apple does A LOT of business in China (16% of total revenue).  They run deficits with Chinese suppliers and surpluses with Chinese consumers.  Everyone is happy. 

But then Apple does something unforgivable: it imports iPhones to the U.S. for sale to its customers!  Again, everyone is happy.  In fact, because everyone Apple touches through money exchanges is happy - suppliers, employees, customers - the company is wildly profitable.  And that makes investors happy.  How happy?  Until Trump's trade war, Apple was valued at $3.6 trillion, the most of any company in the world.  Today, that's down to $2.8 trillion.  This makes total sense that shareholders have seen $800 billion of their wealth evaporate in 2 months: Apple is in the crosshairs of a trade war which mainly targets China.

A "trade deficit" is an accounting fiction, a contradiction in terms.  When Apple imports an iPhone and sells it in the U.S., it's counted by the U.S. Bureau of Economic Analysis, but when Apple sells an iPhone in China, it's not.  Using worthless trade statistics as an excuse to diminish trade is dangerous folly.

~ Kevin Duffy, Facebook post, April 6, 2025

Keyu Jin compares the political systems of the U.S. and China

In the U.S., parties change but policies don't.  In China it's the opposite.

~ Professor Keyu Jin, "Prof. Keyu Jin: What Americans GOT WRONG About China's Economy," Rise of Asia, January 18, 2025

Peter Navarro on the trade deficit: "it's the sum of all cheating"

What the trade deficit does for any given country, it's the sum of all cheating.  It's the sum of all unfair trading practices.

~ Peter Navarro, senior counselor to the president for trade and manufacturing, CNN interview, April 3, 2025

Kush Desai: U.S. trade deficits are a "national emergency"

The only special interest guiding President Trump’s decisions is the interest of the American people.  The entire administration is aligned on addressing the national emergency that President Trump has rightfully identified is posed by our country running regular trade deficits.

~ White House spokesman Kush Desai, "Wall Street Gets Rude Shock as Bessent Plays Second Fiddle on Tariffs," Bloomberg, April 5, 2025

Stephen Miran: "In the long run, the tariff rate will make the United States more competitive"

The wrongs of excessive trade imbalances and the wrongs of excessive globalization didn't happen overnight and they also won't be fixed overnight...  In the long run, the tariff rate will make the United States more competitive, vis a vis our trading partners.

~ Stephen Miran, Fox News interview, April 4, 2025

Daniel McAdams on big government in America

America has massive problems, which can be summed up in two words — overwhelming government. Despite some impressive exposures from DOGE, our chief problem is being exacerbated.  Government spending is increasing, government debt is increasing, President Trump threatens new wars, and now we’re in the midst of a trade war.  The troops are not coming home, the 1,000 bases are not being closed, and the “foreign aid,” is not being eliminated.  In order to get rid of overwhelming government, all of these variables have to move in the opposite direction.

~ Daniel McAdams, "More Spending, More Debts, More War — And A Trade War?," LewRockwell.com, April 4, 2025

Max Rangeley and Daniel Hannan on the post-WWII trade order

In closing, we know what happened when the world moved away from Cobdenite [free trade] principles.  It happened at the beginning of the 20th century with cataclysmic consequences.  Indeed it was precisely as a reaction to the horrors of the two wars, the Holocaust and the Holodomor that delegations from the free nations met in Bretton Woods in 1944 and agreed to a progressive reduction in trade barriers, a policy which led to the creation of what is now the World Trade Organization and to seven decades of unprecedented democracy as well as unprecedented prosperity.  

That process is now going in reverse.  Trade is falling as a proportion of global GDP and we are seeing a revival of the doom loop between political instability and autarkic tendencies.  "The owl of Minerva," wrote Hegel, "spreads its wings only with the gathering of the dusk."  If ever there was a time to remind ourselves how fortunate we have been in the economic order we have enjoyed, that time is upon us.

~ Max Rangeley and Daniel Hannan, Free Trade in the Twenty-First Century," Preface

2025

Mark Thornton on protectionism

It's important that Austrians and friends of the Austrian School realize that protectionism is just a step forward to war.  It's a step forward to human impoverishment and it's a step towards human division, hate and devolution.  Protectionism is the health of the state.

~ Mark Thornton, "Free Trade in the Twenty-First Century," Minor Issues, 3:40 mark, March 29, 2025