From Independent Institute <[email protected]>
Subject A Dumb Trade War is Not Wise Economic Statecraft
Date February 5, 2025 11:00 PM
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February 5, 2025

Welcome to The Lighthouse ([link removed]) , the weekly email newsletter of the Independent Institute covering politics, economics, current events, and everything in between.

Dear Readers,

In an unprovoked move, President Trump has thrown the world into chaos by threatening punitive tariffs against our allies and neighbors in Canada and Mexico. Trump's convoluted messaging pivots between describing these measures as protection for American industries, as a negotiating tactic in the international arena, and even as a new source of tax revenue. He does not seem to realize that each of these goals contradicts the other two. In practice, Trump risks supply chain disruptions, Wall Street turmoil, and the retaliatory contagion of a trade war that threatens to saddle Americans with higher prices and additional taxes. In the international arena, tariffs have angered and alienated friendly nations and Trump's alleged "3D chess" has only yielded concessions that Canada and Mexico had already put on the table before he was in office. With a 30-day "pause" on new tariffs in effect, Trump is now ensuring that these policy relics of 17th century mercantilism will continue to plague our
economy with uncertainty and turmoil in the months to come.

At the end of the day though, a tariff is a tax, and taxes are antithetical to a free and prosperous society. My colleague Bill Evers has put together a masterful and comprehensive bibliography on the free trade versus protectionism debate. I put it at the top of this week’s reading list so you wouldn’t miss it. I highly recommend sharing it with your friends, family, and anyone wondering how to defend free market values from this administration’s ill-informed attacks.

Also this week, Nikolai Wenzel breaks down the different policies supported by more-informed and less-informed voters. Benjamin Powell argues that Trump should increase high-skilled immigration. My colleague Jonathan Hofer analyzes DeepSeek’s innovation and gives us reasons for hope. Paige Lambermont explains why wind and solar tax credits are horrible (and actually destroy the power grid). And Scott Beyer makes a brilliant case for home flipping.

Happy reading.

Phillip W. Magness
David J. Theroux Chair in Political Economy

Top picks this week
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** Recommended Readings on Free Trade Versus Protectionism ([link removed])
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** Everything You Need to Know about Open Markets, Comparative Advantage, and Globalization ([link removed])
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** by Williamson M. Evers
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What is needed today is a revival of the ideals of free trade and a recognition of the perils of protectionism. This annotated reading list gives necessary intellectual sustenance to those arguments.
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** Of Budgets and Biases ([link removed])
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** by Nikolai Wenzel
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Everyone has biases … but biases have economic consequences.
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** Trump Should Increase High-Skilled Immigration ([link removed])
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** by Benjamin Powell
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If Trump wants to make the American economy great again, he should ignore conservative fear-mongering about H-1B visas.
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** Is America Poised to Overreact to DeepSeek? ([link removed])
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** by Jonathan Hofer
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Is AI the new atomic bomb for 21st-century warfare? Has America found itself in a new kind of arms race against Chinese software developers? Or do we need to calm down?
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** Wind and Solar Tax Credits are Destroying the Grid ([link removed])
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** It’s time to choose reliability. ([link removed])
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** by Paige Lambermont
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If reliable power sources can’t make money, they will close. That’s exactly what’s happening when these subsidies disrupt the economics of the power mix.
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** Home Flipping Brings Value to Society ([link removed])
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** Along with providing a bottom-up path to entrepreneurship, flippers bring housing that was dated or out of commission back into the marketplace. ([link removed])
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** by Scott Beyer
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The people who claim home flippers are simply rapacious profiteers who fuel gentrification and displacement couldn’t be more wrong.
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** FEATURED BOOK - AVAILABLE NOW!
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** Race & Liberty (Updated Edition) ([link removed])
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** The Essential Reader ([link removed])
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** Edited by Jonathan J. Bean
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With new contributions from Thomas Sowell, Coleman Hughes, Thomas Chatteron Williams, Kenny Xu, David Bernstein, and Ilya Somin—as well as a plethora of primary source evidence from recent landmark US Supreme Court decisions—Bean champions the values of colorblindness, freedom, and equal constitutional protection for all individuals—regardless of race. It’s a message that couldn’t be more timely.
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