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
