The inability to distinguish between Japan in the 80s and China in the present perfectly demonstrates the libertarian right’s attachment to theory at the expense of reality
In the '80s and '90s, Dick Gephardt and other Democrats talked up "economic nationalism." Japan was a bogeyman. I remember an ad with an ominous rising sun. Republicans laughed at all this -- scorned it as ignorant, demagogic, and boobish. Now the Republicans have embraced "economic nationalism" (along with nationalism tout court). When you're young, you read about how the parties switch policies. Then when you're older, you see it "in real time."
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Every media outlet in the country has spent the past two years searching for a company bankrupted by tariffs. They’d love to write that article. Hasn’t happened. Below is the best they have: a retailer closed 10% of their stores. Keep trying guys!
🧵 I am sorry to learn that North Carolina-based women's budget fashion retailer Cato Fashions is closing 120 stores because of tariffs, rising fuel prices, and weakening family budgets. 1/
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The attitude that the $15 billion Mesabi Metallics steel mill announcement is "imaginary" is curious, given that this follows a very real $6 billion investment by Hyundai and a very real $11 billion investment by Nippon in American steel mills. It's possible that the Mesabi project fails, but the snide dismissal of the confirmed trend of investment and expansion in steel is bizarre.
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Free traders have long concluded this doesn’t matter. When manufacturing employment was declining, they said it was because of tariffs. When it started rising, they started saying it would have risen even more without tariffs. Heads I win, tails you lose
Manufacturing was on a three-year slide, hemorrhaging jobs, but has been rising this year - a welcomed reversal to a sector that had been hammered since '22:
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Free traders keep having to move their target. First it was PMI. Then it went positive. Next it was manufacturing employment. Then that went positive. Now they’re focusing on manufacturing construction spending. We’ll see what happens!
Factories add 9,000 jobs in September. Up 72k this year. Manufacturing employment up 1.2 million jobs since its March 2010 bottom. We can do this!
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Steel prices are higher in the United States because they're set by the market instead of Chinese industrial policy.
We have a competitive domestic steel market, with a ton of demand and at least five major producers. The difference between our market and everyone else is that everyone else welcomes in massively subsidized Chinese steel and then gives additional subsidies to their guys to keep them in business. That means their steel prices are lower, but almost no one is making any money producing it. It's government steel.
We tariff that steel. As a result, the price distortion created by Chinese subsidies doesn't infect our market.
The result is that our steel market is the only one where prices are set by firms operating in a competitive market economy. Everyone else's steel prices are effectively set by the Chinese state.
In that context, tariffs allow capitalism to work. Because our market is competitive and American producers can actually earn a return making steel, investment is increasing and output is expanding. Every US steel company is in growth mode. With more supply, the price will come down, which is exactly how we built our steel industry in the first place.
That’s how you get cheaper steel sustainably: not by having China subsidize it, but by allowing American companies to compete to make more of it.
While the President parades the obvious beneficiaries of protection through the Oval Office, we shouldn’t forget that those gains are paid for by others, including other American businesses and workers. ericadyork.substack.com/p/pr…
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Genuinely don't understand this perspective. Manufacturing construction spending is significantly up compared to the pre-2022 trend, even though CHIPS Act and IRA projects are no longer contributing. This is true in basically every sector measured, not just the electrical category that includes data centers. This is consistent with expanding PMI and six straight months of manufacturing employment growth. The bottom line is that people predicted that tariffs would kneecap manufacturing and they just didn't.
American factory construction inched down to the lowest level since 2022 in official data released today as CHIPS Act projects finish and tariffs weigh on nearly all industries
Total US factory construction is down 33% from its 2024 highs and 20% over the last year alone
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Seeing a lot of negative sentiment about the largest investment in American steel on record because the investor’s parent company is foreign. But that’s a classic industrial policy outcome.
Tariffs are designed to incentivize serving your market by producing inside of it instead of exporting to it. When foreign firms want to tunnel under your tariff wall and build industrial capacity that didn’t previously exist, that’s a win. If, on the other hand, your demand is being served via exports, 100% of the jobs and capacity growth are necessarily enjoyed overseas.
Mesabi Metallics is owned by an India based company and is already an H1B sponsor.
So how many of the 1,750 jobs at its new Iowa steel plant will actually go to American workers?
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The global economy has already been “reshuffled” by massive Chinese state intervention. It’s not a natural market outcome that China supplies half of global manufacturing demand and pulls global prices so far down that market-based firms can’t earn a return. That isn’t “efficient,” it’s just Chinese industrial policy. Tariffs correct for that distortion.
Because the pre-tariff allocation of production isn’t efficient, tariffs don’t necessarily make the economy less productive. In fact, manufacturing productivity (the sector most impacted by tariffs) has increased by over 2% this year compared to an average of 0.1% from 2007-19, when low tariffs should have been making us hyper-productive and efficient.
What “tariffs work” really means is benefits for the protected sector and costs for everyone else. More often than not, this reshuffling of economic activity results in a less productive economy overall. ericadyork.substack.com/p/wh…
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Tariffs are the only reason why the United States still has a steel industry of any size. China's excess capacity alone is sufficient to satisfy 100% of U.S. steel demand. If we let them, they would.
Free traders frequently set the bar for tariff effectiveness at whether they triggered a "boom" in the year or two after implementation. This is ridiculous, because the point of tariffs is to trigger a structural readjustment in demand that requires investment, construction, etc. over longer time horizons. The whole point is that you're building capacity that didn't previously exist. If it did, you wouldn't need tariffs.
The idea that previous tariff rounds settle the question is also ridiculous. Bush's 2001 steel tariffs were in effect for less than two years and exempted Canada and Mexico. Trump's 2017 steel tariffs quickly became Swiss cheese and exempted even more countries in even less time. Certainty is crucial, and if you can't provide it, there's a limit to how much new investment you can drive. The main forces blocking this certainty are free traders and importers who, in the past, have been able to kneecap tariff enforcement and then crow about how tariffs don't work. It's a shell game.
For a test of whether the current round of steel tariffs can drive new investment, see e.g. Mesabi Metallic's announcement yesterday of the largest investment in the history of American steel, which followed two other massive capital commitments (Hyundai and Nippon). Output is up across the sector, employment has held steady (a big win given what's happening in other countries) and new capacity coming online brings the price down. That's how it's always worked since the days of my favorite tariff "experiment," which is the creation of the American industrial base behind a 25-40% tariff wall during the Industrial Revolution.
"It is time to stop treating the outcome of tariff policy as a hypothetical. The experiment was run in 2001 and failed. It was re-run on a grand scale since 2017 and failed. It is not good economic policy. And in a month it will prove to be poor politics as well" 🔥 mailchi.mp/americanactionfor…
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This is a good example of how tariffs can structurally disadvantage smaller markets like Canada.
Both the US and Canada have 50% steel tariffs on each other. That should give each country's steel industry equal protection. But in reality, Canada's steel sector is contracting while the US sector is growing.
Because the US is a much larger market, Canadian steel loses more from reduced exports than it gains from protecting the smaller domestic market. For US steelmakers, it's the reverse. Tariffs lead to expansion because the industry gains more in the massive domestic market than it loses from lost exports to smaller markets like Canada.
This dynamic creates a permanent disadvantage for Canada in the trade war. The cost of retaliation is much higher for Canada than it is for the US.
Hamilton steel plant to lay off hundreds of workers as U.S. tariffs prompt ‘survival’ move. Canadian steel imports to U.S. face up to 50% tariffs, @jefflagerquist reports cbc.ca/news/canada/hamilton/…
Find out more at nationalnewswatch.com
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This is why “targeted tariffs on China” don’t work:
1. We tariff China
2. China diverts exports away from the U.S. and towards Europe and Asia
3. European and Asian producers offload the pressure from new Chinese competition by increasing their exports to the U.S.
With a China-only approach, we remain the consumer of last resort, balancing everyone else’s imbalances by accepting their exports (as long as they aren’t shipped directly from China). If we don’t want to play that role, we need global tariffs.
"Carmakers including Volkswagen, Stellantis and Toyota have targeted the US market to offset plummeting sales in China & declining profits in Europe & elsewhere. That's OK if that means building more in the US. Not OK if it means exports.
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The people cry out for their rightful ruler. They drink secret toasts to the health of classical liberalism, Sire
There's a reason you are seeing an angry backlash right now against libertarians/classical liberals coming from the Postliberal and NatCon right. It has to do with the fact that they can't compete with us on the substance of ideas, and they know it.
Even the "best" Postliberal/NatCon scholars are either mediocrities with weak publishing records (excluding their own house blogs) or they are older academics like Deneen and Vermeule who got tenure for stuff they did decades ago & then transitioned into postliberal activist writing that probably could not pass peer review at any credible mainstream outlet.
The Postlibs/NatCons also lose just about every debate they have with us on the substantive points, be it free trade vs tariffs (or really any economic subject), the history of the American founding, the contours of political philosophy, the evidence of whether their preferred policies work as intended (see also: Orbanism), you name it. Whenever Oren Cass goes up against a real economist, he gets his rear end handed to him or worse - he gets caught fabricating evidence or badly misreading source documents, and then he lashes out with name-calling. As a result, the Postlibs/NatCons have generally retreated from the debate space on all of these issues.
Turning to their published works, it's invariably dreck. Deneen and Hazony's books are comically superficial to the point of being visibly out of their depths on the subjects, thinkers, and historical events they attempt to discuss. When they venture into the economic sphere, they display an incompetence that does not even know the scholarly literature and that seldom ventures beyond obsolete crankery from the 19th century. And their claims about the political sphere, be it on policy or even the mood of popular opinion, are undermined by empirical evidence that they often never even considered because it conflicts with their ideological priors.
So instead, they go on the attack against libertarians and classical liberals to try to discredit these ideas through sloppy caricatures. And then they proclaim their own "victory" like the armless, legless Black Knight from a Monty Python sketch.
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