Tariffs are becoming widely accepted by U.S. politicians and policymakers as an important tool for maintaining and rebuilding our industrial economy. But quotas, a related tool, can sometimes work better to restrain imports and encourage growth in domestic production, investment and jobs.
Proposals for new tariffs face a lot of criticism these days, from the media, from economists, and from foreign policy types. Part of the reason is that it’s Donald Trump making the proposals and many in those groups don’t like Trump. But the fact is that tariffs can work to build our economy. They have worked before and they have worked recently as well.
MP Materials, the only active rare earths mining company in the U.S., is making great progress. And yet at the same time, the company just reported a financial loss. The contradiction illustrates the challenges involved for the U.S. in rebuilding a rare earths industrial capability.
Excessive imports siphon demand for goods and services away from American producers and drive the government to run a budget deficit to cover that gap.
Euphoria over artificial intelligence has seized the technology industry, the stock market, and the world. But for the U.S. economy as a whole, the AI boom is very likely to be a huge productivity disappointment.
A 10% “universal” tariff on all U.S. imports, combined with a schedule of income tax cuts would generate economic growth of $728 billion and 2.8 million additional jobs, according to the CPA economic model of the U.S. economy.
The quarterly CPA Monitor tracks currency misalignment based on latest monthly exchange rates. Dollar overvaluation worsened to 16.9%, as hope of U.S. interest rate cuts
So what is comparative advantage? Comparative advantage occurs when the ratio of costs in one country differs from the ratio of costs in another.
Airbus is the greatest success of industrial policy in modern history. It is the world’s most successful commercial airplane manufacturer, with a global workforce of 121,000 people around the world.
The dollar is wreaking havoc around the world, yet the federal government and Treasury Secretary Janet Yellen refuse to do anything about it.
