The Trade Deficit is Worse Than We Thought: De Minimis Hides $128 Billion of U.S. Imports

            Summary: This is the first ever estimate of substantial missing import data due to the U.S de minimis program. The “de minimis” provision of U.S. customs law allows imports valued at less than $800 to enter the U.S. duty-free. The impact of de minimis on the U.S. economy is large and getting larger. We…

Alternative Pillar 1 Formulas for International Fairness

by Jeff Ferry and David Morse Jeff Ferry is chief economist and David Morse is tax policy director at the Coalition for a Prosperous America. They thank Mary Hollenbeck for her data collection and additional research for this article.In this article, Ferry and Morse examine the advantages and disadvantages of pillar 1 of the OECD…

Trillion-Dollar Capital Flows Into the U.S. Are Driven By Tax Avoidance, Trading, and a Tiny Bit of Real Investment

Global capital flows are the driving force behind the rise of the dollar, which rose 3.9% in 2021. In the last ten years, the dollar is up 25.5%[1]. The US attracts capital for many reasons, including tax avoidance, speculative trading, and a relatively small amount of genuine investment. The deregulation of financial markets in the…

U.S. Trade Policy: Over Half a Century of Unreciprocated Tariff Cuts

U.S. Trade Policy: Over Half a Century of Unreciprocated Tariff Cuts By Amanda Mayoral, CPA Economist   Summary Points: The US held high tariff rates from 1816 until the middle of the 20th century The US then cut tariffs more than most countries, often unilaterally, without also requiring tariff reductions by others Today, the US has…

Can the MAC Make the Federal Funds Rate More Effective?

Background When inflation threatens America’s stability and economic growth, the Fed raises the Federal Funds Rate (FFR). This reduces domestic demand for borrowed funds, and that reduces the growth of domestic money in circulation and thus the rate of inflation. This approach worked reasonably well from the 1930s when the FFR became an official policy…

Not All Tariffs Are the Same: A Case to Consider Optimal Tariff Policy

Not All Tariffs Are the Same: A Case to Consider Optimal Tariff Policy   By Amanda Mayoral, CPA Economist   Summary Points: Despite popular misconception, economic theory has long suggested that tariffs can benefit a country, particularly one like the US. The most advantageous tariffs are optimal tariffs. This is because optimal tariffs balance the…

Tariff Incidence in the Real World: Why Consumers (Mostly) Didn’t Pay the Steel Tariffs

Summary points: The import price of steel fell in the period following the 2018 imposition of a 25% steel tariff, an indicator that steel tariffs were not passed entirely onto consumers. Steel tariffs did not lead to a proportional rise in consumer prices of steel-intensive goods, such as automobiles. In many instances, firms will internalize…

Worker-Centered Trade Means Reshoring U.S. Industries

In June, U.S. Trade Representative Katherine Tai gave a speech in which she outlined her vision of worker-centered trade, a popular phrase among Biden administration officials. According to Tai: “Build Back Better starts by growing the economy from the bottom up and the middle out and putting workers at the center of our economic plans…In…