economy

Food For Thought

Dave Davis Commentary, Policy, Uncategorized , , , ,

It took only a few moments after the Supreme Court’s long-awaited tariff decision for President Trump to strike back by imposing an across-the-board 10% tariff. Within 24 hours, he increased it to 15%. Under Section 122 of the Trade Act of 1974, the tariffs remain in effect for the next 150 days. At that point, the tariff authority will expire unless Congress acts. Not to worry, the administration will have completed the mandatory work to continue the tariffs under yet another statute.

The same affected importers and others are likely to sue to prevent implementation. Still, given how long it took to secure a favorable decision on the original statute used to justify Trump’s torrent of tariffs, the administration will remain one step ahead of relief.

As for getting a refund for the illegal tariffs collected, Judge Kavanaugh, in his dissent, said that’s messy. Litigating the refunds could take years, according to Treasury Secretary Scott Bessent.

Nice try, Supreme Court, but the courts are just too slow to keep up with those bright administration people. Trump’s beloved tariffs will remain, while importers will grow old waiting for their refunds.

According to the administration and its media supporters, the importer’s High Court victory is just a mirage. Nothing has really changed. Trump will keep your money and keep collecting in the future.

That’s one plotline for the future of the Trump tariff regime, but there might be another script. The stage for court challenges to the administration is the Court of International Trade (CIT). This court will hear the demands of Costco, FedEx, and many others for refunds.

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The Real Trump

Dave Davis Commentary, Policy, Uncategorized , , , ,

We finally have the Supreme Court tariff decision. Even though they took too long in a faster-moving world, it is as predicted. The Court ruled that all tariffs imposed under the International Emergency Economic Powers Act (IEEPA) were illegal in a 6-to-3 decision. The majority acknowledged what the first article of our Constitution clearly states: that duties (tariffs), like all taxes, are the exclusive province of Congress.

Predictably, the President threw a hissy fit. His main ire fell on two of the justices he appointed, Neil Gorsuch and Amy Coney Barrett,, even going so far as saying their families are ashamed of them or should be. At the same time, he praised the three conservative judges who backed the tariffs, Clarence Thomas, Samuel Alito, and Brett Kavanaugh. The latter wrote the key dissenting opinion. He made three points: the statute gives unlimited tariff power, the linking tariff power to the ability to conduct foreign affairs, and refunding the money would be “messy.

All three justices claim to be Scalia originalists, meaning simply applying the original intent of the law. What is confusing about the original intent of the first article of the Constitution that gives the power of the purse, including duties, exclusively to Congress? The thinking behind this traces back through British history and law, and the framers’ intent is crystal clear. What part of “no taxation without representation” don’t they understand? The majority in Chief Justice’s opinion stated the obvious.

The contention that the President needs the power to impose a punishing tax on U.S. citizens to conduct foreign affairs would be news to the Founding Fathers. This idea is like a child demanding his way, or he’ll hurt himself. As two recent studies have shown, Americans, not foreigners, pay 90% of the tariffs.

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Head-scratchers

Dave Davis Commentary, Policy, Stopping Inflation, Uncategorized , , , ,

Confusion rules. Has there been a time when, other than wars or economic reversals, everything was so up in the air? In just the last couple of weeks, we’ve had a meltdown over frozen Greenland, a fleet racing to the Middle East for possible military action against Iran, and the appointment of a Federal Reserve chairman philosophically at odds with the President, who appointed him. All with worldwide implications. What can we make of all this?

We’ve gone from giving the U.S. Greenland or else, to we’ll work things out—no big deal. Wait, wasn’t our need to possess Greenland a necessity for national defense? As I pointed out in the last post, we already had access to everything in Greenland that we would ever need. We antagonized our allies for no discernible end. Will Trump return to his demands again down the road?

The administration is correct in acknowledging the Arctic’s rapidly increasing importance. Still, as others and I pointed out, China has more to fear from us regarding the new Arctic trade routes than we do from it. This map makes it obvious where the choke point for both routes lies, and it isn’t Greenland. It is already part of the U.S., our state of Alaska:

As you can see, both new shorter routes run through the Bering Strait, which Alaska dominates. A reasonably strong Alaska military position could close the strait to China’s trade, and China would have to pay hell to regain passage there, even if they could. After all, China would have to move its forces a great distance under to attack, only to find a well-positioned enemy. If we take the proper military steps in Alaska, we, not China, possess the leverage in the Arctic.

Given this strategic fact, Trump’s campaign to grab Greenland was about his legacy, rather than national defense. We’ll determine the cost of his vanity later.

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No Predictions, Just Clues

Dave Davis Commentary, Policy, Uncategorized , , , ,

As I alluded to in my last post, I was optimistic a year ago. Wrong on a lot, but I had some idea of how things might go. Right now, I have to admit, I’m clueless. The Ukraine War still rages. We’re bombing boats on the high seas and suspected terrorist sites in Nigeria. Not exactly peace on earth.

Inflation is still uncomfortably high. The national debt gets scarier by the minute. Employment is dicey, and manufacturing jobs are falling. Consumer sentiment is weak:

Yet the stock market keeps hitting new highs, and the economy is growing. What gives? Darned if I know, given today’s crosscurrents. I’ll share the clues I’m looking for that clarify the situation.

The first, expected early in 2026, is the Supreme Court’s ruling on the executive branch’s tariff powers. So many of Trump’s second-term actions depend on his ability to slap tariffs on anyone at will; any limits will change the face of his administration. Without knowing what restrictions the court will put on the executive, it’s hard to plan.

If the court narrowly decides that the law underlying the tariffs fails to cover them, but no further, the administration can invoke another law and reimpose the tariffs. Those who are negatively affected will sue again, and we’re back to square one, confused. Previously, I complained that the court was taking way too much time to decide a fundamental constitutional question: Does the first article of the Constitution mean what it clearly states, only Congress has the power to levy tariffs?

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What Works?

Dave Davis Commentary, Policy, Uncategorized , , , ,

Progressives have the word ‘affordability’ and are going to run with it. Two prominent areas where costs are particularly burdensome for the public are housing and healthcare. Ranting about high prices only gets you so far. At some point, you have to come up with solutions.

Who better to look to for progressive answers than Ezra Klein, the New York Times columnist, turned the left’s Abundance guru due to his co-authored book “Abundance.” For the latest from the left on healthcare, who better than the principal author of the Affordable Care Act, Ezekiel J. Emanuel?

In his book, Klein unearthed the reason for our inability to build anything. We don’t make enough houses because of government restrictions and red tape. Heavens, what else will he find directly under his nose? He provides us with this illuminating chart in a recent article to state the obvious:

Klein offers insights into progressive solutions. The Center for American Progress and the Searchlight Institute would give some rent subsidies, but, like all subsidies, this would only add to demand, not increase supply, unless you could address the red tape and restrictions.

Many of the restrictions are aimed at preventing the construction of multi-family units in established single-family housing communities. Klein admits this could lower values, so there is no incentive for owners to increase density. People rarely vote against their economic interests.

This situation leaves Klein with one solution that I’ve expounded on in this blog: modular housing. Do the major work in factories rather than on-site. He, again, cites the Center for American Progress. “It wants the federal government to seed a major research program to fund innovation in housing construction.” Backdoor subsidies through military and other government purchases would maintain market continuity and the demand needed to bring in manufacturers.

Klein puts it this way, “One problem the modular housing industry has faced is the absence of steady demand to keep the factories running and work out the kinks of construction.” But then he refers to Sweden, where “more than 40 percent of new homes — and more than 80 percent of single-family homes — are fabricated off-site.” How can a small nation maintain a vibrant modular home industry when we have a market 32 times greater, and we can’t?

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