FACT: The U.S. African and Haitian trade preference programs end this month.

THE NUMBERS: U.S. imports 2024 –

WHAT THEY MEAN: 

Lesotho’s Government Gazette typically announces pretty mundane things: Cabinet appointments, revisions of traffic regulations, annual financial statements, etc. The Gazette’s Bulletin #57, out on July 7 and labeled “Extraordinary,” is different:

“Pursuant to section 3 of the Disaster Management Act, 1997, and acting on the advice of the Board through the Minister in the Prime Minister’s Office, I, Nthomeng Majara, Acting Prime Minister of Lesotho, declare a state of disaster on socio-economic effects on high rates of youth unemployment and job losses in Lesotho which threaten the livelihood of the people of Lesotho. This declaration shall be for a period of two years with effect from the date of publication in the Gazette to the 30th of June, 2027.”

When Mr. Majara uses the term “disaster,” he isn’t exaggerating.

As a point of departure, since 1974, the U.S. has provided support for small and low-income countries through an array of “trade preference” programs (a technical term meaning “U.S. law waiving tariffs”). Two of these programs, the “African Growth and Opportunity Act” (“AGOA” in common usage) and “HOPE/HELP”, date to the early 2000s and have used clothing tariff waivers to underwrite and growth in Haiti and a number of African countries — Kenya, Madagascar, Tanzania, Ghana, as well as Lesotho and South Africa — for a generation.

Their last renewal and update came in 2015. It gave them a ten-year lifespan, which runs out on September 30, 2025. So, absent an urgent Congressional action, both stop at the end of this month. Some background on their impact, and the likely consequences:

Lesotho is a small, landlocked country of two million people in southern Africa. As we pointed out some months ago, its 33 garment companies are especially successful AGOA users, and are Lesotho’s largest sources of wage-paying jobs. (Top product: four million pairs of blue jeans.) Employment isn’t the industry’s only value: Southern Africa is the region hit hardest by the HIV/AIDS pandemic, Lesotho has the world’s second-highest HIV-positive rate at 19.3% of adults, and garment factories have joined the American PEPFAR program as large-scale providers of HIV treatment and education.

Haiti is as “preference-reliant” as Lesotho, shipping 47,500 tons of garments to American shops each year via Miami, topped by 195 million cotton T-shirts. Last year’s receipts were just under $600 million.  This industry is “resilient” in policy jargon.  Having weathered the 2007 Port-au-Prince earthquake — owing to factories built to international standards, on-site electricity generators, and dedicated transport services for workers — and though eroded by the past three years’ chaotic Port-au-Prince politics, it employed 24,850 hourly-wage workers at the end of July.

In practical terms, the end of these programs means that Lesotho’s jeans — now duty-free — will get both a 16.6% MFN tariff and the Trump administration’s 15% “reciprocal” tariff. That is, a 31.6% tax by Columbus Day as against none at all this week. Haiti’s duty-free T-shirts will get a 16.5% MFN rate and a new 10% “reciprocal” rate, for an overall 26.5% penalty. And though recitations of tariff rates can make for dry reading, again: when Mr. Majara uses the Government Gazette to announce a disaster, he isn’t exaggerating.

Lesotho’s clothing orders started drying up in the summer, and the garment economy is starting to collapse. Two first-hand accounts by American journalists from August illustrate the consequences:

National Public Radio: “Maqajela Hlaatsane, 54, has been working in Maseru’s garment industry for decades — a job that’s allowed her to raise her children on her own. Like many here she’s a single mother who has been empowered by joining the workforce. Now she’s unemployed and hungry, she says, pointing to the water bottle she carries around drinking to try to trick herself into feeling full. What food she has she’s saving for her family. ‘I’m here looking for a job,’ she says, standing on the street in the garment district where the smell of sewage fills the air. ‘My family can’t survive on water alone.’ Like many searching for work, she’s unclear why the U.S. imposed such massive tariffs on her desperately poor country, but they all keep repeating one name: ‘Trump, Trump, Trump.’”

NYT (subs. req.): “In ordinary times, Maseru’s residents greet the month’s end with an exhale, collecting their salaries and sometimes treating themselves to a little splurge. The Lapeng Bar and Restaurant in downtown Maseru usually draws crowds indulging in Maluti Premium Lager and tripe stew. But the end of July had been eliciting dread. Dread that their children might not be allowed to attend school next week, without enough money to pay their fees. And that they’ll fall further behind on bills. And that they’ll need to rely on family and friends to purchase food so they can eat more than once a day. ‘We are just hoping the Messiah can come,’ said Solong Senohe, the secretary general of Unite, a Lesotho textile worker’s union. For many people, like Neo Makhera, it was already too late for divine intervention. On Tuesday afternoon she huddled around a fire at the side of a road, selling loose cigarettes and vegetables. She’s been doing this, and offering to wash her neighbors’ laundry, since April when she lost her job sewing Reebok T-shirts and shorts.”

Last thought: In the world of American trade flows, the AGOA and HOPE/HELP numbers are pretty small. Last year’s $1.76 billion worth of African- and Haitian-stitched clothes made up about 2% of America’s annual clothing imports, and less than 0.1% of last year’s $3.3 trillion in imports. Unless you’re looking, you might not notice when they lapse.  But in the economies of Haiti, Lesotho, and other African AGOA beneficiary countries, they’re very large. And this unfolding human disaster can still be arrested.

The two weeks left before the expiration date aren’t a long time — but they are still enough for Congress to act before the clocks run down.

FURTHER READING

PPI’s four principles for response to tariffs and economic isolationism:

• Defend the Constitution and oppose rule by decree;
• Connect tariff policy to growth, work, prices and family budgets, and living standards;
• Stand by America’s neighbors and allies;
• Offer a positive alternative.

News from Lesotho:

Acting PM Majara announces a national disaster.

… and the Lesotho Times reports.

On-the-ground reporting from the New York Times and National Public Radio.

And the Lesotho Embassy in DC.

And from Kenya:

Lesotho is far from alone in its alarm.  Here for example is a headline from The Star in Nairobi: “Mass Job Loss Looms as Curtains Drawn on AGOA Pact.”

Program background:

The U.S. Trade Representative Office’s AGOA page.

And the International Labor Organization reports on Haitian garment workers.

Read the full email and sign up for the Trade Fact of the Week.

FACT: Humanity is ‘aging’ three months each year.

THE NUMBERS: Median age,* worldwide –

* Our World in Data
 

WHAT THEY MEAN: 

We last looked at the graying world in the fall of 2023. Here’s a reprise, with two more years of data:

Until the 19th century, life expectancy at birth was about 30, and a 25-year-old expected (on average) to live to 50. One rare exception who made it to the tenth decade — 90-year-old Usama ibn Munqidh, a Syrian aristocrat living in retirement at Saladin’s court in 1185 — found the old age experience a dismaying surprise. In his youth, he would happily ride off on weekends to spear a few Crusaders or some charismatic megafauna; now he’s worn out by a few hours with a calligraphy pen:

When I wake up I feel like a mountain is on top of me
When I walk, it’s like wearing chains
I creep around with a cane in my hand …
My hand struggles to hold up a pen, when it once
Broke spears in the hearts of lions.

Nobody’s surprised now. The elderly demographic is the world’s fastest-growing, adding 15 million octo- and nonagenarians, plus half a million over 100, since 2020. Birth rates, meanwhile, have dropped by half in the last 50 years. So humanity is steadily aging. Per the Our World in Data table, the world’s “median age” — that is, the age of the person exactly in the middle — rises about three months a year. At 30 years and a month as of 2022, it’s now about to hit 31. (Meaning that this actual “median person” is a “millennial” born early in 1995.) By the next U.S. presidential election, it will likely hit 32. A little detail, beginning with a sample list of median ages by country –

Pulling back a bit, Africa is the world’s “youngest” region, with a median age just above 19. Europe is the “oldest” at nearly 43, and Latin America is in the middle at 32. Asia is mixed: the South Asian tier is relatively youthful (Pakistan at 21, India 29, Sri Lanka 33); ASEAN skews a bit older, from the 26 in Cambodia and the Philippines to 41 in Thailand; Hong Kong, Taiwan, and Korea join Japan and Korea on the world’s aging frontier. China is a notch younger but aging fast: the median Chinese out-aged his or her median-American counterpart in 2019, turned 40 this year, and is now a year and a half older than the median American.

Youngest: The world’s youthful extreme is in the Central African Republic, where the 14.5-year-old median person is possibly a lycee sophomore (or more likely, in a 56% rural country, a farm kid pondering a move to the city). Niger, Somalia, Mali, Chad, and the Democratic Republic of Congo are one grade older, all somewhere between 15 and 16.

Most typical: The countries most closely representing this year’s world demographics, each with a median age between 30 and 31, are Bhutan, Indonesia, Malaysia, and Panama.

“Oldest”: Japan, whose median age will likely cross 50 this winter (after reaching 30 in 1977, and 40 in 1998), is furthest out on the gray frontier.* Italy is next at 48, followed by Hong Kong and Portugal at 47, with Korea, Bosnia, and Germany.

So: Over the 2020s and 2023s, expect production and consumer booms in India, Africa, and parts of the Middle East. Americans, and the U.S.’ neighbors north and south, will be aging. And Europeans and East Asians, having long since put down their spears and growing tired as they push around the modern equivalents of calligraphy pens, can look forward to labor shortages, lower growth rates, and politics increasingly dominated by arguments over how to pay for health and pensions. Maybe not very inspiring but still, as ibn M. might agree, better than any currently realistic alternative.

* Counting countries with populations above 100,000. The Vatican, with about 800 people, is technically the oldest country, with its various Cardinals, secretaries, and Swiss Guards at a median age of about 57.

FURTHER READING

 PPI’s four principles for response to tariffs and economic isolationism:

• Defend the Constitution and oppose rule by decree;
• Connect tariff policy to growth, work, prices and family budgets, and living standards;
• Stand by America’s neighbors and allies;
• Offer a positive alternative

Aging:

Our World in Data’s interactive table of median ages by country, region, income group, etc., from 1950 to the present with projections to 2100.

The CIA’s World Factbook ranks countries by life expectancy.

And Usama ibn Munqidh has perspective on old age and lots more — medieval battle tactics, poetry and calligraphy advice, Crusaders’ odd gender habits and loony trial-by-ordeal legal theories, and the mighty Saladin.

Countries:

Indonesia, at 240 million people, joins Malaysia, Panama, and Bhutan at the demographic median. Stat-portrait here.

Japan will be the first country (again, setting aside the Vatican and a couple of other micro-states) to pass 50.  Through the lens of Nippon Steel’s eventually successful bid to purchase U.S. Steel, Senior Fellow Yuka Hayashi explains how this is playing out in Japanese industry and foreign direct investment.

And only in the Central African Republic are most people 14 years or younger.

And at home:

As America’s population approaches the 40-year median Japan reached in 1998, PPI’s Ben Ritz and Nate Morris look at Social Security at 90, with demographics, financing, and policy ideas.

… and the broader PPI Budget Blueprint sets out tax, health, retirement, interest, and other reforms to bring down long-term debt, stabilize retirement and health programs, free up money for discretionary spending, and ensure “fiscal democracy” for the next generation.

ABOUT ED

Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.

Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.

Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank ProgressiveEconomy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.

Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.

Read the full email and sign up for the Trade Fact of the Week.

FACT: Las Vegas unemployment is up 12% this summer.

THE NUMBERS: Canadians returning home from U.S. visits by car –

* StatCanada

WHAT THEY MEAN: 

FURTHER READING

PPI’s four principles for response to tariffs and economic isolationism:

• Defend the Constitution and oppose rule by decree;
• Connect tariff policy to growth, work, prices and family budgets, and living standards;
• Stand by America’s neighbors and allies;
• Offer a positive alternative.

In better times:

Then-Pres. Reagan signs the U.S.-Canada Free Trade Agreement, September 1988.

PM Mulroney pitches the idea to anxious Canadians, December 1987.

… and from the Canadian Embassy, U.S.-Canada state-by-state trade data.

Now:

The Trump administration’s Feb. 1 emergency decree claims a northern-border “emergency.”

… CBP drug-seizure stats don’t show one.

Up north:

PM Mark Carney assesses in April …

… responds to August 1 tariff threats: preserve USMCA, diversify Canada’s options, reform at home.

… and speculates on a Canada-EU future.

And the Pew Center polls Canadians on views of President Biden, Mr. Trump, and the United States.

Nevada focus:

StatCanada counts shrinking numbers of tourists returning home.

… Air Canada likewise.

UNLV’s Center for Business and Economic Research has research and data updates on Las Vegas, Clark County, and Nevada.

Las Vegas hotels and casinos gloomily report falling occupancy and revenue.

… and the Las Vegas Review-Journal concurs, finding the city’s employment rate the second-highest in the U.S. this year.

Hawaii’s tourist authority has a similar but not quite as bleak outlook.

ABOUT ED

Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.

Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.

Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank ProgressiveEconomy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.

Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.

Read the full email and sign up for the Trade Fact of the Week.

FACT: ‘Export control’ decisions ought to be made on ‘national security’ grounds, and the government shouldn’t earn money from approving sales.

THE NUMBERS: Export licenses granted for military-related technologies –

WHAT THEY MEAN: 

• Understand the state of technology in fields as different as microbiology, artificial intelligence, materials science, avionics, and ballistics, whether in the United States or elsewhere.
• Make reasonable estimates of the effect export limits would have on potential adversaries. (Slow them down? Push them into developing their own technologies independent of U.S. input? Both at the same time?)
• Make reasonable estimates of the impact lost export revenue would have on American research, development, and future technological leadership.
• Then, integrate these to reach the best available judgment on the national security merits of a specific application to export one of the listed products.

FACT: Main likely impacts of Trump administration trade ‘deals’:
higher prices, uncertain export and investment benefits, policy instability.

THE NUMBERS: Extra tariff burden, February to mid-July 2025 –

* Customs and Border Protection summary, through July 13th .

WHAT THEY MEAN: 

Though the administration has announced lots of July’s trade “deals” — the European Union, Japan, Korea, Vietnam, Thailand, Cambodia, Malaysia, Indonesia, the Philippines, Pakistan, Bangladesh — it hasn’t posted any actual agreement texts. In only one case (Indonesia) has published a “Joint Statement” with an agreed description of the contents. So lots about them is uncertain. With that noted, though, the arrangements appear to have three main features: higher prices for Americans, some commitments for exporters/intellectual property holders/investment seekers; and more future policy instability. More details and initial reactions to each –

1. Higher prices: First, bluntly put, most Americans will lose from these “deals.” Their common feature is a very high tariff, imposed by decree rather than legislation, on goods bought from abroad. Vietnamese-made goods like shoes and consumer electronics, for example, will get a 20% tax. So will pretty much everything from Taiwan and Bangladesh. Japanese and Korean products — cars, boats, matcha, MRI machines — get a modestly lower 15%, while things from the Philippines, Thailand, Cambodia, Indonesia, and Pakistan are at 19%. All are loaded on top of the regular, Congressionally authorized “MFN” tariff system. (“MFN,” the acronym for “most favored nation,” the term of art for the standard non-discriminatory approach to tariff rates.) The EU “deal” is somewhat different, imposing a 15% fee which replaces rather than being added to the regular MFN tariff rates. (Unless the regular rate is above 15%, in which case it just stays in place unchanged.)

For historical context, the overall average resembles the 19.8% tariff Franklin Roosevelt inherited from his predecessor Herbert Hoover in 1933. Alternatively, some specific product examples illustrate the daily-life impacts. Asian grocery stores buying cans of straw mushrooms from Vietnam, for example, will now pay 28.5% plus 6 cents per kilo. That’s three times the 8.5% plus 6 cents they were paying in March under the MFN tariff system. Auto repair shops buying Japanese or Korean brake-pads and fanbelts will pay 17.5% rather than 2.5% (and 15% for the German or Swedish equivalents); lovers of Dutch Gouda and Edam cheese, meanwhile, will pay 15% rather than the 10%. Or, in dollar terms, three months’ worth of “emergency decree” tariffs have already cost American buyers about $52 billion.

Tentative conclusion: Expect to pay more for things.

2a. Export commitments: Second, some Americans will benefit from export, intellectual property, and/or foreign investment commitments. Until the “deals” are published, we won’t know what these really are. But if the July 22 arrangement with Indonesia is a representative example, it includes some useful benefits and a lot of murkier “agreements to talk.” On the “useful” side, the U.S.-Indonesia “Joint Statement on Framework for United States-Indonesia Reciprocal Trade” unambiguously says Indonesia will “support a permanent moratorium on customs duties on electronic transmissions at the WTO immediately and without conditions”. (PPI view on the 30-year-old WTO “moratorium” and its value here.) The clauses on tariff and non-tariff issues, by contrast, lack timelines and feature cryptic phrasing: the U.S. and Indonesia “will work together to address Indonesia’s non-tariff barriers that affect bilateral trade and investment in priority areas” such as cars and agriculture, and “will negotiate facilitative rules of origin that ensure that the benefits of the agreement accrue primarily to the United States and Indonesia.”

Tentative conclusion: Wait to see the agreement texts before drawing any conclusions.

2b. Investment commitments: The arrangements with high-income allies also feature some commitments to invest in the United States, in the form of headline numbers: “$600 billion” from the EU, a “$350 billion” Korean investment fund, and “Japan will invest $550 billion directed by the United States to rebuild core American industries.” To put this in context, in 2024, Japanese firms invested $39 billion in U.S. industries through FDI, and Japan’s holdings of long-term securities grew by $91 billion. So new Japanese investment in the U.S. would likely hit $550 billion naturally over a few years, and the commitment might mean very little in real life. Alternatively, and more positively, the U.S. and Japanese governments might encourage specific private-sector investments like Nippon Steel’s purchase of the troubled U.S. Steel corporation.

Tentative conclusion: Don’t expect much.

3. Uncertainty: Finally, the so-called deals’ lives may be short. They all originate in the April 2 decree declaring the U.S. trade balance to be a “national emergency,” and then using the International Emergency Economic Powers Act to override Congressionally set tariff rates. The specialized U.S. Court of International Trade’s “V.O.S. Selections vs. Trump” decision struck down all the “IEEPA” tariffs on May 28 as an impermissible grab at Congress’ Constitutional power to set rates for “Taxes, Duties, Imposts, and Excises.” The Court of Appeals heard oral argument on this ruling last Thursday, and the Supreme Court will probably get the case this fall. If the C.I.T.’s view holds up, the “deals,” tariffs, costs, and (probably) commitments could be gone by Christmas.

Nor are the courts the sole source of uncertainty — the administration itself is another. The “deals” originate in a belief that the U.S. trade balance is a “national emergency.” (Professional economists pretty much shred that idea here.) But the effect of any deals on trade balance will be only marginal. This is because (a) a country’s trade balance equals the gap between its savings and its investment; (b) combining July’s tax cut bill with higher tariffs almost certainly means a higher U.S. fiscal deficit, and therefore (all else equal) a somewhat lower U.S. national savings rate, and (c) barring some unexpected surge in family savings, or a collapse in investment, the trade deficit will probably rise. If that’s the case, the administration might rip up this year’s arrangements and start all over again next summer — as it has done with the first Trump administration’s 2018 renegotiation of the U.S.-Korea Free Trade Agreement, which it wrongly advertised at the time as having “secured changes that will reduce the trade deficit”.

Tentative conclusion: Don’t expect policy stability soon.

FURTHER READING

PPI’s four principles for response to tariffs and economic isolationism:

• Defend the Constitution and oppose rule by decree;
• Connect tariff policy to growth, work, prices and family budgets, and living standards;
• Stand by America’s neighbors and allies;
• Offer a positive alternative.

Compare and contrast:

The National Archives’ official Constitution transcript; see Article I, Sec. 8 for power to set rates for “Taxes, Duties, Imposts, and Excises”, and to “regulate Commerce with foreign Nations”.

And from the administration, the “Joint Statement” with Indonesia; “Fact Sheets” for Japan, Korea, and the European Union; and an overall summary.

Legal update:

Court of Appeals oral arguments from last Thursday.

The administration’s Court of Appeals filing.

Amicus brief from House and Senate Democrats defending Congressional tariff authority.

Economists’ amicus brief explaining that trade balances are not emergencies.

The Court of International Trade’s May 28th decision (see V.O.S. Selections v. Trump, #25-66)

… or direct to the V.O.S. Selections v. Trump opinion in a PDF.

International Emergency Economic Powers Act text.

A solution:

Rep. Linda Sanchez (D-Cal.) and all other Ways and Means Committee Democrats propose a revision of IEEPA, Section 301, and Section 232 to require Congressional approval of any new tariffs, quotas, or other trade limits under these laws.

And some econ. and stat background:

The IMF on the basics of savings, investment, trade balance, current accounts, when they might matter, and when they probably don’t.

And from the Census, a one-page sheet with U.S. exports, imports, and trade balances from 1960 to 2024.

ABOUT ED

Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.

Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.

Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank ProgressiveEconomy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.

Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.

Read the full email and sign up for the Trade Fact of the Week.

FACT: High-seas pirate attacks are up 50% this year.

THE NUMBERS: Pirate attacks* –

* International Maritime Bureau.

WHAT THEY MEAN: 

Statistically, the risk of a pirate attack isn’t high. UNCTAD’s Review of Maritime Transport found 108,789 civilian vessels — trawlers, cruise ships, container ships, tankers, etc. — on the water last year. Fishing fleet data is less precise, but FAO’s most recent State of World Fisheries and Aquaculture suggests that somewhere around 70,000 big fishing boats. Set against these tens of thousands of ships, the Kuala Lumpur-based International Maritime Bureau reported 116 pirate attacks last year. This is the second-lowest total in their thirty years of reporting, and down nearly 80% from the 471-attack peak in 2005.

Nonetheless, it’s bad if it happens to you. The May 30 attack on the MV Orange Frost illustrates. This is an eight-year-old refrigerated bulk carrier, built in Taiwan and Curacao-flagged, 8,726 deadweight tons and 137 meters long. At the time, it was carrying a cargo of fish from Cameroon to the Republic of Congo. IMB’s attack summary:

“Seven pirates boarded the ship underway. [Note: they were steaming south past Sao Tome e Principe, about 70 nautical miles from nearest land.] Alarm raised, distress message activated, and all but two crew retreated into the citadel. A Nigerian Navy team responded, boarded the ship, and assisted the crew. On inspecting the ship bloodstains were identified near a ladder used by the pirates. It is suspected a crew member [later reported to be the second engineer] was kidnapped. The ship sailed to a safe port.”

As an example of this year’s pirate events, this one is pretty typical. First, it occurred in a high-risk location, the Gulf of Guinea being one of three long-time centers of pirate activity, along with the busy Southeast Asian waters around Singapore and Indonesia, and the Horn of Africa. Second, like 71 of the 90 attacks this year, this was a high-seas attack in international waters; only 15 attacks so far have targeted ships at anchor, and only four ships in dock. Third, bulk carriers are frequent targets, hit  in 34 attacks so far this year, as against 23 on tankers, 13 container ships, 4 fishing trawlers, and the remaining 16 miscellaneous vessels. And finally, it had apparently limited goals, with the pirates looking for a theft and kidnapping-for-ransom opportunity rather than trying a full hijacking.

Stepping back a bit, though, IMB’s data suggests that pirate attacks are becoming more frequent and more dangerous. Some indicators:

• The attack on MV Orange Frost was the 62nd of 90 such attacks so far this year – 50% up from the 60 attacks reported in the first half of 2024.
• Seven attacks involved kidnappings like that of the unlucky Second Engineer, a Russian national whose fate hasn’t been reported;
• 34 attacks involved guns, nearly as many as the 43 involving firearms in the years 2021, 2022, and 2023 combined; and
• Four involved successful hijacking of an entire ship, as compared to four ship hijackings in all of 2024, one each in 2021 and 2022, and two in 2023.

By region, attack counts are sharply up this year in two of the three high-risk areas.  The biggest jump has been in maritime Southeast Asia, with 57 of this year’s 90 attacks in the Singapore Strait.  IMB’s summary suggests that these are mainly opportunistic operations: “Pirates/robbers [in the Singapore Strait] are usually armed with guns, knives, and/or machetes. Pirates/robbers normally approach vessels during the night. When spotted and alarm is sounded, the pirates/robbers usually escape without confronting the crew.”

Attack counts are also up (though totals are lower) around the Horn of Africa.  Here, ships must pick their way between an ominously reviving Somali pirate fleet to the south and the Houthi movement running Yemen on the north. Where most Southeast Asian and West African pirates appear to be small-scale (though violent) opportunists, Somalia’s pirates operate on an industrial scale, using military weapons and in the 2010s attacking ships as far south as Mozambique and Madagascar:

“Somali pirates have the capability to target vessels over 1000 nautical miles from coast using ‘mother vessels.’ In 2025, two fishing vessels and a dhow were hijacked.  … Generally, Somali pirates tend to be well armed with automatic weapons and RPGs.  They sometimes use skiffs launched from mother vessels, which may themselves be hijacked fishing vessels or dhows.”

At their peak 15 years ago, Somali pirates had captured 49 ships and were holding over 1,000 crew hostage.  International naval patrols suppressed the industry in the mid-2010s.  It may now be reviving, perhaps taking advantage of the “security shadow” cast to the north of the Gulf of Aden by the Houthi militant movement in Yemen, to resume large-scale pirate ventures. Somali pirates mounted all four of last year’s successful ship hijacks, and three of this year’s four.

The Gulf of Guinea has been quieter, with no rise this year. So MV Orange Frost appears to have had bad luck. We haven’t found any public updates on the unfortunate Second Engineer’s status, but the in general May attack seems to have interrupted the ship’s business only temporarily.  Having finished a Mauritania-Ghana trip last week, it’s now back in Congo.

FURTHER READING

The International Maritime Bureau’s piracy reporting for January to June 2025 (with archives for earlier reports).

The U.S. Navy tallies threats to civilian shipping worldwide.

The Nigerian Navy recounts the rescue of MV Orange Frost.

… and MV Orange Frost itself is back to business.

The rise, fall, and possible revival of Somalia’s pirate fleet:

The Brookings Institution has background on the Somali pirate industry’s 2000-2010 peak.

Combined Task Force 151, led this year by Pakistan, squashed it by 2015.

Pretoria-based Institute for Security Studies/Africa reports on its recent revival.

And some boat counts: 

UNCTAD counts civilian cargo vessels, and reports on worldwide maritime trade as of 2024.

And FAO’s estimates of the fishery fleet.

ABOUT ED

Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.

Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.

Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank ProgressiveEconomy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.

Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.

Read the full email and sign up for the Trade Fact of the Week.

FACT: American shipyards are building three of the 5,448 large commercial vessels on order worldwide.

THE NUMBERS: Major commercial vessels on order, 2024* –

* BRS Shipbrokers 2025 Annual Review

WHAT THEY MEAN: 

Ecclesiastes 1:9: “The thing that hath been, it is that which shall be; and this which is done is that which shall be done: and there is no new thing under the sun.” 

The Biden administration’s signature economic plan — “industrial strategy” to rejuvenate aging industries or create new ones — tried to use loans, tax credits, and regulations to ramp up semiconductor chip production and build electric vehicles, battery factories, and low-emission power plants. Its authors achieved less than they hoped. A big reason was their addition of extra costs and qualification hurdles related to different priorities — especially the expensive “Buy American” mandates, but also hiring guidelines, child-care rules, etc. — to the core “more chip-making” and “low-carbon future” goals. This meant industrial-strategy projects cost more, arrived later, had less real-world impact, and wound up more associated in the public mind with spending and higher prices than industry and jobs.

“The thing that hath been done, it is that which shall be.” This spring, the Trump administration adopted the last Biden-era program — an effort to use fees on arriving Chinese-built or Chinese-owned/operated ships to subsidize creation of a U.S. commercial shipbuilding industry. They’re also repeating the Biden team’s extra-cost mistake: Mr. Trump’s obsession with tariffs, especially on metals, suggests that though the shipbuilding program will raise costs for Americans, it won’t launch many ships. Background:

The hope of the chip and EV programs was to enlarge, and partially reshape, large existing industries with lots of capacity, skilled workers, and engineering talent. Reviving commercial shipbuilding is a bigger job. It’s been 70 years since American shipyards built many cargo vessels — the U.S. share of world commercial shipbuilding was only around 2% in the 1960s and 1970s, and has been under 1% since the late 1980s. The current data:

1. Vessel orders: BRS Shipbrokers’ annual review reports 5,448 large cargo vessels on order worldwide in 2024. These are the container ships, tankers, ro/ros, grain carriers, etc. that will carry the world’s cargoes in the 2030s. Chinese yards are making 3,419 of them, while Japan and Korea combine for 1,378. EU countries are building 197; Vietnam, India, Turkey, and the Philippines do most of the rest. The U.S.’ count was an inglorious “three”.

2. Vessel costs: U.S.-built cargo vessels are also expensive. The three 3,620-TEU (i.e., 3,620 twenty-foot containers) Aloha-class container ships under construction at the Philly Yard, destined for domestic Jones Act transport rather than “blue water” intercontinental cargoes, cost about $330 million each. By comparison, the 32 giant container ships Maersk reportedly contracted last year to buy from Korea’s Hanwha Ocean — 22,000 TEU to 24,000 TEU apiece, six times Aloha-class capacity — cost about $272 million each. (Comical asterisk: Hanwha bought the Philly Yard last December, and presumably inherits the Aloha-class contract.)

Given how few commercial ships Americans now build and how much they cost, this industrial-strategy project looks, well, challenging. That doesn’t mean it’s impossible, though, and in an era of alarming naval competition, the idea has strategic appeal. But it at minimum needs enough money to:

(a) Purchase land and offer construction contracts to build shipyards able to assemble much larger ships.
(b) Recruit tens of thousands of specialized engineers, welders, and other workers.
(c) Drastically cut the price of U.S.-made ships, so yards could sell them to big international maritime companies as well as small captive-market Jones Act carriers.
(d) Perhaps underwrite some sort of technological leap, rethinking ship-construction methods altogether through advanced AI design, which might, maybe, possibly, help turn the U.S.’ lack of a big incumbent shipbuilder into a “first-mover” advantage.

Now to the fees. They result from a “Section 301” unfair trade petition filed in 2024 by a labor union group, arguing that Chinese subsidies since 2000 had damaged U.S. shipbuilding. The premise is intellectually shaky — U.S. yards were building just two commercial vessels in 2000 – but the Biden administration approved it, and the Trump administration uses it as the legal basis for fees that, barring some change in plan, by April 2028 will reach:

• $140 per net ton [note: a measurement of cargo capacity] for Chinese-owned or -operated ships.
• $33 per net ton or $250 per off-loaded container, whichever is higher, for Chinese-built container ships with capacity above 4,000 TEU.
• $14 per net ton for automobile carriers [note: perhaps legally vulnerable, as it covers all ro/ros made outside the U.S., not only those made or operated by Chinese firms].

Outside the shipbuilding world, the fees will mean new costs. At face value, the fee for unloading 10,000 containers from a Chinese-built container ship operated by a non-Chinese company looks like $2.5 million, and for similar vessels owned by Chinese or Hong Kong carriers, about $10.5 million. As shipping firms incorporate these costs into their cargo charges, prices would rise for both incoming consumer goods and factory or farm inputs (half of all container traffic). American seaports would lose some business, harming local and hinterland economies and reducing U.S. trucking and rail employment. And with fewer vessel calls, especially at smaller ports, exporters, too — especially western-state farmers — would have fewer choices among carriers and higher cargo charges, probably losing some overseas sales. (Exports are 20% of U.S. farm income.) Overall, one analyst this spring estimated, assuming average cost of $1 million per port call, that the fees might reduce U.S. GDP by 0.24% (about $72 billion), with the largest drops in farm income.

They probably won’t, though, bring in enough money for an industrial-strategy project this big. Where the Congressional appropriations and tax breaks for chip and EV production were large and predictable, vessel-call fee revenue would be uncertain and volatile. Importers and shipping firms (at least big ones which own lots of ships) can, after, shift vessel arrival patterns to reduce cost: use non-Chinese ships for American ports when possible; employ small ships exempt from fees more often; drop off Chinese-carried cargos in Mexico or Canada for land transport; centralize calls at very big American ports; bypass smaller ports.

Meanwhile, the Trump administration has adopted the Biden team’s characteristic error as well as its industrial-strategy concept. Fees or not, a different policy — higher tariffs, especially on metals — will likely scuttle their core ship-building goal.

Large ocean vessels, after all, are made of metal. Even relatively small Aloha-class container ships use about 14,000 tons of steel. Really big ones like Maersk’s 24,000-TEU EEE-class fleet — 399 meters from stern to bow, as long as an ultra-tall skyscraper is high — are colorfully said to use “eight Eiffel Towers” worth of steel, which would be around 55,000 tons. As a micro-illustration, each link in their anchor chains weighs almost 500 pounds. And even before Mr. Trump’s abrupt June steel-tariff hike (from an already very heavy 25% to 50%), U.S. prices were high. According to the Commerce Department, this spring’s average steel prices were:

In short, American shipbuilders pay twice as much as their Japanese or Korean competitors for steel. That’s an extra $30 million for even one big ship. The new 50% rate will add millions more. So will similar aluminum and copper tariffs. So will the administration’s 10% “baseline” and higher “reciprocal” tariffs on paint, wiring, telecom equipment, and other inputs, should they survive court scrutiny this summer. No foreign shipbuilder pays anything like this.

So: Creating a big U.S. commercial shipbuilding industry from near-scratch looks hard and
expensive under any circumstances. That doesn’t necessarily make it hopeless. But trying to create one, while also using tariffs to make U.S.-built ships even more expensive and harder to sell, is probably impossible. Ecclesiastes gets the mordant last word on the usually futile, and often endless, way public money flows into such “subsidies plus mandated cost increases” programs: “All the rivers run to the sea; yet the sea is not full.”

FURTHER READING

PPI’s four principles for response to tariffs and economic isolationism:

• Defend the Constitution and oppose rule by decree;
• Connect tariff policy to growth, work, prices and family budgets, and living standards;
• Stand by America’s neighbors and allies;
• Offer a positive alternative.

BRS Shipbrokers’ 2025 Annual Review has shipping orders by country and ship type as of
2024.
… or direct to the interactive version.

U.S. policy –

The White House’s maritime strategy.
The U.S. Trade Representative Office outlines its new shipping fees.
The “Section 301” petition soliciting them, filed by four unions and the AFL-CIO’s Maritime
Trades Department.
… and apposite verses from Ecclesiastes (KJV).

Commentary:
Farm Bureau on potential harm to U.S. farm exports.
World Shipping Council views on costs and unintended consequences.

U.S. shipbuilding:
A gloomy 2023 Congressional Research Service look at U.S. shipbuilding.
… and the near-identical 2002 outlook from the Center for Naval Analysis.
The backstory from engineering/construction blogger Brian Potter. TL/DR: 19th century wooden-
ship golden age, early 20th-century fall, brief WWII revival, stasis since.
The Commerce Department reports on steel prices.
The Hanwha Philly Shipyard.
And Jones Act carrier Matson describes Aloha-class container vessels.

Abroad:
UNCTAD’s Review of Maritime Transport examines the world’s commercial shipping fleets.
Maersk explains ocean-shipping services.
Japan’s Imabari Shipbuilding Ltd.
And CSIS analysts Matthew Funaoile, Brian Hart, and Aidan Powers-Riggs on China’s dual-use shipbuilding empire.

ABOUT ED

Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.

Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.

Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank ProgressiveEconomy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.

Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.

Read the full email and sign up for the Trade Fact of the Week.

FACT: The world child labor count has gone down by more than 100 million since 2000.

THE NUMBERS: Child labor by year, worldwide* –

* International Labour Organization estimates, from surveys done 2001-2025.

WHAT THEY MEAN: 

The American mental image of child labor emerges from early 20th-century social reform: Progressive Era photographs of wan children in coal mines and textile mills; factory-focused state government programs in the 1910s; national laws drawn up by Frances Perkins’ Department of Labor in the 1930s. For those looking abroad, the emphasis has been similar: factories, physical goods, supply chains, and children. International Labour Organization research, though, suggests that this is a relatively small share of modern-day child labor. Their most recent worldwide estimate, released on June 11, finds child labor mainly rural, concentrated in very poor countries, and steadily falling, especially in Asia.

As a point of departure, the ILO defines “child labor” as follows:

“[W]ork that is mentally, physically, socially or morally dangerous and harmful to children [aged 5 to 17]; and/or interferes with their schooling by: depriving them of the opportunity to attend school; obliging them to leave school prematurely; or requiring them to attempt to combine school attendance with excessively long and heavy work.”

ILO statisticians have been publishing periodic in-depth analyses of child labor every four years or so since 2002. Their reports include worldwide estimates; the regions in which child labor is most common and those in which it is rarest; change over time; and the “economic sectors” in which most child and teenager laborers work.

Their first report, for the year 2000, found 245.5 million boys and girls (one in six of that year’s 1.53 billion children) doing some form of child labor. The most recent, out in June, estimated 138 million child laborers among 1.90 billion children. Accepting some margin of error, the ILO surveys thus show the worldwide child rate falling by half in a generation — from 16.0% to 7.8% of all boys and girls — and the actual number of child laborers down by 108 million.  Three basic points from these reports, then a thought on the American role:

1. Child labor rates closely track poverty rates. The world’s 26 poorest countries, with about 8% of the world population, are home to 42% of all child laborers: 57.7 million, one in four (23.5%) of these countries’ 245 million children. Child labor rates in high-income countries — the United States and Canada, western Europe, Japan, Korea and Taiwan, Australia and New Zealand — average 0.7%, with a total of 1.6 million child laborers. In between these poles, rates are 3.6% in upper-middle-income countries and 7.5% in lower-middle-income countries.

2. Child labor is mostly rural. The 2025 report finds 61% of child laborers — about 84 million boys and girls — in agriculture, mostly in small family farms and enterprises.  This is often hazardous: per the ILO, child labor in agriculture often involves “exposure to sharp tools (machetes) and dangerous machinery (tractors), risk of snakebites and injuries from other animals, exposure to extreme environmental conditions, and exposure to agrochemicals including inorganic fertilizers and pesticides.” Another 27% of child laborers, 37 million, are in simple urban services such as house-cleaning, food delivery, and shops. The remaining 13%, or 18 million, are in “industry” — that is, on construction sites, in mines, and in factories. Industry work, then, is a relatively small share of all child labor, but appears especially dangerous: 60% of “industry” child labor (meaning 11 million children) is in ‘hazardous’ work, as opposed to 30% in agriculture and 48% in services.

3. Child labor has fallen fastest in Asia. Since the ILO’s first report a quarter-century ago, Asia-Pacific countries — economically growing fast, and demographically rapidly urbanizing — have cut child labor counts from 127 million to 27 million, and to a “rate” of 3.1%. The data:

In Latin America and the Caribbean likewise, the ILO’s estimates of child labor have dropped from 17.4 million in 2000 to 7.4 million in 2024, though the ‘rate’ is somewhat higher than Asia’s at 5.5%. (Or, adding the U.S., Canada, and Greenland to get the “western hemisphere,” 3.9%, which still leaves Asia’s child labor rate the world’s lowest.)  The Arab world and the ILO’s “Europe and Central Asia” region are at 5.8% and 5.6%. Child labor is now concentrated in sub-Saharan Africa (relatively more ‘rural’ than other regions, and with 20 of the world’s 25 ‘low-income countries’). which is home to 87 million child laborers or nearly two-thirds of the worldwide total. Africa’s pattern of child labor mirrors the worldwide “sectoral” pattern, except more intensely: 70% of African child workers are on farms, and only 8% in “industry.”

How to respond? In principle, ILO’s data suggests that urbanization, economic development, and some focused government policies, have sharply reduced child labor over the last generation, especially in Asia; and that child labor is least common, but especially dangerous, in ‘industry’.  With this as the backdrop, U.S. policies, usually focused on child labor in industry (or manufacturing specifically, or international “supply chains”) rather than in agriculture and services, can be criticized as targeting a relatively small part of the child labor phenomenon, but also defended as focused on especially high-risk work.

Debating whether this is still the right approach would be interesting. But unfortunately such an argument would likely miss the point, since current policies suggest that the U.S. won’t be much involved at all in next-generation efforts to reduce child labor.

The Trump administration’s rejection of open-market trade policies, and its attempt to abolish almost all development aid, mean that for the next three years (barring some very sharp turnaround), the U.S. will contribute little to the larger economic trends reducing child labor worldwide. More targeted American work on the most dangerous and worst forms of child labor may also be ending. Having stopped all Labor Department child labor and forced labor projects this spring, the administration hopes to abolish the $91 million U.S. contribution to the ILO, cut its International Labor Affairs Bureau — the group which handles these issues — by 40% (from $113.1 million to $70.2 million, and from 138 to 112 people), and shift ILAB’s remaining work away from humanitarian projects to “ensuring that American workers and businesses benefit from the Administration’s trade agenda by counteracting labor practices overseas that undermine American competitiveness.”

So, a sad U.S. note set against a picture of steady and impressive progress over the past generation. Americans can do better than this.

FURTHER READING

The ILO’s June 2025 report on worldwide child labor.

More from ILO:

Archives: The ILO reports from 2001, 2006, 2010, 2013, 2017, and 2021.

Lessons from reducing child labor through education policies in low-income countries.

And a look at child labor in agriculture.

U.S. policy now:

The Trump administration proposes cutting ILAB by 40% and “refocusing” its work on trade competition. (See under “Departmental Management”, on page 21).

… and to cut U.S. contributions to the International Labor Organization from $91 million to zero (pg. 96).

Not over yet: House Democrats hope to protect ILAB work.

U.S. policy then:

Child labor reports from the Labor Department’s International Labor Affairs Bureau (ILAB):  https://www.dol.gov/agencies/ilab/resources/reports/child-labor

President Clinton oversees the 1999 negotiation and ratification of the ILO Convention on the Worst Forms of Child Labor.

From the Biden/Harris administration, then-Secretary of Labor Martin Walsh at the ILO’s 2021 conference.

… and Tom Vilsack’s USDA on addressing rural child labor at home.

And the long look back:

The National Archives reprints Lewis Hine’s classic photographs of child labor in early 20th-century American streets, mines, and factories.

Smithsonian Magazine looks back on Frances Perkins.

And Economic History has data on the decline of child labor in the U.S. after the passage of state child labor laws in the 1910s and the national Fair Labor Standards Act in 1938.

ABOUT ED

Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.

Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.

Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank ProgressiveEconomy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.

Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.

Read the full email and sign up for the Trade Fact of the Week.

FACT: Tariffs are taxes paid by Americans.

THE NUMBERS: U.S. GDP growth –

* International Monetary Fund projection, April 2025
** 2021-2024 growth rates from BEA

WHAT THEY MEAN: 

Mr. Trump’s April 2 tariff decree, claiming a “national emergency” related to trade balances, imposed (a) a 10% tariff on almost all the coffee, TV sets, automobile parts, shirts, and other things American buy from abroad, and (b) higher rates up to 50% on things from 57 specific trading partners, from Bosnia and Jordan to the European Union.  Following a bond-market rout on April 9, the administration “suspended” these latter rates for 90 days — i.e., today — in the hopes of making “deals”. Monday’s extension of this deadline to August 1st for at least some countries comes with renewed threats, similar though not always identical to those of April 2. (They range from 25% to 40% this time, and cover 14 countries: Kazakhstan, Cambodia, Tunisia, South Africa, Japan, Korea, Indonesia, Bangladesh, Thailand, Serbia, Bosnia, etc.).  These may all be struck down in a few weeks, as on July 31 the Court of Appeals will hear arguments on the May 28 lower-court opinion declaring the entire April 2 decree, and therefore anything using it as a base, illegal. If that doesn’t happen, here’s a look at the likely impacts, through the lens of a “deal”  the administration announced (perhaps prematurely) last Thursday:

Big picture first: Last April, the International Monetary Fund cut its U.S. growth estimate by nearly a point, from a 2.7% guess in mid-January to 1.8%. (In dollars, this means about $200 billion less U.S. output, with an original $730 billion in growth falling to $535 billion.) Excluding the -2.2% contraction in the pandemic year 2020 as an anomaly, a 1.8% growth year would be the U.S.’s lowest in 15 years. Or, more recently, it’s a point below the 2022-2024 average.  The Commerce Department’s Bureau of Economic Analysis, which does the U.S. government’s GDP-estimating, reports a -0.5% contraction in this year’s first quarter, so the IMF seems on track or even a bit optimistic.

Trade “deals” and anti-growth: The administration’s description, posted last Thursday, of a ‘trade deal’ with Vietnam — as of this morning, the only one reported so far among countries targeted in the April 2 decree — helps explain the impact of trade policy on these forecasts:

“Vietnam will pay the United States a 20% tariff on any and all goods sent into our territory, and a 40% tariff on any transshipping. In return, Vietnam will do something that they have never done before, give the United States of America total access to their markets for trade. In other words, they will ‘open their markets to the United States,’ meaning that, we will be able to sell our product into Vietnam at zero tariff.”

The first two sentences aren’t true. “Vietnam” won’t pay anything, and its government made much larger “access” offers to join the Trans-Pacific Partnership in the 2010s.  This “deal’s” nature and lifespan (even if the Court of Appeals doesn’t scrap it next month) are likewise uncertain, as neither the White House nor the U.S. Trade Representative Office has posted any actual text. But assuming that at least the “20%” (cut back from a 48% April 2 rate) and “40%” figures are correct, and that it isn’t swiftly terminated, here’s the likely impact of “deals” of this sort.

1. Vietnam won’t pay any of this. Americans buy about $130 billion worth of goods from Vietnam each year, mainly consumer goods found in retail stores and groceries: TV sets, laptops, and smartphones; shoes and clothes; furniture; seafood, coffee, canned tropical vegetables, and so on. Imposing a 20% tariff on them does not mean that “Vietnam” as a country, or the Vietnamese government, or Vietnam-based companies, will pay anything.  The ones who pay are the buyers — American retailers, food wholesalers, grocery stores, and so on  — who will write checks to CBP for 20% of their cargoes’ value when furniture and clothes dock at Long Beach, or laptops and coffee arrive on the incoming tide at New Orleans.

2. You will pay. The buyers’ tariff payment, in turn, is included in the bill you pay in the store. This is because these buyers add it to the bills they’ve paid to their Vietnamese supplier and to the shipping company carrying across the Pacific to the United States. The result is the “landed cost” from which they mark up to cover costs — wages, building rent, transport, maintenance, marketing, etc. — and leave a profit margin. If the product doesn’t sell, the store takes the loss; if you buy it, you cover their tariff cost. Using the hypothetical example of a container carrying 1,000 Vietnamese-made wooden chairs valued at $100 each, here’s the arithmetic:

Notes: The average import value of a wooden Vietnamese chair last year was $106; the table uses $100 for simplicity.  The $5000 payment to the shipper is based on typical current container rates for a Ho Chi Minh City-to-Los Angeles transit. The markup is purely hypothetical; real-world markups vary by company and product. State sales taxes range from 0% to 7.25%, the 5% is a rough average.

So the administration’s “deal” here is for you to pay $42 more for a chair.  Fundamentally, you’re out $42, the federal government gets $20 in tariff money, and your state government gets $2 in sales tax.  The remaining $20 mostly evaporates as “deadweight loss.” Looking back to the IMF’s forecasts, and scaling this up for U.S. trade in general:

Family price impacts: Spread across the country and all consumer goods, retailers will lose some business as they try to sell higher-priced chairs; buyers such as yourself will pay more; and the country will lose some GDP as more twenties vanish around the country.

Producer impacts: Where most Vietnamese imports are “consumer” goods like the chairs, shoes, and TV sets, Canada’s product mix is heavy on energy, fertilizer, and natural resources. The EU’s tilts toward medicines, cars, chemicals, and industrial inputs.  Retailers, groceries, and restaurants do buy a lot of Canadian and European goods, and with higher tariffs, they’d pay more and charge more. But the impact of tariffs on Canadian and European goods — that’s fully a third of all U.S. goods imports last year — will fall relatively harder on American manufacturers, farmers, hospitals, and building contractors. Facing higher costs, these businesses would lose some competitiveness vis-à-vis imports and especially as exporters. Their higher production costs, meanwhile, would raise inflationary pressure on the “producer price” side and give Federal Reserve economists some extra reason to avoid interest rate cuts.

So: as the IMF’s forecasts and the BEA’s reporting to date both suggest, the likely effect of “deals” like this one will be somewhat lower living standards and a drop in growth rates.

FURTHER READING

PPI’s four principles for response to tariffs and economic isolationism:

• Defend the Constitution and oppose rule by decree;
• Connect tariff policy to growth, work, prices and family budgets, and living standards;
• Stand by America’s neighbors and allies;
• Offer a positive alternative.

PPI’s Ed Gresser testifies on tariffs at the Joint Economic Committee, December 2024; PDF version here.

Macro background:

The IMF’s April World Economic Outlook update.

The Bureau of Economic Analysis’ most recent GDP report shows a drop of 0.5% in January-March 2025.

Legal outlook:

The White House’s April 2 tariff decree.

The Court of International Trade’s unanimous May 28 opinion ruling it unconstitutional.

… our look at the C.I.T. decision.

Next up, with oral argument coming July 31, the Court of Appeals brief from the Liberty Justice Center.

ABOUT ED

Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.

Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.

Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank ProgressiveEconomy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.

Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.

Read the full email and sign up for the Trade Fact of the Week.

FACT: The U.S. needs 8,000 tons of cobalt a year, and produces 300 tons.

THE NUMBERS: Cobalt reserves known as of 2024, worldwide* –

* U.S. Geological Survey, Mineral Commodity Surveys 2025

WHAT THEY MEAN: 

Last March, Marco Rubio, the Secretary of State, announced cancellation of 5,200 U.S. Agency for International Development contracts — all but about 1000 of them – claiming that the projects they underwrote “did not serve, (and in some cases even harmed), the core national interests of the United States.” A PPI guest post today by former USAID economist Kevin Ward looks at one of these projects: an effort to secure American manufacturers’ supply of the “critical mineral” cobalt through a transport project in the Democratic Republic of Congo. Ward’s story illustrates the work USAID professionals actually do — often technical, designed for shared benefit, sometimes entailing personal risk — and also casts an ironic light on Mr. Rubio’s line about national interests and things that don’t serve, or sometimes even harm, them:

As a point of departure, the experts at the U.S. Geological Survey consider a mineral “critical” when it is (a) “essential to the U.S. economy and national security,” and (b) “ha[s] supply chains that are vulnerable to disruption.” Reliable access for American industry to these minerals is thus widely thought (including by the Trump administration) a “core national interest.” USGS’ official list has 50 of them, from arsenic and antimony to zinc and zirconium, complete with their uses, sources, production levels, trade flows, and availability in the U.S..

Cobalt, a bluish metal selling for $33,335 per ton on the London Metal Exchange today, is No. 10 on the list. Used for centuries for stained glass and deep-blue paints, it meets USGS’s two “critical” tests because it is (a) necessary for the heat- and wear-resistant ferroalloys used for aircraft engines, and the lithium-ion batteries that run smartphones and electric vehicles, and (b) in short supply. American factories need about 8,000 tons of cobalt each year, but the lone U.S. source is the Eagle Mine in Michigan, a mainly copper-and-nickel operation which also produces about 300 tons of cobalt, and is set to close in four years.

So most cobalt must come from somewhere else, and one country in particular has a lot. The Democratic Republic of Congo (in central Africa along the eponymous river, formerly Zaire, home to 84 million people) has 55% of the world’s 11 million tons of cobalt reserves, and produces 75% of the world’s 290,000 tons of annual mining output. But as Ward explains, geopolitical uncertainty makes this source “vulnerable to disruption”:

“Though the DRC is the world’s largest cobalt producer and the second largest copper producer, its mineral supply chains are tightly controlled by China: Chinese companies own the country’s largest mines, its local processing operations, and the railroad that takes its minerals to China for additional processing.”

This is where USAID came in. The contract Ward was working on last winter was clearing the way for American businesses to get access without relying on Chinese middlemen:

“To counteract China, USAID supported the growth of a copper processing industry in the DRC and various projects along the Lobito Corridor: an infrastructure initiative connecting the Copperbelt to Angola’s Port of Lobito, increasing access to the U.S. market. As part of that effort, I kicked off a new USAID activity in January of 2025 to help refurbish the railroad from the DRC’s Copperbelt to the Angolan border — a key segment of the Lobito Corridor.”

In sum, a modest U.S. investment would restore a dilapidated railroad outside Chinese control, running from mining areas in the interior to the coast through Angola. Railcars carrying cobalt along it could sell their cargo to American manufacturers. This was one part of a five-year, $235 million program, with additional financial backing from a third U.S. agency (the Development Finance Corporation) and several dozen USAID technical people on the ground. Not a luxury posting for them, to put it mildly — see the State Department’s “Level 4, Do Not Travel” advisory for civilians and CDC’s health warnings about endemic cholera, meningitis, etc. But the job is part of a mission to serve a widely agreed U.S. interest in reducing, or perhaps eliminating, a risk of supply shock for thousands of large American manufacturers, and is the sort of work USAID people regularly do. Ward laconically explains the project’s current status:

“[W]ork came to an abrupt stop on January 20, 2025.”

So: By canceling this particular project, the administration more or less concedes a Chinese monopoly on the largest supply of a critical mineral. In a few years, even designing such projects may be harder: per its 2026 budgeting, the administration hopes to cut USGS by 40%, so by 2027 the government may lack experts on critical mineral reserves and production. The administration is, though, offering a baffling substitute: Mr. Lutnick’s Commerce Department is proposing “national security” tariffs on critical minerals — that is, taxes of 25% or so on essential things not in sufficient supply at home. In practice, this is a chance for American auto, aircraft, and battery companies to pay $41,670 per ton of cobalt, rather than the $33,335 their overseas competitors pay.

Lots more stories like this among the other 5,199 cancellations, of course. So, in a sense, Mr. Rubio is right to say that some people are going around doing things that “do not serve (or even harm) the core national interests” of the United States. He won’t have to look hard to find them.

FURTHER READING

PPI’s four principles for response to tariffs and economic isolationism:

• Defend the Constitution and oppose rule by decree;
• Connect tariff policy to growth, work, prices and family budgets, and living standards;
• Stand by America’s neighbors and allies;
• Offer a positive alternative.

Kevin Ward on USAID’s Lobito Corridor railway project.

PPI’s February defense of the American foreign assistance tradition —  ideals, interests, and aid — from Herbert Hoover’s World War I famine relief program through JFK’s launch of USAID to PEPFAR‘s HIV/AIDS prevention and treatment, the Millennium Challenge Corporation, and Feed the Future in the 21st century.

New Ukraine Project Director Tamar Jacoby on USAID in Ukraine.

… & Mr. Rubio in March.

Cobalt and critical minerals:

The U.S. Geological Survey explains the “critical minerals” concept and lists the 50 critical minerals.

… and summarizes the cobalt-mining world. The mine outputs in 2024:

Cobalt prices at the London Metal Exchange.

… the Eagle Mine in Michigan’s Upper Peninsula is the sole U.S. cobalt producer.

… & the Commerce Department solicits ideas on how American firms can pay more.

The Royal Society of Chemistry’s interactive Periodic Table of the Elements has physical properties and uses for all 118 elements, with cobalt at atomic number 27.

Democratic Republic of Congo:

The Development Finance Corporation announces Lobito Corridor plans, December 2024.

The Democratic Republic of Congo Embassy.

The State Department’s travel advisory has some blunt advice for civilians –  “Do not travel to the Democratic Republic of Congo due to Armed Conflict, Crime, Civil Unrest, Kidnapping, and Terrorism” – and the CDC has guidance on avoiding cholera, meningitis, schistosomiasis, malaria, and other ailments.

The Commerce Department’s guide for U.S. businesses in the DRC is a little more upbeat: “opportunities for firms with a high tolerance for risk and familiarity operating in complex or fragile environments”.

The Labor Department’s International Labor Affairs Bureau has been supporting work to reduce and eliminate child labor in DRC mining, including for cobalt specifically. Perhaps not much longer: as with USGS, the administration hopes to cut ILAB by about 40% this year, and confine its work mostly to issues linked in some way to “trade enforcement”.

ABOUT ED

Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.

Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.

Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank ProgressiveEconomy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.

Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.

Read the full email and sign up for the Trade Fact of the Week.

FACT: 65 million of America’s 80 million hourly-wage workers are in “services.”

THE NUMBERS: Americans at work, 2024* –

* Bureau of Labor Statistics, Current Population Survey.

WHAT THEY MEAN:
The paradox at the core of the Trump administration’s tariff decrees: for American working life to improve, they argue, working-class living standards must fall. (Three TVs are too many for a working family, two dolls per girl should be enough, no price would be too high for locally-made toasters, etc.) Put more sympathetically, the administration’s claim is that while tariffs raise prices for families, they will offset this by shifting workers out of their current jobs into factories.

This may or may not be what workers actually want — as PPI President Will Marshall noted last week, polling suggests workers look more to tech industries than factories for next-generation jobs. Either way, seven years of experience with Mr. Trump’s first-term tariffs (imposed from early 2018 to late 2019), and several months’ experience with this spring’s larger decrees, provide some evidence as to whether tariffs actually do this.  Two definitions, then the data from the Bureau of Labor Statistics:

Working Americans: According to the BLS, 161.4 million Americans were employed last year.  Half of them, 80.35 million, earned their income in hourly wages. (As opposed to annual salaries, executive profit-sharing arrangements, investments, professional fees, etc..)  About 80% of hourly-wage Americans — 65 million of the 80.35 million— work in “services” jobs: waiting tables, stocking grocery shelves, replacing brake-pads, trimming hair, cleaning halls, and running hospital admissions desks. The other 20%, 15.3 million people, are in “industrial” or  “goods-producing” work in factories, farms, construction sites, mines, and logging and fishing jobs. Here’s a rundown with some more detail:

* “Other services” is a miscellaneous BLS category including personal care work such as hair salons and beauty parlors, repair shops, dry-cleaning and laundry, funeral homes, non-profits, and others.

Tariffs: Tariffs are taxes on purchases of goods (whether consumer products, raw materials, or industrial inputs) from a foreign supplier.  Their effects on goods-producing industries and their employees are complex: they give some manufacturers, mining companies, and farmers “protection” from foreign competition, harm others by raising production costs and diminishing exports, and give many a confusing mix of both things. But for workers in the services industries — again, seven eight hourly-wage workers in every eight — tariffs just mean higher prices.

If the administration is right, new opportunities in factory jobs might offset some of their losses. But since there are so many more workers in services than goods production, it would take lots of job-shifting for working America to gain on net. And in fact we aren’t seeing any such job shifting at all — since 2018, hourly-wage manufacturing employment has been at best flat and has more likely shrunk.  Three perspectives from the BLS, on total employment, job openings, and hourly-wage jobs:

(a) Manufacturing employment been flat since 2018, and down 88,000 this year. BLS’ monthly “Employment Situation” reports found about 12.7 million manufacturing workers in 2018. This was about 1.2 million above the 11.5 million jobs at the financial-crisis low in early 2010, reflecting slow but steady growth during and just after the Obama administration. In 2024, they found 12.8 million manufacturing jobs, suggesting that job creation had slowed. The most recent report, for May 2025, is once again at 12.7 million, down 88,000 over the past year with losses concentrated in metal-using industries such as farm equipment, auto parts, and machinery.

(b) Fewer open manufacturing jobs: A second BLS survey, “Job Openings and Labor Turnover”, reported about 500,000 open factory jobs at any given time in 2023 and 2024.  The precise figure for January 2025, just before Mr. Trump’s first 2025 tariff decree, was 513,000 open jobs.  Since then, job openings have contracted each month, to 381,000 in May. Except for three anomalous pandemic months in early 2020, this is the smallest number of open jobs in eight years.

(c) Fewer hourly-wage manufacturing jobs, but more salaried manufacturing jobs. Within manufacturing, meanwhile, companies appear to be hiring more very high-skill employees and fewer line-type workers.  BLS’ annual “Current Population Survey” (which counts differently and gets somewhat larger numbers) reports a net loss of 700,000 manufacturing jobs from 2018 to 2024, from 15.7 million to 15.0 million.  Within this overall total, hourly-wage work has fallen sharply — down nearly a million, from 9.41 million to 8.45 million jobs — but salaried and other non-wage employment has grown by nearly 300,000. This suggests structural change, with factories relying relatively less on human labor, and relatively more on computers, robots, and human experts such as engineers and software professionals.

So: Lots of factors affect employment, and disentangling the effects of the post-2018 tariffs from those of business cycle fluctuations, technological change, the COVID-19 pandemic, and other things isn’t easy. But the last decade’s experience gives little credence to administration arguments that higher tariffs mean more manufacturing work. Calling the claim “fool’s gold,” Marshall has a different approach, amplified last week by an in-depth paper from PPI’s Deanna Ross and Bruno Manno on apprenticeships and skill development. That is, recognize the premium businesses of all kinds are placing on expertise, understand that college degrees shouldn’t always be needed for these jobs, and help non-college workers qualify for the higher-skill jobs (in any industry) where most hiring seems to be going on:

“[A] new national commitment to guaranteeing ‘high skills for all.’ Non-college Americans, a majority of the electorate, need a more robust alternative to college: A post-secondary system of work-study opportunities that enable young people to get in-demand skills, credentials, and work experience quickly and affordably.”

FURTHER READING

PPI’s four principles for response to tariffs and economic isolationism:

• Defend the Constitution and oppose rule by decree;
• Connect tariff policy to growth, work, prices and family budgets, and living standards;
• Stand by America’s neighbors and allies;
• Offer a positive alternative.

FACT: One U.S. measles death from 2000 to 2024; three so far this year.

THE NUMBERS: Measles cases in the United States –

WHAT THEY MEAN:

Measles is an exceptionally “transmissible” disease — one infected person will typically pass it to 12-18 more — and survivors often suffer long-term immune system damage and a heightened risk of early dementia. In the 1950s, American health statistics typically showed about half a million cases and 500 deaths a year. The 1964 introduction of measles vaccines produced by Merck and Pfizer cut this by 90% — to 47,351 — by 1970, and to an average below 200 per year since 2000.  That can make people complacent — and then near-vanished diseases can return.  This year’s measles epidemic, centered in a low-vaccination Texas county, has already hospitalized 112 people and killed three. As long-time anti-vaccination crank Robert F. Kennedy Jr. purges immunization experts at the Department of Health and Human Services, and the Trump administration asks Congress to cancel U.S. contributions to GAVI (the international consortium providing 70 million no-cost vaccinations in low-income countries annually), some background on vaccines, malgovernance, and the possible future:

Vaccines are classes of medicine offering advance protection from 25 contagious diseases — smallpox, typhoid, hepatitis A and hepatitis B, tetanus, diphtheria, polio, measles, rabies, cholera, and encephalitis — borne by viruses or bacteria. The mRNA vaccine for COVID-19 is the most recent.  Vaccines come into use in the United States after a scientific evaluation, formal government approval, and finally recommendations for use by medical professionals. Both here and worldwide, they have made life safer, longer, and better. For example:

Poliomyelitis: In the 1940s and 1950s, before the introduction of the Salk vaccine, America’s annual polio counts often topped 57,000 cases and 3,000 deaths. Since 1993, we have had one case, an unvaccinated man returning from abroad. Overseas, though some “wild” strains remain endemic in Afghanistan and Pakistan, universal vaccination programs run by the World Health Organization, USAID, the CDC, charities, and national health ministries have cut case levels by 99.99%. The numbers:

2024             96 polio cases
2020               6 polio cases
2010           650 polio cases
2000        3,500 polio cases
1988    350,000 polio cases

Neo-natal tetanus data are similar: U.S. case rates have dropped from about 500 a year in the 1950s to 30 or so since 2000. Abroad, campaigns to vaccinate pregnant women and guarantee antiseptic standards in poor-country maternity clinics have cut deaths by about 99%, from nearly a million to fewer than 10,000 annually.

2021        7,719 tetanus deaths
2018      25,000 tetanus deaths
2000    309,000 tetanus deaths
1988    787,000 tetanus deaths

To place these specific cases in wider perspective, worldwide vaccination campaigns such as those run by GAVI – which spends a modest $1.7 billion a year, with America providing $300 million of it, to vaccinate 70 million children in 59 developing countries — have joined with the invention of new treatments and improving primary care to cut world under-five mortality rates by half since 2000 and nearly three-quarters in a generation.

World Health Organization for 1990-2023; World Bank World Development Indicators for 1980.

In sum, vaccine work — by scientists in government and private-sector labs, by businesses inventing and producing medicines, by charities and international organizations, by nurses and doctors, and by clinics and hospitals — has vastly reduced disease case counts, saved many lives, and given young children better chances in life. The achievement may have been so impressive, in fact, as to encourage a dangerous complacency.

This year’s measles outbreak is a vivid example.  The Centers for Disease Control notes that since 2020, America’s rate of “MMR” vaccination (the “measles, mumps, and rubella” combined shot) has fallen from 93.9% to 91.3% — that is, below the level thought necessary for the “herd immunity” which helps protect immune-suppressed people. Gaines County in Texas, the center of this year’s measles outbreak, has an especially low 83.7% rate. CDC’s count shows that within a few months, it has already infected 1197 people (including 347 children under 5, and 446 older children and teenagers), and will likely be the largest outbreak in three decades. The three people who died of it were all unvaccinated.

After decades of safety, then, Americans may be unwisely discounting disease risk and giving cranks and self-taught “contrarians” audiences they don’t deserve. The same may be true internationally. Worldwide measles deaths, having dropped by 92% from 1980 to 2020, have recently risen as global vaccination rates have slipped from 86% of children in 2020 to 83% in 2023.

Which brings us back to the Trump administration, this month’s ominous events at HHS, and Congress’ debate over health-aid “rescissions” this week.

Mr. Kennedy’s tragi-comic launch event — a “report” on children’s health apparently compiled by an AI program, stocked with invented quotes and cites to non-existent studies — has been followed by steadily escalating attempts to erode vaccination policy at home. Since May, Mr. Kennedy has canceled support for the development of second-generation mRNA vaccines and bypassed CDC professionals to remove scientific recommendations for COVID-19 vaccination updates; and, two weeks ago, fired the 17 members of the CDC’s voluntary expert advisory group, the Advisory Committee on Immunization Practices, a few weeks before their regular June meeting. The extraordinary op-ed (subs. req.) he used to announce this justifies the decision with (a) fact-free innuendo about “conflicts of interest” among the current ACIP members, without any specific claim to back it up, and (b) an open admission that the administration sees ACIP positions less as sources of impartial analysis than as patronage. (“[W]ithout removing the current members, the current Trump administration would not have been able to appoint a majority of new members until 2028”.) The American Medical Association’s comment:

“For generations, the Advisory Committee on Immunization Practices (ACIP) has been a trusted national source of science-and data-driven advice and guidance on the use of vaccines to prevent and control disease. Physicians, parents, community leaders and public health officials rely on them for clinical guidance, public health information, and knowledge. Today’s action to remove the 17 sitting members of ACIP undermines that trust and upends a transparent process that has saved countless lives. With an ongoing measles outbreak and routine child vaccination rates declining, this move will further fuel the spread of vaccine-preventable illnesses.”

The administration is matching this malgovernance abroad. Their “rescissions” bill cancels the entire U.S. contribution to GAVI, along with hundreds of millions of dollars meant for child and maternal health, HIV/AIDS, and other public health programs. (Sample justification, direct quote: “programs that are antithetical to American interests and worsen the lives of women and children, like ‘family planning’ and ‘reproductive health.’”) If the Senate approves it, the U.S.’ commitment to vaccination abroad will shrivel to pretty much nothing.

Both at home and abroad, then, public complacency has grown and government policy deteriorated. If the approach of the administration’s first five months persists, the next three years may be somber: an era in which long-vanished diseases return in force to America, children’s health erodes here and abroad, and life grows more dangerous. Congress, we hope, is aware that the right approach is diametrically opposite. Again, vaccines have made life longer, safer and better. We need more of them, not less.

FURTHER READING

PPI’s four principles for response to tariffs and economic isolationism:

• Defend the Constitution and oppose rule by decree;
• Connect tariff policy to growth, work, prices and family budgets, and living standards;
• Stand by America’s neighbors and allies;
• Offer a positive alternative.

FACT: U.S. earnings from international student tuition above those for gold, silver, platinum, diamonds, and gems.

THE NUMBERS: Export revenue, 2024 –

WHAT THEY MEAN:

Department of Homeland Security head and former South Dakota Governor Kristi Noem presents a strange view of higher education, and of international students in the United States, as she tries to stop Harvard University from hosting them:

“It is a privilege, not a right, for universities to enroll foreign students and benefit from their higher tuition payments to help pad their multibillion-dollar endowments.” 

Back home, according to the Sioux Falls Argus-Leader, South Dakota’s universities have 2,150 international students this year, with the largest numbers from India and Nepal.  The University of South Dakota/Vermillion is home to 820, the School of Mines 149, South Dakota State 826, and so on. Like Harvard’s international enrollees, they don’t really “pad the endowments” — that’s more an investment management job — but help provide operating revenue. Most pay full tuition (USD’s charges for international undergrads total $24,587 a year, grad students a slightly higher $25,127), which helps finance staff expenses, maintenance, and scholarships for low-income locals.

The 1.13 million international students in the U.S. this year are presumably watching Ms. Noem’s efforts with alarm.  For now, they haven’t succeeded, as the courts have blocked her attempts to end Harvard’s international student program. She and her State Department colleague Mr. Rubio, though, are not only going after Harvard but raising basic questions about the future of international education in America, as they “pause” visa interviews for aspiring students and cancel some existing visas without notice. With this in mind, some background on international students and their place in American economic and intellectual life:

Basics: According to the Institute for International Education, 210 countries and territories have students in the United States.  A review of them all would be pretty dull (see below for representative examples), but it’s easy to list the four countries with “zero” students here: Nauru, North Korea, Sao Tome e Principe, and the Vatican. By country, India’s 331,000 and China’s 277,000 combine for half the total, and Asia’s 805,000 account for two-thirds. Other regional totals include 57,000 from sub-Saharan Africa, 91,000 from Europe, 74,000 from Latin America and 11,000 from the Caribbean; 1,700 Pacific Islanders and 6,000 from Australia and New Zealand; and 52,000 from the Middle East. By school, the largest international enrollments are NYU’s 27,247, Northeastern’s 21,023, Columbia’s 20,231, and Arizona State’s 18,430. Other samples around the country include 11,800 international students at UM/Ann Arbor, 8,150 at Georgia Tech, 1,300 at the University of Alabama, 220 at the University of Montana, and 4,500 at Florida International.

By academic level, about three-quarters of the international students are graduate students and post-grads in “Optional Practical Training.” (“OPT” is mainly postgrad fellowships or temporary work authorized under student visas.) The breakout looks like this:

502,291 grad students
342,875 undergrads
242,782 “Optional Practical Training”
38,742 non-degree students (for example in English-language classes)

To put these figures in perspective, American colleges and universities enroll about 3.2 million grad students and 15.1 million undergraduates. So international students are a very large part of grad-school life, and a significant but not huge part of the U.S.’ undergraduate student body.  As a very topical example, Harvard’s high international shares are in its graduate schools: 47% at the Kennedy School of Government, 34% at the Graduate School of Arts and Sciences, 18% at the med school, and 53% — the highest share — at the Graduate School of Design.  In “Harvard College”, the undergraduate school, 850 international undergrads make up 12% of the 7,110 enrollees— above the national average, but not overwhelming and fairly typical of elite private universities; see also Johns Hopkins’ 7%, Stanford’s 9%, Northwestern’s 10%, Duke’s 12%, and Caltech’s to 14%. Undergraduate shares at state universities like USD are usually in the 3%-5% range, and community college rates are lower.

As Ms. Noem and her colleagues ponder the future of this part of American academic life — really neither a “privilege” nor a “right”, but rather an example of autonomous civil society — a few things for them to consider:

Trade and income today:  In the Bureau of Economic Analysis’ jargon, international student tuition is a form of trade called “education-related travel services”, and brings in a lot of money each year. In 2023 — the most recent year for which BEA has done an estimate — U.S. “exports” of this service totaled $50.2 billion. This is a bit less than the $80 billion in U.S. exports of cars and trucks, twice the $25 billion in American soybean exports, and about as much as we earned from gems and precious metals. Or, with the Trump administration’s trade balance fixation in mind, education is a large U.S. ‘surplus’ category: the $50.2 billion in exports are nearly five times the $11.2 billion Americans paid out as ‘imports’ to support U.S. students abroad.

Growth and innovation tomorrow: Further ahead, many international students go home with their degrees. Some stay on to work in the United States, often in valuable roles.  Per the National Science Foundation, 58% of computer science PhDs working in the United States, 56% of all engineering PhDs, and 24% of all science and tech workers in general, were born abroad. So if the administration wants —for example — Americans to assemble smartphones and design ships here, it would be odd and perverse for them to be pushing out a lot of the future phone designers and shipyard engineers.

And the intangibles: Current money and next-generation tech labor supply are important. So are some less measurable things. As IIE’s tables show, places like Vermillion and Cambridge are training a large portion of Asia’s next-generation political, intellectual, and business elite, and significant chunks of their peers in Latin America, Africa, Europe, and the Middle East. The practical meaning of this won’t be clear for a decade or more, but it’s probably something good. Nor can it be bad for the international students’ American roommates and lab partners to gain some firsthand views of the world outside, and some unfamiliar perspectives on the United States itself. And more generally, the very large role of American universities in worldwide education and intellectual life is (or at least ought to be) a point of pride.

So: With Harvard’s case against DHS set for a hearing next Monday, Ms. Noem and her associates might usefully get some perspective on the role international students play in America’s economy, intellectual life, and long-term global influence.  One easy option would be to take an hour to call home and check in with USD.

FURTHER READING

PPI’s four principles for response to tariffs and economic isolationism:

• Defend the Constitution and oppose rule by decree;
• Connect tariff policy to growth, work, prices and family budgets, and living standards;
• Stand by America’s neighbors and allies;
• Offer a positive alternative.

ABOUT ED

Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.

Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.

Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank ProgressiveEconomy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.

Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.

Read the full email and sign up for the Trade Fact of the Week.

FACT: “Congress shall have the power to lay and collect Taxes, Duties, Imposts, and Excises.”

THE NUMBERS: Court of International Trade ruling in “V.O.S. Selections vs. Trump” –

WHAT THEY MEAN:

The Court of International Trade is busy, but usually with pretty specialized stuff. Its 66 opinions this year mostly cover things like application of antidumping penalties to steel products and countervailing duties to catfish, customs broker licensing, and airline ticketing fees. It’s rare for one to address something basic enough to elicit quotes from the Constitution on tax authority, and from the Federalist Papers on “the ‘separate and distinct exercise of the different powers of government’ that is ‘essential to the preservation of liberty.’” V.O.S. Selections v. Trump — the one that struck down the Trump administration’s two “International Emergency Economic Powers Act” tariff Executive Orders last Wednesday — is one of that kind. Background on it, and then a thought on the responsibility of Congress:

The case’s core issue is one we raised this past January, in our “Four Principles for Response to Tariffs and Economic Isolationism” post anticipating the Trump administration’s tariff binge. This is Congress’ Constitutional authority over tariffs and other taxes, and the systemic risk unlimited Presidential power to create tariffs would pose:

“The Constitution’s Article I, Section 8, gives Congress unambiguous authority over “Taxes, Duties, Imposts, and Excises,” and for good reason. No single individual, president or not, should have the power to create his or her own tax system out of nothing. That, at minimum, risks impulsive and ill-considered decisions. Even more seriously, it creates a standing temptation for all future presidents to use tariffs to reward personal friends and supporters, and likewise to punish critics, business rivals, and disaffected states.”

Our concern quickly became reality, as Mr. Trump attempted to use three elderly laws to bypass Congress and create a new tariff system by decree. V.O.S. Selections addresses one of these laws: the International Emergency Economic Powers Act — “IEEPA” for short — which dates to 1976. It doesn’t mention tariffs specifically, but gives presidents broad authority to act quickly in emergencies such as the outbreaks of wars or natural disasters.  (The other two laws, not covered in this case, are “Section 232” from 1962, allowing presidents to “adjust” imports to meet national security needs, and “Section 301,” 1974, authorizing threats or imposition of tariffs as a negotiating tool for administrations trying to reduce overseas trade barriers.) These laws share two unusual features: first, presidents don’t need Congressional approval to use them; and second, the policies they choose (tariff or otherwise) can stay on indefinitely. The temptation to rule by decree is thus latent in each, though no earlier president had wanted to try it.

The tariffs at issue in V.O.S. Selections come from two “IEEPA” decrees. The first, spanning three Executive Orders on February 1, declared an emergency over fentanyl and migration and used it to impose tariffs of 25% on Canadian and Mexican products, and 10% on Chinese-made goods.  The second, on April 2, claimed that the U.S. trade balance is a national emergency, and used it to create a “global” tariff of 10% and a battery of “reciprocal” tariffs ranging from 11% to 50% on 56 separate countries and the 27-member European Union.

In practical terms, the tariffs mean massive new costs for hundreds of millions of Americans and millions of businesses. The small New York wine seller whose name is on the case (V.O.S. Selections, on 8th Avenue), for example, buys wine from vintners in the United States and 13 other countries. The permanent “MFN” tariff system imposes a tariff of 6.3 cents per liter for its Argentine, Lebanese, French, Italian, Greek, Croatian, Hungarian, and Austrian wines, and no tariff on wine from FTA partners Morocco and Mexico. The IEEPA decrees hiked this to 10% for the Moroccan and Lebanese vintages, 25% for the Mexican, and threats of 20% and then 50% for the European varieties.

The question V.O.S. and the four other firms in the case — a women’s bicycle shop, a pipe-maker, a designer of educational electronics kits, and a fishing tackle store — pose (via advocates in the Liberty Justice Center) addresses the decrees’ foundation: can a president, by declaring an “emergency,” take Congress’ Constitutional power to set rates for “Taxes, Duties, Imposts, and Excises” for himself? The Court concluded that he can’t.

Its opinion in V.O.S. Selections v. Trump and the parallel State of Oregon v. Trump (filed by the Attorneys General for Oregon and 11 other states*), cites the Constitution for authority over tariffs, and Federalist Papers 48 and 51 for the breach in the ‘separation of powers’ an unlimited presidential tariff power would create. Their unanimous conclusion:

“The question in the two cases before the court is whether the International Emergency Economic Powers Act of 1977 (“IEEPA”) delegates these powers to the President in the form of authority to impose unlimited tariffs on goods from nearly every country in the world. The court does not read IEEPA to confer such unbounded authority and sets aside the challenged tariffs imposed thereunder.”

The administration has appealed, and the Supreme Court will likely get the final word. But for now, the C.I.T. opinion tosses out all the IEEPA tariffs: the 10% global tariff, the threats of 50% tariffs on things from the European Union and Lesotho (and 46% on Vietnamese goods, 36% on Thai goods, 47% on Madagascar’s vanilla and clothing, 28% on Tunisian dates and jewelry, etc.), the 25% on Canadian and Mexican-made goods and the 10% on Chinese-made products.  The real-world impact of this is quite large: if upheld it will save American families and businesses — small firms like those in the case, farms, building contractors, retail shops, restaurants, hospitals, and manufacturers — hundreds of billions of dollars. The effect on American governance is greater: if the opinion stands, it will reaffirm Constitutional limits on unchecked and arbitrary presidential power, and bar presidents from nullifying Congressional tax authority through a law designed for quite different purposes.

Looking ahead: Assuming the C.I.T.’s opinion does stand, the IEEPA route for presidents hoping to bypass Congress and the Constitution will be closed. It isn’t the only such route, though, and the opinion leaves work for Congress and others hoping to avert further attempts to rule by decree.  It doesn’t affect, for example, the “Section 232” 25% tariff on cars and auto parts, nor the drastically oscillating “232” steel and aluminum tariffs (50%, at least this week), nor the “301” law used first to impose tariffs on Chinese goods in 2018 for negotiating purposes but more recently to convert them to long-term “industrial policy.” The 232 and 301 laws have more procedural checkpoints and requirements than IEEPA and take longer to use, but share a core weakness: since neither requires Congressional affirmation of any new tariffs, presidents can use them to create their own tariff systems.

Whatever one’s view of the merits of tariffs in trade policy or as taxation, this spring’s experience makes such a situation Constitutionally untenable.  Congress should not simply rely on courts to defend its authority.  It has the power to do so itself, and — as Trade Subcommittee Ranking Member Linda Sanchez along with House Ways and Means Democrats propose — should use it now.

* Arizona, Colorado, Connecticut, Delaware, Illinois, Maine, Minnesota, Nevada, New Mexico, New York, and Vermont

FURTHER READING

PPI’s four principles for response to tariffs and economic isolationism:

• Defend the Constitution and oppose rule by decree;
• Connect tariff policy to growth, work, prices and family budgets, and living standards;
• Stand by America’s neighbors and allies;
• Offer a positive alternative.

FACT: Denmark is a four-generation ally and a good neighbor.

THE NUMBERS:

WHAT THEY MEAN:

When Americans asked for help, they came. Ten years ago, Marine Gen. Daniel Yoo expresses gratitude for the U.S. Armed Forces as Danish allies rotate out of Helmand:

“I want to thank you for your steadfast partnership. We are grateful for all of your support. Your soldiers should be proud of their multiple deployments here and accomplishments, and for distinguishing themselves with valor on the modern battlefields of Afghanistan. Your country should take pride in your professionalism and commitment.”

A founding North Atlantic Treaty signatory in 1949, Denmark has been a NATO member ever since. The 21,000 Danes who served in Afghanistan and Iraq, including in high-risk provinces Helmand and Anbar, served as allies responding to the Bush administration’s call for assistance under Article V of the North Atlantic Treaty. Fifty never returned, 43 of them killed in Afghanistan and 7 in Iraq.

If we were to call again, what might they say?

This year, the Danes have been the target of a bizarre pressure campaign by the Trump administration, which says it wants to “acquire” Greenland. (Which, see below, is a self-governing country within the Kingdom of Denmark, not a possession.) To justify this the administration has raised some questions of security and critical-mineral policy, which aren’t trivial but also (a) aren’t new and (b) are now, and always have been, addressed perfectly well through international law, alliance management, and standard diplomacy. We noted last January that the opening of this campaign, along with similar decisions to pick fights with Canada and Panama, was among the most disturbing events of the transition period. Four months later our view is the same: unwarranted, lacking public support (whether in the U.S., Denmark, or Greenland), and destructive to American and Atlantic security. Some background, and then our advice for the administration:

Greenland is a close American neighbor: Nuuk, the capital, is 1300 miles from Maine and a four-hour direct flight from New York.  Its 56,000 people live on 2.16 million square miles of land — a gigantic space about three times the size of Texas, though 80% of it lies under a mile-high ice sheet. Politically under the Danish Crown since 1397, and a part of the Kingdom of Denmark since 1814, Greenland is a self-governing country whose local government runs fiscal matters, schools, economic policy, and domestic affairs including control over mining and natural resources. Since 2009 it has had a “right of self-determination” extending in theory to independence. (Puerto Rico may be the closest U.S. analogue, though an imperfect one.) Greenlanders — mostly Inuit by ethnicity; the official language is Greenlandic — have been pondering the options, without any great urgency, for several decades.

Greenland participates in NATO via the Danish Armed Forces, and has an important alliance role through the U.S. military space facility at Pituffik (which, to pin down some security detail, works under the direction of the Joint Force Command in Norfolk, Virginia.) Its place in the world economy is legally complex — though Denmark is an EU member Greenland is not, having opted out of the EU for fishery policy reasons in 1979. Its economy mostly rests on tourism and about $1 billion worth of annual halibut, cod, Arctic crab, and cold-water shrimp exports to European, Chinese, and other Asian buyers.*

The independence option, though not likely to materialize in the near term, does raise some questions — principally for Danes and Greenlanders, but also for Greenland’s near neighbors in Iceland, Canada, and the United States.

With respect to security policy: Arctic security does raise important questions, in particular given Russia’s attack on Ukraine and threats against its northern neighbors. These include naval passage, the future of the Pituffik base (not a facility Greenlanders are interested in scaling back; to the contrary, it’s widely supported and both Denmark and Greenland are spending more on security these days) and commercial shipping lanes as Arctic ice retreats.  As in the past, they are perfectly manageable through normal alliance relationships, diplomacy, and defense and intelligence coordination.

With respect to mining and resources: Though Greenland’s largest resource is fresh water (the ice sheet holds about 2.9 million cubic meters of water, ten times as much water as the rest of the world’s surface lakes, rivers, glaciers, etc. combined), it also has lots of rocks and would be happy to sell some of them to Americans. The U.S. Geological Survey cautiously estimates 1.5 million tons of rare earth reserves (their rare-earth estimate for the U.S. itself is 1.9 million tons) along with gem mining, and more generally Greenland has at least some of 39 of the USGS’ 50 designated “critical minerals.”

The resource endowment naturally draws interest from mining businesses worldwide, but as with the security issues, that doesn’t at all mean a crisis. To the contrary, Greenland’s government has been hoping for a while that American mining firms would show more interest than they’re now doing: this year, they count 23 British and 23 Canadian mining companies operating in Greenland, as against only one American. Here’s the relevant Minister, Naaja Nathanielsen, pitching Americans for more business last January:

“Greenland has high hopes of signing a new agreement with the United States as soon as possible. We are searching for ways to increase investments in our mining sector. …  At the moment, companies in Canada and Britain own the most mining licenses in Greenland. They each hold 23 licenses. The United States holds just one. I am sure this picture can change.”

In sum, without any obvious rationale, the Trump administration has been berating Denmark in the press, insisting that the U.S. has some sort of need to acquire and administer Greenland, sending J.D. Vance to walk around in the snow looking for supporters of the idea that Greenland should join the United States (he couldn’t find one), and shifting U.S. intelligence community professionals from the useful work one hopes they’re now doing to an embarrassing, Inspector Clouseau-like mission of finding the acquisition-supporters Mr. Vance couldn’t. This has accomplished nothing useful and done much harm. PPI’s National Security Director Peter Juul sums up the consequences:

“Trump’s alienation of America’s oldest and closest allies leaves the United States less safe in the world — and raises the risk of conflict in Europe and the Pacific by sowing doubts about America’s commitments to its allies and their security.”

Now to the advice, which starts with three pretty obvious points:

• There is no “Greenland problem.” The U.S., Denmark, the Greenland government, and NATO can handle any “issues” related to Greenland policy per se, or to Arctic security more generally, perfectly well and have done so for decades.
• Both the Danish government and Greenland’s elected local government have said repeatedly (including during the first Trump term) that Greenland’s sovereignty isn’t up for discussion.
• Helmand Province in 2014 wasn’t long ago. Mistreating a four-generation ally and good neighbor, which in the very recent past has made considerable sacrifices in a shared cause, reflects poorly on the United States and erodes America’s reputation as an honorable partner.

And then the bright spot: The world is full of unpleasant choices among lesser evils, complex long-running challenges with no simple solutions, etc., etc. This isn’t one of those things. To the extent any problem exists, it is quite new and the Trump administration can choose at any moment to stop causing it. The alternative — just be a trustworthy ally and good neighbor – shouldn’t be hard at all.

*  The U.S. is a minor customer, spending about $30 million a year on 2000 tons of fish and 1000 tons of crab, and selling in return about $10 million in airplane parts, weather-monitoring and telecommunications gear, and navigation equipment. Greenland escaped the Trump administration’s April 2 “reciprocal” tariff decree (though this still imposes a 10% tax on the fish and crab) because in 2024 its government bought a plane and some aircraft parts for $40 million, leaving the U.S. with a bilateral trade surplus that year. 

FURTHER READING

PPI’s four principles for response to tariffs and economic isolationism:

• Defend the Constitution and oppose rule by decree;
• Connect tariff policy to growth, work, prices and family budgets, and living standards;
• Stand by America’s neighbors and allies;
• Offer a positive alternative.