Companies hurt by the tariffs could sue Trump if he uses IEEPA, but they’re unlikely to find a judge that would issue an injunction to stop the order from going into force and the lawsuit itself could take years to resolve, said Everett Eissenstat, a former Trump White House official who now is a partner at Squire Patton Boggs.
Still, Trump’s action under the law may be easier to challenge legally if he uses the growing U.S. trade deficit as justification for urgent tariff action. The United States has run a trade deficit every year since 1975, making it hard to claim the current trade deficit is an emergency, said Ed Gresser, a former USTR official now at the Progressive Policy Institute, a Democratic think tank.
The U.S. economy has quadrupled in size over the past five decades to more than $22 trillion and employment has doubled to 158 million jobs even though the trade deficit has increased, Gresser added. And while the dollar value of the trade deficit has hit record highs in the range of $1 trillion annually, the trade gap actually has declined as a percentage of U.S. gross domestic product from the peak level of 5.7 percent in the mid-2000s to 2.9 percent in 2023.
FACT: World infant mortality rate cut by half since 2000; in the U.S., by only 22%.
THE NUMBERS: Infant mortality rates, 2000-2022* –
Country
2000
2022
Decline
Sierra Leone (highest rate 2022)
138.3
76.0
-45%
Estonia (lowest rate 2022)
8.7
1.5
-83%
Least-developed countries
108.6
42.3
-61%
World
53.0
27.9
-47%
High-income countries
6.9
4.1
-41%
United States
7.1
5.6
-22%
Deaths in the first year of life, per thousand live births. World Bank for world and regions; CDC’s most recent release for the U.S. rate in 2022. Note that the CDC has recalculated the U.S.’ 2000 figure to 6.9 per 1000.
WHAT THEY MEAN:
“Natalism,” the view that governments should encourage people to have children, can come in modest and supportive forms: child tax credits, cash subsidies for child care, and so on. Few are extremely successful. More exotic approaches — e.g. Vice Presidential candidate Vance’s haranguing of childless couples as in some way letting down the country — aren’t at all likely to do better. An alternative suggestion: improve the protection of children once they’re born. Here a remarkable 21st-century international success — a sharp drop in infant mortality almost everywhere, fastest on average in poorer countries but also clear in Europe, Australia, and Japan — highlights an area where Americans should do better. The background and the contrast:
20th-century success: In the very long view, American infant mortality has declined drastically — by 99.4% — since 1915, when the Labor Department’s newly formed Children’s Bureau first estimated a national infant mortality rate. Their statisticians found 99.9 deaths in the first year of life per every 1,000 births that year, for a 10% infant mortality rate. Earlier rates were likely even higher — Michigan’s health department, for example, reported 15.7% state infant mortality in 1900 — and the Bureau believed 30% of all deaths in the U.S. were of children five years or younger. To put these figures in perspective, the death rate for soldiers in the Union Army was 13.4%; and according to World Bank tables, the highest national infant mortality rates today are Sierra Leone’s 76 per 1,000 and the Central African Republic’s 74. Or, to move from data to family life, early childhood death was common, and neither power and wealth, nor education, nor medical education seem to have been defenses: three of Abraham and Mary Lincoln’s four children died young, as did four of Karl and Jenny Marx’s seven, three of Louis and Marie Pasteur’s five, and two of Charles and Emma Darwin’s ten.
The causes were fairly simple: (a) bad sanitation, especially contaminated milk and water; (b) no vaccines, anti-inflammatory medicines, or antibiotics; and (c) poor or non-existent primary health care. Over the next decades, with public health and sanitation laws, new medicines, vaccination campaigns, Medicaid insurance for the poor, and other policy innovations, the figures collected by the Children’s Bureau and its successors at the Centers for Disease Control steadily improved: 60 deaths per thousand births by 1930, 40 by 1940, 26 by 1960, 10 by 1980, and 7.1 (since recalculated to 6.9) as CDC published its “Achievements in Public Health ” retrospective in 2000.
But more recently: Placed against this 20th-century achievement, the U.S.’ 21st-century record looks mediocre at best. CDC’s most recent calculation of the national infant mortality rate (for 2022, out in late July) is 5.6 deaths per 1,000 births. This is 22% below the rate of 2000 and actually up from 5.4 deaths in 2021 – the largest jump in 20 years.
Meanwhile, the rest of the world has cut infant mortality by nearly half. It’s tempting to put the relatively poor U.S. performance in a good light by noting that the high worldwide rate reflects remarkable successes in lower-income countries, and/or assuming that public health policy might have a diminishing rate of return, with infant mortality reduction slowing naturally as rates fall and at some point stopping.
The first of these points is true. Most of the low- and middle-income world has cut infant and childhood deaths deeply and fast since 2000. Uzbekistan, for example, has cut infant mortality by 77% since 2000, Cambodia by 76%, Armenia and Morocco by 66%, Bangladesh by 62%, Ethiopia 61%, Egypt 59%, El Salvador 57%, Indonesia 56%, Honduras 55%, Timor-Leste 53%, and Ghana 51%. But the second isn’t. The U.S.’ rate was near the ‘developed’-world average in 2000, is now clearly higher, and has fallen more slowly than most. As an example, Japan’s 3.2 per 1000 rate was the world’s lowest in 2000, and has fallen at exactly the world average rate to 1.7 per 1000. A representative table of large and advanced economies:
Country
2022 Infant Mortality Rate
Drop since 2000
China
4.8
-84%
Australia
3.2
-63%
Korea
2.5
-63%
Ireland
2.7
-60%
India
25.5
-62%
Italy
2.2
-53%
World
27.9
-47%
Japan
1.7
-48%
Spain
2.5
-43%
United Kingdom
3.6
-39%
Germany
3.0
-32%
United States
5.6
-22%
France
3.3
-19%
Canada
4.3
-19%
What explains this? And what might be done?
One explanation comes from internal disparities: differing experiences by geography, by race, and ethnicity, and differing rates of change over time. Some comparisons:
* State and region: By state, Massachusetts has the lowest U.S. infant mortality rate at 3.2 per 100 births; Mississippi’s 9.1 per thousand is the highest. By region, rates in New England, the mid-Atlantic, and the West Coast are well below the national averages and within a standard rich-country range. Rates in the deep South and Vance’s Ohio-Indiana-West Virginia region are typically above 7 per thousand.
* Race and ethnicity: Infant mortality rates range from 3.7 per thousand in Asian American families through 4.4 in non-Hispanic white families, 4.8 in Hispanic families, 7.5 in Native American, and 10.6 in African American families.
* Change over time: By race and ethnicity, declines over time are not vastly different. Regionally, however, some parts of the country have cut infant mortality noticeably faster than others. The best state record since 2000 is the District of Columbia’s 60% reduction, followed by drops of 45% in New Jersey and North Dakota, 39% in Rhode Island, 36% in Massachusetts, and 35% in New Hampshire. Recent studies suggest a couple of commonalities in the latter group. One is non-participation in the Affordable Care Act’s Medicaid expansion, which improved access to prenatal and maternal care for lower-income moms. Another is the imposition of abortion restrictions since the Supreme Court overturned Roe v. Wade in 2022, often vaguely written and applicable to many different situations, which may be both keeping patients from seeking care and deterring providers from working in the relevant areas.
Perhaps related to both of these themes is an ominous trend in rural health care: maternity care seems to be getting steadily harder to find, and both expectant mothers and infants therefore face rising risk. Health consultancy Chartis summarizes:
“More than 400 maternity programs closed nationwide between 2006 and 2020. In rural communities, the disappearance of OB services has been particularly impactful. Between 2011 and 2021, 267 rural hospitals closed OB services, representing 25% of all rural OB units in the United States.”
To put these figures in context, there are 2,168 maternity hospitals in the United States. So at least in remote areas, health care options are fewer and further away than they were a generation ago. And bringing this from policy and data to family life, the CDC reports 20,577 infant deaths in 2022. Had the U.S. achieved Japan’s world-standard 1.7 per thousand infant mortality rate, 14,300 of them would have lived. The EU’s 3.1 per thousand rate — which is certainly possible, since it’s not far away from the New England average — would have kept 9,200 alive.
So: For those wanting more American children, Vance’s “browbeating” approach is pretty certainly useless, and more prosaic things — child tax credits and child care support, better access to prenatal and perinatal care, primary health in general, “keeping clinics open in places where they’re closing” — are good ideas. We can, really, do a lot better.
… and a study looking at Medicaid expansion, post-Dobbs abortion restrictions, and changes in infant mortality rates.
World perspective –
The World Bank has rates for 1990, 2000, and 2014 through 2022 across all countries and for regions and income groups.
… and a sample of its data:
Country
2000
2022
Decline
China
29.9
4.8
-84%
Estonia
8.7
1.5
-82%
Uzbekistan
51.4
11.9
-77%
Mongolia
48.4
11.5
-76%
Turkey
30.9
8.5
-73%
Cambodia
79.0
22.3
-72%
Armenia
27.0
9.2
-66%
Australia
5.1
3.2
-63%
Bangladesh
63.0
24.1
-62%
Least-developed countries
108.6
42.3
-61%
Ethiopia
87.4
33.9
-61%
El Salvador
24.6
10.5
-57%
Indonesia
40.9
18.1
-56%
Honduras
30.5
13.8
-55%
Ireland
6.0
2.7
-55%
Italy
4.7
2.2
-53%
Timor-Leste
87.3
41.5
-53%
Mexico
23.6
11.5
-51%
Japan
3.3
1.7
-48%
European Union
5.9
3.1
-47%
World
53.0
27.9
-47%
Jordan
22.6
12.2
-46%
Sierra Leone
138.6
76.0
-45%
High-income countries
6.9
4.1
-41%
United States
7.1
5.6
-24%
Canada
5.3
4.3
-19%
Jamaica
17.5
16.1
-8%
Success stories –
In 2000, the capital’s infant mortality rate, at 13.5 deaths per 1,000 births, was nearly twice the national average. As of 2022, it was 5.5, down by 60% and equal to the national average. Mayor Bowser’s health division, with links to perinatal and infant health services and reporting.
UNICEF looks at newborn health care in Uzbekistan.
* San Francisco Fed, Peterson Institute
** Initial proposal was a 10% tariff worldwide and a 60% tariff on Chinese-made goods; more recently campaign has suggested 20% worldwide and 60% on Chinese-made goods. Cost estimates from the Tax Policy Center, Peterson Institute, Center for American Progress
WHAT THEY MEAN:
From Through the Looking-Glass, Chapter 5:
“Alice laughed. ‘There’s no use trying,’ she said. ‘One can’t believe impossible things.’
“‘I daresay you haven’t had much practice,’ said the Queen. ‘When I was your age, I always did it for half an hour a day.
Why, sometimes I’ve believed as many as six impossible things before breakfast.’”
In the Queen’s spirit, the Trump campaign’s 10-chapter, 5,398-word, platform starts with a pledge to “defeat inflation and quickly bring down all prices” in Chapter 1, and then — four notches down in its own Chapter 5 — says this on trade policy:
“Trade deficit in goods has grown to over $1 Trillion Dollars a year. Republicans will support baseline Tariffs on Foreign-made goods, pass the Trump Reciprocal Trade Act, and respond to unfair Trading practices. … By protecting American Workers from unfair Foreign Competition and unleashing American Energy, Republicans will restore American Manufacturing, creating Jobs, Wealth, and Investment.”
The weird grammar and “Mad Hatter” orthography makes the passage a bit hard to read. Converted from argot to standard English, it promises a lower trade deficit and a larger manufacturing sector, plus a couple of policies that ostensibly will get these things. One, the cryptic allusion to a “Reciprocal Trade Act” can be ignored; it’s a concept pitched by Peter Navarro in the Heritage Foundation’s Project 2025 book, and unworkable in practice. (Precis below for those curious about this particular rabbit-hole.) The other, the “baseline tariff,” has been defined in campaign comments as a 10% tax (or more recently a 20% tax) on all imported products — shoes, over-the-counter medicine, groceries, tea, auto parts, toasters, etc. — plus a 60% tariff on all Chinese-made goods. VP Harris, channeling straight-ahead thinker Alice in her North Carolina talk last Friday, summarizes the idea as follows:
“A national sales tax on everyday products and basic necessities that we import from other countries. … It will mean higher prices on just about every one of your daily needs: a Trump tax on gas, a Trump tax on food, a Trump tax on clothing, a Trump tax on over-the-counter medication.”
Here’s a small but important first-aid example:
The current U.S. tariff on band-aids and similar bandages is zero. (Termed “adhesive dressings and other articles having adhesive layers” in the Harmonized Tariff Schedule; HTS Chapter 30, lines 30051010 and 30051050.) Americans spend about $3 billion dollars a year on them, buying some locally and some from abroad. Trade data report $893 million spent on band-aid imports last year, with Europe and the U.K. supplying $299 million worth, China $263 million, Mexico $142 million, other Latin American countries (mainly Brazil and the Dominican Republic) $88 million, and other countries the remaining $140 million. At face value, raising the U.S. tariff rate from zero to 10% for the European/Latin/etc. bandages, and to 60% on the Chinese, would add another $220 million in costs. A 20%/60% variant would be $285 million. In practice, some or most Chinese products would likely shift to other production sites, so the direct cost to Americans would be a bit less. U.S.-based producers, though, would presumably start charging more. Families’ and clinics’ bandage bills would then rise, probably by 6% to 10% (that is, $150 million to $300 million in extra costs), depending on how sharply imports from China shrank.
A larger 10% or 20% tariff across all industries, applied to industrial inputs as well as consumer goods, will have larger and more complex price effects — since about a third of U.S. inputs are ‘intermediate goods’ used by manufacturers and farmers, it would raise U.S. production costs as well as consumer bills — but the basic one is higher prices. How much? The first Trump administration’s tariffs (on metals, at 25% for steel and 10% for aluminum, and 25% or 7.5% on about $350 billion worth of Chinese-made goods), raised overall U.S. tariff rates from a 1.4% average to 3.0%. Analyses by San Francisco Fed economists and others suggest this likely contributed about half a percentage point to inflation. Three nonprofit studies this spring and summer, using the 10% worldwide tariff — Peterson Institute for International Economics, Center for American Progress, and most recently the Tax Policy Center — expect it would raise families’ bills for goods by $1,500 to $1,820. This would add 6% to 8% to the roughly $23,000 an average household now spends on food, appliances, clothes, gasoline, and other goods.
As to whether you can do both Chapter 5’s promise of higher tariffs and prices, and Chapter 1’s promise to “bring down all prices” (setting aside whether the methods proposed for either one are credible): trust Alice, not the Queen.
As a policy, Chapter 5 works directly against Chapter 1’s “bring down prices” promise. Assuming the Trump campaign abandons Chapter 1, doesn’t worry about price hikes, and sticks with higher tariffs, how credible are its claims that theses higher tariffs would mean lower trade deficits and manufacturing growth? Lots of things beyond trade policy, of course, go into big sectoral trends like this. But experience from the first Trump administration’s 2018/19 tariffs suggests “don’t count on it”.
1. Trade Balance: Each February the U.S. Trade Representative Office publishes a report entitled “The President’s Trade Agenda,” explaining Administration trade goals for the coming year. The 2017 edition, the Trump administration’s first, cited a U.S. manufacturing trade balance stat to argue that its predecessors had gotten things wrong:
“In 2000, the U.S. trade deficit in manufactured goods was $317 billion. Last year [i.e. 2016] it was $648 billion — an increase of 100 percent.”
This ‘$648 billion’ is far below the “1 trillion” manufacturing deficit cited in the 2024 platform. That is because, since the 2018/19 tariff round, the U.S. trade deficit has risen sharply in general and grown more concentrated in manufacturing, which had hit $891 billion in 2020 and reached $1.06 trillion in 2021 before turning down a bit by 2023.
What happened? As an economic axiom, national goods/services trade balances equal national savings minus national investment. A tariff hike, as a form of tax increase, should reduce government “dissavings”. Unless offset by a fall in private-sector savings, it should mean a slightly lower trade deficit. If fiscally outmatched by a tax cut elsewhere, though — as in 2018 and 2019 — the trade deficit will not fall but rise. Thus, the last Trump administration drove up the trade deficit rather than cutting it as it promised. Since tariffs are a form of tax applied particularly to goods buyers and goods-using industries (e.g. retail, manufacturing, and agriculture pay a lot more when tariffs rise; financial services or real estate not so much), the higher Trump-era tariffs are likely a reason the overall deficit has become more concentrated in manufacturing and the agricultural surplus has gone. The most likely outcome, if the Chapter 5 stuff goes into effect, will be similar but larger.
2. U.S. manufacturing sector: Likewise, manufacturing growth slowed after the first set of tariffs. At 10.9% of U.S. GDP in 2018, manufacturing was down to 10.3% by 2021 and has stayed there. With respect to employment, the Bureau of Labor Statistics finds manufacturing job growth not negative but slower after the tariffs than before: about 135,000 net new jobs per year from the financial crisis low in early 2010 to the spring of 2018 just before the Trump tariffs; an average of 57,000 per month since then.
The Census has U.S. exports, imports, and balances from 1960 to 2023 on one convenient page.
And BLS’ database (use Employment, Hours and Earnings for manufacturing and other sector employment).
And down the rabbit hole:
As promised fort hose interested: The “Reciprocal Trade Act” concept, set out by Dr. Peter Navarro (a first-term Trump trade official, recently released from the Federal Corrections Institution in Miami) in essay #26 in the Heritage Foundation’s “Project 2025” book, starting on page 765.
The idea is that either “our trading partners lower their applied tariff rates on specific products to U.S. levels in cases where their applied tariffs are higher,” or if they don’t, “to uphold the principle of reciprocity, the U.S. raises its tariffs to mirror levels”. In practice, there are about 150 “tariff schedules” in the world. This is somewhat less than the count of countries and non-independent customs territories, since some countries (e.g. the 27 EU members) are in Customs Unions and use the same tariff schedule. Tariff schedules are quite long: America’s 4,392-page schedule has 11,414 different 8-digit tariff lines (setting aside the extra complexity created by anti-dumping orders, FTAs, 232 and 301 tariffs, and so forth). According to the WTO’s Tariff Profiles 2023, Somalia’s 5,469-line schedule is the shortest, and the others range up from Mozambique’s 5,549 through Nigeria’s 6,890, Switzerland’s 8,703, the EU’s 9,785, Argentina’s 10,811, the Philippines’ 10,896, and India’s 12,088, to peak at Algeria’s 16,785.
All use the same basic 96 chapters, and the same “headings” and “sub-headings” down to 6 digits, so statistical agencies know which types of goods are moving around. But at the “8-digit” level which defines tariff rates, different countries’ tariff systems vary widely. For example, New Zealand has 75 tariff lines for shoes (mostly zero or 10%), while the U.S. has 134 shoe lines from zero to variable compounds like “90 cents/pair + 37.5”. Likewise, the U.S.’ nine jam lines go from 1.4% (currant) to 3.5% (apricot) to 7.0% (peach); Norway’s eight lines (Chapter 20) mix apricots and peaches together and give them a zero, but charge 8.34 kroner/kg for blueberry jam. To make this “Act” work, Customs officials and Congressional staffers would need to write up and then administer a system in which the U.S. had not nine jam lines and 134 shoe lines, but enough — likely several thousand – to match every jam and shoe line in each of the other 150 schedules. Across the entire schedule, the number of tariff lines would likely wind up in the millions. Not going to work, no.
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.
“Tariffs are taxes—taxes that weigh most heavily on the poorest Americans. Protectionism is, and always has been, regressive, a fact most brutally illustrated by the tariff tables themselves, according to figures compiled by Ed Gresser of the Progressive Policy Institute.”
FACT: The ‘African Growth and Opportunity Act’ expires next year.
THE NUMBERS: U.S. imports from Africa, 2000 and 2023 –
2000
2023
Total
$22.1 billion
$29.6 billion
Crude oil
67.7%
29.3%
Unworked diamonds & precious metals
8.4%
16.9%
Ores, slag, and ash
1.8%
1.8%
All else
22.5%
52.0%
Note: Nigeria, Angola, Chad, Equatorial Guinea principally oil exporters; South Africa metals and automotive; Botswana and Namibia diamonds both cut/polished and unworked; Kenya, Ethiopia, Madagascar, Senegal, Ghana, Mauritius light manufactures, clothing, agriculture.
WHAT THEY MEAN:
The quick story of U.S.-African trade since 2000: Americans buy less African crude oil, but more clothes, cocoa paste, flowers, wigs and hair extensions, shea butter, polished diamonds, auto parts, birdseed, and branded coffee. Crossing the Atlantic eastward, meanwhile, more American-made cars and tractors, telecom equipment, chicken and computer parts.
Where to next? Looking ahead at July’s “AGOA Ministerial Conference”, the 29 participating African governments expressed three policy-speak hopes:
“An expeditious and long-term renewal,” meaning a hope Congress will extend the 24-year-old African Growth and Opportunity Act — the law from which the annual AGOA Ministerial conferences take their acronym, now 13 months away from its September 2025 expiration — for 16 years or more, to “ensure predictability and stability in trade and investment relationships.”
“Enhancing utilization,” echoing the concerns of U.S. Africa-watchers that U.S.-Africa trade remains relatively modest overall, and some eligible countries aren’t using the AGOA benefits as much as expected.
“Eligibility and reviews,” meaning worry that over-enforcement of “eligibility criteria” (on human rights, rule of law, foreign policy, economics, gender equity, and other factors) could erode AGOA’s effectiveness as long-term policy for U.S.-African trade growth and African economic development.
Background: The AGOA law, passed in the last year of the Clinton administration, and last reworked in 2015, has two core components. The first, a tariff waiver, gives duty-free status to nearly all things grown or made in participating countries. (Currently 32 of the 49 sub-Saharan African countries.) The second, a large “convening” program, holds annual Trade Minister conferences (the Washington session in July was the 20th) along with business dialogues, civil society fora, etc. The hope was to create a much larger U.S.-African economic relationship, and to shift Africa’s trade away from heavy reliance on energy and metal ore exports toward more labor-intensive and stable manufacturing and agricultural goods.
How well has it worked out? In raw dollars, U.S.-Africa trade is larger than in 2000, but not spectacularly so. Americans bought $22.2 billion worth of African* goods in 2000 and $29.6 billion in 2023. America’s own exports to Africa have grown faster — $5.9 billion in 2000, $18.2 billion last year — but aren’t very large either. And looking out from Africa the U.S.’ place in trade seems relatively smaller than it was in 2000: where that year’s $22.2 billion was about 20% of Africa’s $112 billion in exports to the world, 2023’s $29.6 billion is about 7.5% of a larger $406 billion.
These bottom lines are a bit misleading, though, because they mix volatile (and falling) oil with more stable (and growing) farm and factory goods. As U.S. oil imports from Africa have dropped from $15 billion to $9 billion, everything else — the clothes, cocoa paste, shea butter, auto parts, worked diamonds, hair extensions, etc. noted above — has jumped from $7 billion to $20 billion. So outside the big continental oil-producers Nigeria and Angola, trade data often look pretty impressive. A quick table:
IMPORT SOURCE
2000
2023
Change
Sub-Saharan Africa
$22.21 billion
$29.61 billion
+21%
Nigeria
$9.68 billion
$5.97 billion
-38%
Angola
$3.34 billion
$1.18 billion
-65%
South Africa
$4.20 billion
$13.88 billion
+220%
Ghana
$0.21 billion
$1.72 billion
+719%
Kenya
$0.11 billion
$0.89 billion
+709%
Madagascar
$0.16 billion
$0.72 billion
+350%
Botswana
$0.04 billion
$0.57 billion
+1325%
Ethiopia
$0.03 billion
$0.49 billion
+1533%
Senegal
$0.01 billion
$0.16 billion
+1500%
Thus, though China and more recently India long since overtook the U.S. as buyers of Africa’s oil and metal ores, Americans play a larger role in manufactured goods and farm products. In that sense, AGOA does seem to be fulfilling one of its main goals, and the Ministers have good reason to hope Congress will act soon to keep it going. Lots of ideas on next steps, and some background below on the Ministers’ “utilization” and “eligibility reviews” points along with some American thinking. Their Point 1, on the need for a renewal very soon, is timely and clear and doesn’t need much explanation.
* Using the “sub-Saharan” definition in AGOA — 49 countries — rather than the 55-country count of the African Union, which adds Egypt, Libya, Tunisia, Algeria, Morocco, and Western Sahara.
** Most don’t really need changes in the AGOA law, and the sad outcome of a 2020 attempt to rewrite the broader “Generalized System of Preferences” tariff waiver program for small and lower-income countries in a four-year-long lapse in the program coupled with endless arguments and tactical gambits – suggests it would be good to be cautious about big legal revision.
African Trade Ministers on AGOA renewal, via the African Union.
“Utilization”: One of AGOA’s puzzles, highlighted in the Ministers’ comment on “utilization,” is that fewer countries use its tariff waivers than the program’s designers had expected. The clothing tariff waiver, for example, provides not only duty-free status but “rules of origin” which in theory make AGOA cheaper and easier to use than U.S. free trade agreements. (Clothes are typically high-tariff products in the United States – top AGOA clothing imports such as acrylic sweaters get tariffs as high as 32%, and unlike Central American countries using the “CAFTA-DR” free trade agreement, duty-free African clothes can be made of fabric from anywhere in the world.) But only six of the 32 current AGOA countries — Ghana, Kenya, Lesotho, Madagascar, Mauritius, Tanzania — sell any substantial amount of the clothes that show up in American outlets and malls. Their $1.14 billion in clothing exports last year made up 99.6% of all AGOA clothing.
Why the relatively low use of this “centerpiece” AGOA feature? U.S. government analysis and outside observers see at least part of the reason in African policies. Some AGOA-country governments haven’t developed the implementation plans the program suggests. Some have geographical and cost disadvantages tariff benefits can’t overcome, as land-locked countries with shaky road and air connections to customers. And many have problems with port management, infrastructure quality, and import limits that raise production costs and erode competitiveness, and can be fixed at home.
Eligibility reviews: The Ministers, though, aren’t wrong to highlight “eligibility reviews” as a contributing factor. Since 2016, AGOA’s membership has shrunk from 38 countries to 32, as U.S. administration has removed countries for failure to meet program eligibility rules on rule of law, human rights, and other topics. (Eight countries on the 2016 ‘eligible’ list are gone: Burkina Faso, Cameroon, Ethiopia, Gabon, Guinea, Mali, Niger, Uganda; two others, Mauritania and the Democratic Republic of Congo, have returned.) Each decision had its own logic and legal background of course. But experience also shows that removals have costs. As a local example, Eswatini’s removal in 2014 over labor issues led to the collapse of AGOA garment trade and employment; they haven’t revived despite Eswatini’s return to the program in 2017. And in general, the Ministers are probably right to believe that this level of volatility reduces buyers’ confidence in AGOA as a long-term economic and developmental policy.
As an example, here are the January 2024 changes, with Mauritania back on the eligibility list and Gabon, Niger, and Uganda removed.
From the U.S. government:
U.S. “next-steps” ideas typically involve some way to manage “graduation” of countries reaching high-income status (as required under a different “preference” law, the Generalized System of Preferences), and seeking more reciprocal relationships with countries at higher income levels and with a more diversified industry. The Obama administration’s 2016 “Beyond AGOA”, even at eight years old, remains fresh.
And next steps:
A renewal proposal from Sen. Chris Coons (D-Dela.) and James Risch (R-Idaho).
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.
FACT: Tiger population estimates for Thailand’s Western Forest Complex are up from 40 in 2007 to a range of 189-223 this year.
THE NUMBERS: World wild tiger population estimates –
2024:
5,574
2022:
4,500
2010:
3,200
1980:
~35,000?
1900:
~100,000?
WHAT THEY MEAN:
From Thai newspaper Khao Sod last week:
“The Department of National Parks, Wildlife, and Plant Conservation released on December 19 the first photos of two tiger cubs and their mother in Slap Phra Wildlife Sanctuary, Kanchanaburi Province. … Over 420 automatic camera traps have been installed in 7 protected areas of the southern part of the Western Forest Complex to record the population of tigers and other wild cat species, including predators, from early 2023 to date. The area is a large wildlife corridor in a dry evergreen forest and is located near a large river. Analysis of the data from the automatic camera traps revealed that 3 tigers were photographed, an adult female listed in the tiger database under the code TWT128F, which is the mother tiger, and two cubs (with the codes SLT_Unknown003 and SLT_Unknown004).”
Is this an everyday event? A significant sighting? Probably the latter, and a very hopeful one.
Background: A 2018 National Academies of Science study guessed that, excluding fish, all the world’s vertebrates together weighed (in “dry carbon”) about 170 million tons. Humans and farm animals make up about 160 million tons of this. Vertebrate wildlife — that is, all the eagles, cobras, elephants, condors, whales, jaguars, deer, sea turtles, mice, frogs, bison, etc. — comes to a bare 10 million tons. From another perspective, Our World in Data summarizes three research papers and concludes that wild mammals weighed about 10 million tons (again in dry carbon) in 1900, and were down to 3 million tons by 2015.
Tigers’ sad modern history is part of this larger decline in wildlife and biodiversity. Zoologists guess that, when wildlife weighed 10 million tons in 1900, about 100,000 tigers patrolled a roughly triangular forest-mountain-steppe range with Korea at the top right, Indonesia at the bottom, and Iran at the top left. By 1980 the population was down to 35,000; by 2010 tigers were gone from Central Asia, Korea, Vietnam, Laos, and Cambodia, and three of the nine “subspecies” (the Caspian, Javanese, and Bali tigers) were declared extinct. The remaining 3,200 included a large group of about 2,000 Bengal tigers in India, 450 Amur tigers in Siberia, 400 Sumatrans in Indonesia, 200 Indochinese and South China tigers in Thailand, and smaller refuges of 100 to 200 in Bangladesh, Nepal, Bhutan, China, and Malaysia. The roughly 14,000 zoo and farm tigers distributed around Asia, Europe, and the United States likely outnumbered wild tigers by four or five to one.
The principal issue, for tigers as for other large wild animals, is a massive loss of habitat through conversion of wild areas to agriculture, pasture, and urban land; logging and road- and town-building, with attendant chopping up of forests into “fragments” and “islands”; and most recently climate change. As the pre-1900 tiger range contracted by about 95%, and the number of tigers shrank with it. Trade and economic factors, though a secondary concern, mean that as with elephants, rhinoceros, and Caspian sturgeon, tigers have declined faster than less “charismatic” wildlife: hunting for sport and pelts in the 20th century, more recent collection of cubs for exotic pets and tiger farming, and sale of tiger bones, blood, and organs for ill-founded medicinal purposes throughout.
Against this unhappy background, last week’s “Global Tiger Day” assessment provides, cautiously and tentatively, some reason for optimism. Since the 2010 low, wild tiger populations appear to have been growing, with surveys reporting worldwide populations of about 4,500 in 2022 and 5,574 this year. This isn’t because the estimates of the 2010s were too pessimistic or missed populations, but because of confirmation that tiger populations in several countries are beginning to rise.
Khao Sod’s report on the newly photographed cubs is an example of this. Thailand’s Western Forest Complex, a group of 12 national parks and seven wildlife sanctuaries, was thought home to around 40 tigers in 2007. By 2022 the population, tracked by the Forestry Department’s batteries of cameras, had grown to a range of “148 to 189,” and in 2024 it is “179 to 223.” Reasons: habitat has improved as government programs release prey species such as sambar deer into the sanctuaries; protection against poachers; and a program of joining disconnected sanctuaries and parks through protected “tiger corridors” – like the riverbank evergreen forest in which the mother and cubs turned up — which at least partially reverse past fragmentation of habitat into areas too small to support significant populations. Outside, meanwhile, the international environmental agreement CITES (“Convention on Trade in Endangered Species”), amplified over the past 20 years to ban domestic trade of wild tigers for pets, farming, pelts, and medicines as well as international trade — which has been banned since 1973 — may also be helping. Nor is Thailand uniquely successful: Nepal’s tiger count has risen from 121 to 355, and India’s from 2,967 in 2018 to 3,682 this year.
These are, of course, still small numbers — dozens and hundreds rather than the thousands necessary for a durable recovery. If threats of habitat loss and poaching are receding at least in some countries, climate-change concerns continue to grow. But for the first time in quite a while the trends have turned up, suggesting that tigers’ future may still be in forests rather than zoos. Perhaps, though later than you think, it’s still probably not too late.
FURTHER READING
Rebound:
… Khao Sod reports, with Western Forest Complex photos.
How reliable are “zoo and farm tiger” estimates? Since the early 2000s, press and NGO reports have frequently used a figure of 5,000 in the United States, and sometimes suggested higher estimates of 7,000 or 10,000. A conservation group, the Feline Conservation Foundation, attempted a direct count in 2021. They identified 4,103 “big cats” including 1,538 tigers, 862 lions, 487 cougars, and 425 cheetahs. This doesn’t disprove hypotheses of the larger zoo and farm populations, but does put some question marks around very high numbers.
Policy:
… The U.S. Fish and Wildlife Service explains CITES.
… Immigration and Customs Enforcement estimates ~$7.8 billion to $10 billion in annual illicit wildlife trade, along with $7 billion in illegal timber trade and $4.2 billion to $9.5 billion in illegal/unreported/unregulated fishery trade.
… Our World in Data summarizes trends in land mammal biomass.
… And PNAS looks at the big picture. Excluding nematodes and microorganisms, all world animal life weighs about 2.2 billion tons (in terms of “dry carbon.”) Bugs of various sorts — more technically, “arthropods” including insects, crustaceans, arachnids, mites, and so on — make up a bit less than half of this total. Fish at 700 million tons make up most of the rest. Humans and farm animals (including ducks and chickens) nearly equal worms, and there isn’t much space for vertebrate wildlife:
Asiatic lions remained at large in the wild from Iraq to India as recently as the 1940s, but are extinct outside western India. They also seem to be rebounding — though the numbers are nearly an order of magnitude smaller than those for tigers — with about 700, up from 400 20 years ago, in Gir Forest.
Closer to home, a wildlife biologist shot the last known U.S. jaguar in 1964. The jaguar population is much bigger than the tiger and lion groups, with about 175,000 of them living from Brazil and Peru to Mexico. Ten Mexican jaguars have been photographed exploring Arizona and New Mexico in this decade, so maybe there’s a return in prospect. NGO Panthera explains.
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.
FACT: U.S. public debt 99% of GDP and rising above 166% by the time November’s 18-year-old voters turn 50.
THE NUMBERS: U.S. debt/GDP ratio –
2024:
99%
2054 (baseline):
166%
2054 (PPI “Paying for Progress” budget blueprint):
48%
WHAT THEY MEAN:
PPI’s 160-page budget blueprint, out last week and entitled Paying for Progress, assesses the next 30 years’ fiscal choices — taxes of all kinds, debt buildup and interest payments, health and retirement programs, national defense and “America in the world,” bridge repair and fiber-optic cable deployment, “discretionary” spending on everything from housing and science to pre-kindergarten and apprenticeship — proposes lots of ideas, and opens with a warning about the future of American government:
“Every election, we choose leaders who are supposed to levy taxes and use the revenues they collect to fund programs that benefit society as a whole. The principle that our leaders allocate public resources consistent with the values of the people who elect them is often known as “fiscal democracy.” Regrettably, in the United States today, fiscal democracy has deeply eroded.”
Authors Ben Ritz and Laura Duffy give us a way to measure this, by tracing the share of budgets that are mandatory and automatic — that is, interest payments and entitlement programs — and the share that’s ‘discretionary’ over time. A generation ago in 1994, the ratio was 63% mandatory to 37% discretionary. Now it is 73% mandatory, and 27% discretionary. And assuming no change, according to the August Congressional Budget Office, by 2054 it will be 82% to 18%. CBO also believes that in this “no-change” scenario, we will be spending 6.3% of annual national income — more than goes to Social Security, Medicare, or any other budget “line” — simply to pay down the national debt.
In more human terms, this November’s 18-year-old first-time voters will be middle-aged parents and homeowners in 2054. The 82%-to-18% ratio means their taxes will overwhelmingly go to their parents’ retirement costs and interest payments, with a bit for national defense. Their ability to make other choices — tax rates, road-building, new telecom technologies to replace today’s fiber-optic cables and satellites, help for the poor, arts and environmental quality, international programs from PEPFAR to Peace Corps and embassy security, scientific research, workforce development — will be small and cramped. One likely consequence is to further inflame the already great temptation to shift the electoral debate away from practical choices and into emotional culture wars. Another, again per the Congressional Budget Office, is that the 166% debt-to-GDP ratio in 2054 implies a fall of $5,400 in our 18-year-old’s income (in today’s dollars, using CBO’s per capita income projection) relative to the level it would reach were the current 99% ratio simply stable for 30 years.
PPI’s budget shows the way to do better, by (i) shifting taxation from work and investment towards consumption and unearned income; (ii) controlling “mandatory” spending by reversing debt buildup and saving costs on retirement; and while doing these things (iii) restoring the ability for a disciplined government to be an activist government. One among seven center-right-to-left think-tank blueprints* commissioned by the Peterson Foundation last fall, PPI’s plan is distinctive for three big results:
Fiscal democracy restored: Mixing savings in some areas, process and enforcement reforms in others, and thorough revision of the tax system, PPI’s plan by 2054 places the mandatory/discretionary spending ratio at 62%/38%, more or less the level of the mid-1990s and the most balanced ratio among the seven plans. The result puts discretionary spending at 6.5% of GDP, the highest among the seven plans, and sufficient to give the Americans of 2054 the chance to choose both an activist government and a low-debt government.
Interest burden reduced: Through tax reforms, savings in spending, and efficiency and process reforms, PPI’s plan brings the debt/GDP ratio down from today’s 99% to 48% in 2054. This debt level, last seen in 2009, is about the same as that achieved during the 1990s boom. The 48% ratio is easily the lowest among the seven plans; those in the other six range from 59% to 118%. The lower debt burden under PPI’s plan reduces interest payments by almost 75% (relative to CBO’s “baseline” projection), freeing up resources for other public purposes.
Tax policy made fairer, cleaner, and more pro-growth: To pay for the restored fiscal democracy lower debt/GDP ratio, and the reduced interest burden, PPI proposes a thorough revision of tax policy, fundamentally based on reducing taxation of work, shifting taxation towards consumption and pollution, and encouraging progressivity. This includes canceling the payroll tax and replacing it with a value-added tax and a carbon tax; replacing the antiquated estate and gift tax with a progressive inheritance tax; and replacing several regressive and inefficient tax expenditures, such as the state and local tax and college savings deductions, with better-targeted grant programs. Alone among the seven plans, PPI’s blueprint also looks hard at the tariff system, reducing hourly-wage families’ cost of living and stopping selective taxation of goods-using industries — e.g. manufacturing, retail, construction, farming — by cutting away most Trump-era tariffs and pre-Trump tariffs on industrial inputs and consumer goods not made in the United States.
In sum, a very ambitious plan with a lot of ideas: a restoration of eroded fiscal democracy; a shift in taxation from work to consumption and unearned income; a vote for disciplined but activist government; and a hope to lighten the burdens now accumulating upon hourly-wage families and this year’s young voters.
* In alphabetical though not ideological order, the American Action Forum, the American Enterprise Institute, the Bipartisan Policy Center, the Center for American Progress, the Economic Policy Institute, and the Manhattan Institute.
… and the Peterson Foundation compares and contrasts PPI’s approach with 6 other plans.
And for those wanting a bit more tariff background:
Ed Gresser on inclusivity, regressivity, and bias in tariff policy.
Elaine Wei explains how, uniquely in the world, U.S. clothing tariffs tax women’s clothes higher than directly analogous men’s clothes.
Reps. Lizzie Fletcher (D-TX and New Democrat Coalition Trade Task Force Chair) and Brittany Pettersen (D-CO) introduce the Pink Tariffs Study Act, directing the Treasury Department to review the tariff system for gender bias and regressivity.
Even after 100 years, Paris/1924 has a strong claim for the best U.S. “away” Olympics ever. That year’s awe-inspiring team, featuring — among many — Hawaiian surfing legend Duke Kahanamoku, Hollywood action-hero Johnny Weissmuller, women’s pro tennis pioneer Helen Wills Moody, and first African-American gold medalist DeHart Hubbard, won 45 of the summer’s 129 gold medals. Only the Mexico City/1968 team has matched that total, and by then there were 210 medal events. As a sample, here’s the NYT’s Paris correspondent joyfully reporting demoralized French crowds booing the U.S. rugby team after its 17-3 finals win (adding that “the three points scored by the French were lucky”) and concluding that after a rare U.S. silver:
“[W]hen a non-American winner was called up for the official tribute, the crowd cheered lustily, and the band ceased to play the Star-Spangled Banner for a moment.”
A century on, Paris/2024 has 329 medal events, from Friday’s first archery shots to the women’s marathon tape on the 11th. So expect a lot of antheming as Team USA meets its familiar rivals: Caribbean sprinters, Aussie swimmers, Southeast Asian boxers and badminton aces, Chinese divers and gymnasts, East African distance stars, Japan’s martial artists, Brit cyclers and rowers, South American and Baltic basketballers, Ukraine’s sentimental favorites in track and boxing, France’s high-expectations home team – tipped by a personality no less than President Macron for their most medals since the 31 golds of 1900 – et al. Specifically, an Olympic anthem arrangement has to be 80 seconds or less. So even if there are no ties, expect six and a half hours of music, nearly as much as all the track races combined. Whose idea was this, anyway? Here you go:
Warmups: Like the Red Cross (1863), the metric system (1875), international patent and copyright agreements (1883 & 1886), time zones (1884), and Nobel Prizes (1895), the Olympics (1896) are a survivor of the pre-World War I “globalization” era, centered on Europe and organized by aristocrats and business executives as much as by governments.
The first “anthems,” meanwhile, are a bit older and weren’t originally composed for ‘nations’ as such, but for European royal families. The earliest, Het Wilhelmus, is a 15-verse marathon honoring the House of Orange. Dating to 1572, it stood alone for 170 years until joined by Britain’s God Save the King (the anthem in longest continuous use) in 1745. France’s La Marseillaise (1792) seems to be the first specifically for a country rather than a ruling family, but also has a long discontinuity. (Banned by Napoleon and subsequent Bourbons, not re-designated until the 1870s.) Japan’s Kimi Ga Yo, officially adopted in 1879 as a Meiji-era westernizing reform, laps the field in Katie Ledecky-like style for the most venerable lyrics, drawn from a 1250-year-old poem recorded in the Heian anthology Kokinshu.
Qualifying Heats:Anthems spread worldwide a bit later. The Ottoman Empire hired an Italian bandleader to write an anthem in 1844; two founders of newly independent Liberia wrote one in 1847; Francisco Acuna wrote two, Uruguay’s and Paraguay’s, in 1833 and 1846. China, though austerely declining for a while, gave in after the 1912 nationalist revolution. Americans were technically even later adopters: though frequently played in the 19th century and chosen as the military anthem under the Wilson administration, the SSB only got official “national” designation in 1931. The newest is South Sudan Oyee!, composed by University of Juba students for independence in 2011. Given the South Sudan basketball team’s remarkablepre-Olympics matches, SSO! has at least a long-shot hope for an August 11th performance.
Medal Round: How, then, did ‘country-specific’ anthems join up with the ‘internationalist’ Olympics? The abstract “playing anthems at sports events” concept has several origins. Americans for example note regular SSB performance at sports events since the 1918 World Series, but Wales says they started it at a 1905 rugby match with New Zealand. Probably it has multiple independent authors. As to the Olympics, the aggravated French crowds of 1924 had only themselves to blame. It was their government’s idea to launch the “playing anthems at medal ceremonies” concept as a new thing for that year’s Paris Games, and it has held on ever since.
What comes next? PPI’s Diana Moss and Jason Gold ponder NCAA chaos, antitrust law for student-athletes, and the implications for the “non-revenue” college sports programs that stock U.S. Olympic teams.
More about anthems –
Almost all anthems use the Western military-march or hymnal arrangements popular in the 19th century, though Latin America has a few experiments with operatic style, and some Persian Gulf monarchies use concise trumpet flourishes. Few concede anything to modern musical forms or non-western music theory: Jamaica’s Week 2 sprinters will hear no reggae on the stand, Indonesian and Malaysian badminton standouts no gamelan, and Japanese judoka and Nadashiko stars no shakuhachi solo. South Asia is an exception, with India, Bangladesh, Bhutan, Nepal, Pakistan and Sri Lanka all at times using South Asian musical forms.
How good are anthems as music? The BBC’s Music Magazine, bravely or recklessly attempting a ranking for quality and emotional impact last month, put Het Wilhelmus first by virtue of longevity, with the SSB second, La M. third, and Argentina’s Himno Nacional Argentina fourth. Next come Germany’s Das Lied der Deutschen, Italy’s similarly titled Canto degli Italiani, and Kimi Ga Yo, with Kenya, Ethiopia, Jamaica, Liechtenstein, South Africa, Spain, Russia, and Wales next. (“As stirring as it gets — even the stoniest-hearted Englishman surely feels the hairs standing on the back of his neck at the sound of ‘Gwlad! Gwlad!’” Perhaps so.) The BBC’s top 14…
And if there were “last-place” medals –
If Paris/1924 has a claim for the best U.S. “away” team, what’s the best of the nine “home” teams? LA/1984 for top modern-era medal count? Lake Placid/1980 for inspiration? Your call, of course, but don’t let raw medal counts trick you into picking St. Louis/1904.
In that third Olympiad, the U.S. team won 239 of the 280 possible medals, but the garishly big total is more travesty than triumph. The bumbling business group that ran the Games strung them out for four months, from July to November, to build publicity for a money-losing World’s Fair they were managing at the same time. Few foreign delegations could afford the lodging bill, so 523 of the Games’ 651 competitors were Americans. The managers later claimed this didn’t matter since U.S. athletes were so good that foreigners wouldn’t have won much anyway. (Defiant sample: “It is doubtful, indeed, if a single Frenchman could have finished even fourth in any of the events”; conceding that “one” Brit had a chance, they add “and that man’s name was Shrubb.”) The Games’ many lowlights, from swimming events held in a muddy temporary pond to competitions invented on the spot with crowd-sourced competitors, all culminate in the infamous 1904 Marathon, whose official record begins with a bang — “The Marathon race, from a medical standpoint, demonstrated that drugs are of much benefit to athletes along the road” — and only gets better as it recounts a race which, 120 years and 30 Games later, still has a good bid for “worst-run, most dangerous Olympic event ever held”.
* Two of the 31 runners nearly died. Eventual winner Thomas Hicks was, in fact, almost killed by his managers, who refused to give him any water and instead made him drink an experimental “energy” potion made of raw eggs, brandy, and strychnine. (A kind of rat poison). Hicks began to hallucinate at 20 miles, became obsessed with food, and collapsed after crossing the finish line. He finished at 3:28:53, the slowest winning time in Olympic history by more than half an hour, and spent the next two weeks in a hospital.
* Two more contestants collapsed from heat, dehydration, and dust kicked up by automobiles on the course, ten dropped out with stomach cramps after drinking contaminated water, and a loose dog chased another man off the course.
* Clever New Yorker Fred Lorz dropped out after 9 miles, hitched a ride on a car until he was close to the finish line, then jumped back in and pretended he won. He temporarily got the medal, but they later took it back and gave it to Hicks.
The next administration must confront the consequences that the American people are finally facing from more than two decades of fiscal mismanagement in Washington. Annual deficits in excess of $2 trillion during a time when the unemployment rate hovers near a historically low 4% have put upward pressure on prices and strained family budgets. Annual interest payments on the national debt, now the highest they’ve ever been in history, are crowding out public investments into our collective future, which have fallen near historic lows. Working families face a future with lower incomes and diminished opportunities if we continue on our current path.
The Progressive Policy Institute (PPI) believes that the best way to promote opportunity for all Americans and tackle the nation’s many problems is to reorient our public budgets away from subsidizing short-term consumption and towards investments that lay the foundation for long-term economic abundance. Rather than eviscerating government in the name of fiscal probity, as many on the right seek to do, our “Paying for Progress” Blueprint offers a visionary framework for a fairer and more prosperous society.
Our blueprint would raise enough revenue to fund our government through a tax code that is simpler, more progressive, and more pro-growth than current policy. We offer innovative ideas to modernize our nation’s health-care and retirement programs so they better reflect the needs of our aging population. We would invest in the engines of American innovation and expand access to affordable housing, education, and child care to cut the cost of living for working families. And we propose changes to rationalize federal programs and institutions so that our government spends smarter rather than merely spending more.
Many of these transformative policies are politically popular — the kind of bold, aspirational ideas a presidential candidate could build a campaign around — while others are more controversial because they would require some sacrifice from politically influential constituencies. But the reality is that both kinds of policies must be on the table, because public programs can only work if the vast majority of Americans that benefit from them are willing to contribute to them. Unlike many on the left, we recognize that progressive policies must be fiscally sound and grounded in economic pragmatism to make government work for working Americans now and in the future.
If fully enacted during the first year of the next president’s administration, the recommendations in this report would put the federal budget on a path to balance within 20 years. But we do not see actually balancing the budget as a necessary end. Rather, PPI seeks to put the budget on a healthy trajectory so that future policymakers have the fiscal freedom to address emergencies and other unforeseen needs. Moreover, because PPI’s blueprint meets such an ambitious fiscal target, we ensure that adopting even half of our recommended savings would be enough to stabilize the debt as a percent of GDP. Thus, our proposals to cut costs, boost growth, and expand American opportunity will remain a strong menu of options for policymakers to draw upon for years to come, even if they are unlikely to be enacted in their entirety any time soon.
The roughly six dozen federal policy recommendations in this report are organized into 12 overarching priorities:
I. Replace Taxes on Work with Taxes on Consumption and Unearned Income II. Make the Individual Income Tax Code Simpler and More Progressive III. Reform the Business Tax Code to Promote Growth and International Competitiveness
IV. Secure America’s Global Leadership
V. Strengthen Social Security’s Intergenerational Compact
VI. Modernize Medicare
VII. Cut Health-Care Costs and Improve Outcomes
VIII. Support Working Families and Economic Opportunity
IX. Make Housing Affordable for All
X. Rationalize Safety-Net Programs
XI. Improve Public Administration
XII. Manage Public Debt Responsibly
FACT: Kung Fu Panda 4’s Chinese box office earnings are down 65% from the Kung Fu Panda 3 record.
THE NUMBERS: Kung Fu Panda series box office –
World
U.S.
China
KFP1:
$632 million
$215 million
$26 million
KFP2:
$665 million
$165 million
$92 million
KFP3:
$520 million
$143 million
$154 million
KFP4:
$544 million
$193 million
$50 million*
* As of end-June 2024.
WHAT THEY MEAN:
Here’s the Smithsonian’s National Zoo happily joining First Lady Dr. Jill Biden last May to announce the coming arrival of a new pair of giant pandas — Bao Li and Qing Bao — this fall. As the bears prepared for the flight east from their suburban Sichuan home to Connecticut Avenue NW, their cartoon cousin Po from the Kung Fu Panda series’ fourth installment was crossing the Pacific in the other direction. His reception in China was a bit lukewarm though, with box office down nearly two-thirds from the third KFP film. Why the drop? Some possibilities …but some background [minor spoiler alert] first:
Set in an animated version of ancient China, DreamWorks Animation’s 4-film Kung Fu Panda series centers on martial arts enthusiast panda Po. Something of a bumbler as KFP1 opens, Po to everyone’s surprise turns out to be an incarnation of the legendary “Dragon Warrior.” Trained by elderly Master Shifu, Po leads other martial arts adepts to defeat evil, foil villains, and emerge as hero of the Valley of Peace and leader of the Panda Village. KFP’s first installment drew its largest audience in the United States. Chinese interest, with the incorporation of traditional wuxia storylines and qi themes, escalated over the first three films to the point at which KFP3’s $154 million Chinese box office was nearly a third of global revenue and outdid U.S. sales by $11 million. But eight years later, interest seems off. What happened?
1. Reviews not so good: One very simple explanation: Chinese viewers liked the earlier movies more. The major fan-sites rated each of the first three KPF’s above 70% (“enjoyable and well-made”), while KFP4 dropped to about 60% (“average and passable”). Among more formal reviewers, China Youth groans — “how surprised the audience was 16 years ago, how disappointed they are now” — and Xinhua concurs: “[T]he movie’s absorption and application of Chinese elements seems to have reached the end of its rope. … Po’s adventures have become less exciting.”
2. Growing preference for local films: There’s also a bigger picture, with Chinese-made films in general gaining relative to foreign productions. Chinese box-office revenue is up from $6.6 billion in 2016 to $7.3 billion in 2023, and from 17% to 23% of global box office. As the audience has grown, viewers’ tastes have changed noticeably though not drastically. While foreign films continue to draw, local productions have caught up over the past decade. Among the 423 films China screened in 2016, the 31 U.S. productions averaged $79 million, five times the $15.6 million average for Chinese-made films. By 2023, the Chinese-film average had jumped to $28 million, and the U.S. average dropped to an equal $28 million. From this perspective, KFP4’s lower earnings might illustrate local films’ rising entertainment value, and consequently diminishing passion for foreign movies. A table has the figures:
Year
# of movies shown in China
Total box office
Average box
office per movie
# of U.S.
movies*
Average box office
per U.S. movie
2016
423
$6.6 billion
$15.6 million
31
$79 million
2023
510
$7.3 billion
$14.3 million
35
$25 million
2024
YTD
104
$3.0 billion
$28.0 million
10
$28 million
3. Co-production and Cultural Match: A third explanation looks to some unique advantages for KFP3 as a U.S.-China co-production by DreamWorks and its joint venture with the China Film Group Corporation. (Oddly named Oriental DreamWorks; since updated to Pearl Studio after a buyout by the Chinese partner.) This appears to have given KFP3 special technical and cultural cachet, through work by the Chinese partner’s staff on costumes, hairstyles, etiquette, and lip-movement. One example is the female panda and ribbon dancer Mei Mei, for whom the Shanghai animation team corrected dynastic inconsistencies in clothing articles. Another is the production of a Mandarin version with new lip animation synchronized with Chinese words, to avoid ‘uncanny valley’ and dubbing issues and improve viewing. This anecdote got picked up by the U.S.-China Economics and Security Review Commission, as a relatively unobjectionable case of “Directed by Hollywood, Edited by China (as opposed to a more political “Made in Hollywood, Censored by Beijing”).
4. Co-production and Policy Advantage: Maybe a bit less subtly, official co-production status gave KFP3 a boost KFP4 lacked, with a prized launch-date and avoidance of revenue-sharing systems imposed on foreign content. The Chinese government now allows 34 foreign films in per year — up under WTO rules from quotas of 10 in 1994 and 20 in 2002 — and also regulates release dates. KFP3 got a great opening night during the blackout period before Chinese New Year and the subsequent Golden Week. (Lunar New Year often falls in February, and the vacation week afterwards means February often gets China’s largest box office.) Foreign films rarely if ever get this window; KFP4’s March 22, for example, wasn’t nearly so good.
So: Some mixed reviews, some changing tastes, some particularly good animation quality in KFP3, and some policy favoritism. All this noted, KFP4 still drew double the box office for this year’s Chinese films and topped all others during its opening weekend. So, not a rapturous but still a polite Chinese reception for animated Po, and by no means a bomb. Bao Li and Qing Bao will probably do better this fall at the Zoo, though.
Special Note: Research and drafting for this week’s Trade Fact by Ruowei Yu, a Google Public Policy Fellow with PPI this summer. Ms. Yu is a junior at Georgetown University, concentrating in Government and Economics.
The U.S.-China Security and Economic Commission’s Directed by Hollywood, Edited by China looks from Hollywood to Beijing and back, & asks who is changing whom?
Looking at 2023 global box office, trade journal Deadline feels pessimistic about future foreign-film growth in China.
And some prequels:
Three book recommendations on Chinese & American high and pop culture, film and TV, and their past collisions:
Jianying Zha’s China Pop (2000); a bit dated but lots of insight and human detail on high-end Chinese cinema, popular culture, and politics in the 1990s.
A little later, Rachel DeWoskin’s Foreign Babes in Beijing (2006) on expatriate life in the boom era, a well-deserved plug for the 1st-century BCE classic Biographies of Famous Women, and DeWoskin’s own experience starring in a “blonde home wrecker” role in a mass-market Chinese TV soap-opera.
And Yunte Huang’s Charlie Chan: The Untold Story of the Honorable Detective (2011) looks back at the Chan character’s long career, from the original real-world model (1890s Honolulu policeman Chang Apana) to the 1920s novels, the 1930s films and their reception in Nationalist China, Asian roles in old Hollywood, and more recent Asian-American community intellectual debate.
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.
As the Republican Convention continues this week, candidate Donald Trump’s ideas for a second-term trade policy look remarkably similar to those of his long-gone but never-quite-forgotten Republican predecessor: Herbert Hoover.
Hoover’s 1928 program — a higher tariff across the board — is the obvious ancestor of Trump’s proposed 2024 program of 10 percent tariffs on goods from all countries and 60 percent on Chinese-made products. This would mean a national rate of around 12.5 percent, the highest U.S. tariff since the late 1930s.
Would a Trump tariff in 2025 bring the same results Hoover’s Smoot-Hawley Act got then?
FACT: Panama Canal worker mortality down 99.9% from the 1906-1914 project to the 2006-2016 expansion.
THE NUMBERS: Panama Canal shipping –
Ship Transits
Cargo
2023
14,080
511 million tons
2015
13,874
331 million tons
1965
11,834
71 million tons
1915
969
5 million tons
WHAT THEY MEAN:
To build the Panama Canal, 56,000 workers dug a trench 41 feet deep across 48 miles of peninsula, including a rock ridge 275 feet high and 8 miles across. Over eight years, they moved 177 million cubic meters of earth and rock weighing half a billion tons. When it opened at the end of June 1914, the Gatun Locks — the largest concrete structures ever built until the 1930s — could lift and float ships up to 965 feet long and 106 feet wide. This meant nearly all world shipping, and transit time from New York to San Francisco fell by half. As a quick table shows, the Canal opening by itself equaled the logistical effect of replacing sailing ships with steam a generation earlier, and maritime technology has needed a century to halve passage time again:
Clipper ship record, 1854
89 days
Pre-Canal steamship record, 1900
59 days
Panama Canal average, 1920s
30 days
Current
15 days
A century later, with the Canal grew too narrow and shallow to accommodate for the world’s largest ships, the Panamanian government’s $5.2 billion expansion project moved another 52 million cubic meters of earth and stone. Its conclusion at the end of June in 2016 deepened the navigation channels and opened new locks on the Pacific and Atlantic (180 feet wide and 60 feet deep, as compared to Gatun’s 110 and 42). The result hasn’t had quite the epochal shipping impact of the original, but has raised cargo volume by about 60%, from about 300 million tons of cargo a year in the early 2010s to 510 million tons a year since 2016. Before the re-digging, the largest ship the Canal could handle was a “Panamax” vessel of 52,500 deadweight tons; now it’s able to handle LNG tankers en route to Asia, and 14,000-TEU container ships coming east.
Another aspect of the two excavations, and the century separating them, illustrates not only logistical progress and engineering achievement but human progress.
Visionary 19th and early 20th-century projects took a large toll. The initial French attempt to build the Canal in the 1880s, before the discovery of the mosquito vector for yellow fever, proved beyond the reach of 19th-century technology and failed at the cost of 22,000 lives. The successful early 20th-century American effort wasn’t much safer: 5,609 of the 56,000 workers — mostly recruited from Barbados, Jamaica, and other Caribbean islands — died over the eight years of construction. The Canal Commission’s 1910 report, as a typical example, records 548 employee deaths, including 376 from disease (especially yellow fever and malaria, despite energetic efforts to control mosquito breeding), and 164 from industrial accidents including dynamite explosions, railroad accidents, electrocutions, drownings, and “accidental traumatisms, various.”
The expansion program’s record, telescoping a century’s worth of public health and worker-safety policy development, is a remarkable change. We haven’t found a detailed worker mortality report of this type for the last decade’s expansion program, but (a) an online source of uncertain reliability, quoting an official at the 2016 conclusion ceremony, says there were seven, and (b) an ILO workplace death and injury table suggests that the whole of Panama averages 4 to 6 workplace deaths a year among its 2 million workers. Sometimes things do get better.
* TEU: “twenty-foot equivalent unit,” the acronym used to describe the number of twenty-foot shipping containers a vessel can carry.
FURTHER READING
Today:
The Panama Canal Authority has current cargo statistics.
The Canal Commission’s massive labor recruitment on Barbados is said to have brought 40 percent of the island’s working-age men to Panama, and cut the population from 200,000 in 1900 to 172,000 in 1910. The total workforce added 12,000 from the United States, 16,000 from other Caribbean islands, and 8,000 from Europe and Latin America to the 20,000 Barbadians. A tenth of them died during construction – 5,609 people, including 4,290 Caribbean workers – of yellow fever, malaria, landslides, explosions, railway accidents, and other illnesses and workplace injuries. By country, the Canal Commission’s 1910 death toll included 167 workers from Barbados, 113 from Jamaica, 49 from Martinique and Guadeloupe, 60 from other Caribbean islands, 48 from Spain, 36 from Colombia and Panama, and 31 from the United States.
“We Were Giants” — Barbados remembers the 20,000 at the 2014 Canal centennial.
Perspective from Smithsonian Magazine on labor recruitment, segregation in the Canal project , and health policies.
And as a primary source, the Isthmian Canal Commission’s 1910 report; see Appendix P for statistics on worker health, mortality, and disease control.
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.
FACT: The Trump campaign is proposing a higher tea tax than George III.
THE NUMBERS: Tea taxes –
Current U.S. “MFN” tariff on black and green tea
0%
Current “301” tariff (applied to Chinese tea only)
7.5%
“Tea Act” 1773*
~8%
Trump campaign proposal
10%
*3 pence per pound of tea; ad valorem equivalent varied with price.
WHAT THEY MEAN:
Parliament intended the “Tea Act” of May 1773 mainly as an emergency bailout of the “East India Company.” In modern terms, the EIC was a “state enterprise” (though one with a military arm) launched in 1600 and, by the late 18th century, governed parts of India. Its conquest of Bengal in the 1760s had left the company nearly bankrupt. To rebuild its finances, the Tea Act authorized the Company to ship a 250-ton stockpile of unwanted tea (bought a year earlier in Guangzhou) to Britain’s Atlantic colonies with the regular 25% export tax waived and a refund for the tariffs it had paid bringing the stockpile into London. The Tea Act left in place an existing 3-pence-per-pound tariff to be paid by colonial buyers, and by requiring export licenses for overseas tea sales, also confirmed that only the EIC was allowed to sell tea to colonial customers. Two often missed details about this very tediously written law:
(1) The 3 pence per pound tea tax wasn’t especially high. Here’s the arithmetic:
Tea cost 3 to 4 shillings per pound in the 1770s. (Prices varied a bit each year.) In Britain’s confusing 18th-century currency system — golden guineas, pounds sterling, shillings, pence, and farthings — one shilling equaled twelve pence. So “3 pence per pound” meant a tariff varying in a range from about 8% in low-price years to 6% in high-price years. To put this in context, the “301” tariff the Trump administration imposed on Chinese tea in 2019 is 7.5%, essentially identical to the Tea Act level, and the 10% tariff the Trump campaign has pitched is well above the George III rate. (The permanent U.S. tariff on tea is zero for black and green, but 6.4% for some flavored varieties.) Of course, at the time, nobody in Parliament or the Ministry pretended the Chinese tea-growers would somehow pay it; everyone knew colonial consumers would do that.
(2) The tea tax wasn’t new.
Parliament had launched it in 1767 as part of the larger “Townshend Revenue Acts”, which also had imposed tariffs on colonial purchases of molasses, sugar, tea, glass, and some other products. These had all been canceled after colonial protest — no taxation without representation – except for the tea tax. Parliament’s hope in dropping the export tax (apart from rebuilding the EIC’s finances) was that tea prices would fall, inducing the colonists to stop buying tea from other sellers.
Why then did the Tea Act arouse such emotion? Here we can look to the two global-economy grievances cited in the Declaration:
Grievance #16:“For cutting off our trade with all parts of the world” refers most immediately to the blockade of the Port of Boston, begun in mid-1774 in retaliation for the previous December’s Tea Party. (See below for the startling trade data.) The longer-term issue were laws called “Navigation Acts” passed between 1651 and 1696, which (a) banned colonial imports of anything except British-made goods or products such as the EIC tea shipped via British ports, (b) prohibited exports of colonial products to anyone but British buyers, and (c) required use of British-owned ships, with crews of at least 75% British or colonial sailors, to carry goods. The colonists had mostly ignored these rules up to the 1750s, except for the security-sensitive case of timber exports reserved for Royal Navy shipyards. They resented renewed enforcement in the 1760s and 1770s as having financially damaged some of them and eroded everyone’s freedom to buy what they liked, and saw the Tea Act’s attempt to reinforce the EIC’s tea monopoly as escalation.
Grievance #17: “For imposing taxes on us without our consent”, is, of course, the famous “taxation without representation” dispute about the imposition of tariffs (and earlier, stamp taxes) without approval by colonial legislatures. Even at relatively low rates, the Tea Act re-ignited the whole 10-year-old argument by confirming a tax at any level. As with Navigation Act enforcement, the Tea Act’s declaration that Parliament retained its right to impose new ones also seemed to promise lots more to come.
With that, the links between the Declaration’s opening abstract discussion of government principles (“deriving their just powers from the consent of the governed”), the references to specific grievances such as those caused by the Navigation Acts, Tea Act, and Boston Port Act, and the risks the signatories are willing to take to redress them (“we mutually pledge our Lives, our Fortunes, and our sacred Honor”) link up. A bit more below for those interested in whether the tea controversy of 1773 and 1774 has any modern relevance. Either way, PPI trade staff wish readers and friends a happy Fourth.
*By tonnage, Argentina is the top source of U.S. tea at 43 million kilos, or nearly half the 104 million-kilo total in 2023. Traditional growers India, China, Vietnam, and Sri Lanka come next by tonnage; Japan, however, earns the most money selling tea to Americans, with their 3,500 tons of high-end sencha and matcha bringing in $105 million of the U.S.’ $493 million worth of imports last year.
FURTHER READING
250 years later, is the tea tax controversy relevant for anything but historical interest? If the main question is whether a tax is “legitimately” imposed, here’s the catalogue of current tea policy and proposals:
* The modern zero-tariff rates for black tea and green tea, and the 6.4% for flavored teas, may be good policy or not depending on one’s point of view, but are the result of old tariff bills passed and trade agreements ratified by Congress. So from the ‘representation’ perspective, no problem.
* The 7.5% tariff imposed on Chinese tea during the Trump administration is open to question. It avoided Congressional action and seems at face value in tension with the Constitution’s Article II, Section 8: “Congress shall have power to lay and collect Taxes, Duties, Imposts and Excises.” It still, however, came through a Congressional law (“Section 301”) ceding some Congressional control over tariff policy in cases when administrations want to use tariffs as negotiating leverage.
* The 10% tariff on all tea the campaign has proposed — Sri Lankan, Argentine, Japanese, Chinese, whatever — seems, if imposed by decree, to evade Congressional tax powers altogether.
Data:
Census’ 1975 collection of trade data from the Colonial era and the early republic:
“Cutting off our trade with all countries of the world”: Boston in 1772 — a town of 15,520 by the 1765 census — was getting about 850 ship arrivals a year, and receiving about a fifth of all U.S. trade. After the blockade began this all stopped, and other colonies began refusing British goods in protest. Here are the colonies-UK trade data:
Colonial exports
Colonial imports
1776
£0.11 million
£0.06 million
1775
£1.92 million
£0.19 million
1774
£1.37 million
£2.59 million
1773
£1.37 million
£2.08 million
Background and documents:
The U.S. National Archives’ official text of the Declaration.
The UK National Archives explains 18th-century British currency (four farthings per pence, 12 pence per shilling, 20 shillings per pound sterling, and 21 shillings per golden guinea).
… and Yale Law School reprints the text of the verbose Boston Port Act which followed.
And a book recommendation:
The Smithsonian’s essay collection The American Revolution: A World War looks at the Revolution from abroad, with appearances by French admirals, Chinese tea merchants, Spanish viceroys, German warlords, Dutch gun-runners, and the intrepid Sultan Haidar Ali of Mysore, admired by the colonists as a fellow enemy of the East India Company and namesake of one of the Continental Navy’s 65 ships, the 40-ton Hyder-Ally.
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.
FACT: The U.S. digital economy, on its own, would be the world’s eighth-largest economy.
THE NUMBERS: “GDP,” 2022* –
World:
$100.66 trillion
1. U.S.
$25.74 trillion
… [China 2, Japan 3, Germany 4, India 5]
6. U.K.
$3.10 trillion
7. France
$2.78 trillion
U.S. digital economy
$2.57 trillion
8. Russia
$2.27 trillion
9. Canada
$2.16 trillion
* IMF for world and countries; Bureau of Economic Analysis estimate for U.S. digital economy.
WHAT THEY MEAN:
Last December the Commerce Department’s Bureau of Economic Analysis statisticians ventured an estimate of the size of the American “digital economy.” After sifting the “digital” bytes and pixels out of the big manufacturing, services, mining, information, and other “sectors,” they then summed up the software, hardware, e-commerce, computer systems design, gaming, and other online (or online capable) industries. The arithmetic yielded a figure of $2.57 trillion for American digital “GDP” in 2022 — exactly a tenth of that year’s $25.7 trillion U.S. economy, and 2.5% of the $100.7 trillion world economy. Were the U.S. digital economy an independent country, it would have ranked eighth in the world, $200 billion below France and $300 billion above pre-war Russia.
Whether compared to the overall U.S. economy, the world, or other countries, the American digital economy has some distinctive features. First, it is fast-growing. In 2022, it grew by 6.5%, nearly double the world economy’s 3.5% growth rate. From 2017 to 2022 the gap was even larger, with the digital economy averaging 7.1% annual growth and world GDP 2.7%. Second, its population is modest: BEA estimates a total of 8.9 million U.S. digital-economy workers, slightly less than a third of the 28 million French workers for nearly the same “GDP” value. (Alternatively, the Netherlands — a high-income country with 9.6 million workers, close to the U.S. digital-worker total — had a GDP of $1.01 trillion.) Third, it is affluent – U.S. digital-economy workers earn $2,195 per week on average, about 33% more than the $1,650 average for U.S. workers in general. And finally, it is trade-reliant, earning 28% of its money from exports. This is about twice the U.S.’ overall 13% export reliance, and about equal to the world average.
For more on this last point, over to a smaller and equally cerebral agency — the White House’s Council of Economic Advisers, on the top floor of the Eisenhower Executive Office Building — whose data-heavy blogs serenely survey the U.S. and world economic landscapes each week. The latest, out last Tuesday, examines the interface between this U.S. digital economy and the outside world. Some of its findings:
Scale: As of 2022, digitally delivered services exports came to $719 billion, a quarter of the U.S. $3.02 trillion in total exports. This included $93 billion in exports of “ICT” services (telecommunications, computer services, and software licensing payments) plus $626 billion in “digitally deliverable” services, such as financial wires, telemedicine diagnoses, music downloads, Chatbot fails, memes, distance education, and so forth. The U.S. is easily the world’s largest supplier of these things — as an index, the WTO’s somewhat different overall “commercial services” total for the U.S. was $900 billion in 2022, about an eighth of the world’s $7.04 trillion total, and just about equal to the $492 billion of second-place U.K. and $422 billion of third-place China put together.
Exporters: The largest U.S. digital exporters are financial services providers, with 29% of the 2022 total. They aren’t far above labs and factories, though: manufacturers ranked second with 24%, much of it through revenue from “rights to use their patents, industrial processes, or software licenses abroad.” A 24% share of $719 billion is about $172 billion, so given 2022’s $1.6 trillion in exports of physical manufactured goods, U.S. manufacturers earn a tenth of their export money through digital services. (And to complicate things a little, the physical goods themselves often incorporate digital trade — agricultural machinery communicates with its makers to analyze soil and water conditions, medical devices send data for analysis and return it to physicians, automobiles exchange data with headquarters to report signs of wear and signal drivers of the danger of collision.) Information industries — Hollywood studios, software designers, gamers and influencers, social media and internet platforms, news and media — receive 23% of digital exports; a lengthy spectrum of service providers — architects, R&D scientists, hospitals, universities, advertisers, etc. — combine for the other 27%.
Trade Balance: As CEA notes, the U.S. is more of a seller than a buyer of digital things. ICT services imports in 2022 were $63 billion and ICT-enabled imports were $370 billion, yielding a digital trade surplus of about $285 billion.
Future: Based purely on physical investment, digital trade seems likely to keep growing fast. Digital services move through space as radio waves via satellite beam, and along the sea-bottoms as pulses of light through fiber-optic cable. The more satellites and cables there are, and the more sophisticated they are, the more services can move, and deployment of both is fast. Last year alone saw 2,664 satellite launches. Cable-watcher TeleGeography reported 550 active and planned submarine cables in June 2023, and expects another 78 to go live by the end of 2025. That all suggests a continuing boom. On the other hand, as CEA concludes, growth opportunities also require openness and policy:
“The United States is poised to lead the growth in intangible flows given that the digitally-enabled services sector is one of the highest-paying and innovative segments of the economy. The rapid growth of digital services will require careful consideration in both domestic and international regulatory regimes. While the United States ranks fifth among fifty countries in terms of having the least restrictive barriers to digital trade, African countries have the highest levels of restrictions, followed by the Asia-Pacific region. Continued consideration and consultation will be necessary to support a thriving digitally-enabled services sector in the United States.”
The OECD tries to compare size and growth rates of digital sectors in Europe, Latin America, Canada, and the U.S.
Perspectives:
Geneva-based trade scholar Richard Baldwin looks at the growth of services trade and decides “peak globalization” is a myth.
Labor:
PPI’s poll of less-than-college Americans last fall finds respondents viewing ‘tech-sector’ jobs as the next generation’s best career options.
And last, on metal birds and glass wires:
Up above: Our World in Data counts last year’s 2,664 satellite launches.
Down below: Telegeography maps the world’s 600 submarine cables, and predicts 75 more lighting up over the next year.
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.
FACT: The U.S. manufacturing trade deficit rose by over 60% from 2016 to 2021.
THE NUMBERS: Manufacturing sector share of U.S. GDP –
2023:
10.3%
2018:
10.9%
WHAT THEY MEAN:
This fall’s core choice is more basic than a policy question: Can a person who has attempted to overthrow a settled election, and called for the “termination” of unspecified parts of the Constitution, keep an oath to “faithfully execute the office of President of the United States” and “preserve, protect, and defend the Constitution”? But policy issues, even if they’re secondary this year, still have human consequences. Here’s a look at one:
The Trump campaign pitches a 10% tariff worldwide plus a 60% tariff on Chinese-made goods — which as we’ve noted before, would be the highest U.S. tariff rate since the Depression. (Last week’s float of replacing the $2.2 trillion income tax with tariffs probably isn’t serious; for those interested in it, a bit more below.) The claim is that the higher prices tariff hikes bring are worth it because they will (a) lower the U.S. trade deficit, (b) put more people in factory jobs as opposed to the health, transport, construction, etc. jobs they now have, and (c) increase U.S. manufacturing output.
The smaller first-term tariffs imposed on steel, aluminum, and most Chinese-made goods in 2018 and 2019 provide some real-world experience for this. What’s happened since then is mostly the opposite of these claims: trade deficits have sharply risen, and grown fastest in manufacturing; U.S. manufacturing job growth has slowed, though not stopped; and the manufacturing share of U.S. GDP has fallen. The data:
1. Trade balance: In the 2017 edition of the “President’s Trade Agenda” (an annual report by the U.S. Trade Representative Office) the then-incoming Trump officials argued that a rise in the trade deficit* over time showed earlier administrations had got things wrong:
“In 2000, the U.S. trade deficit in manufactured goods was $317 billion. Last year [i.e. 2016] it was $648 billion — an increase of 100 percent.”
Economists argue among themselves as to whether trade balances matter much. But nobody disputes what happened after 2018. Tariff rates rose, and the U.S. trade deficit got both bigger in general and more concentrated in manufactured goods. Between 2018 and 2021, the “trade-weighted” U.S. tariff rate doubled from 1.4% to 3.0%, and actual tariff payments rose from $33 billion to $83 billion. Meanwhile, by 2021 the “manufacturing-only” trade deficit figure cited in the 2017 report had soared to $1.06 trillion — about 60% above the 2016 figure — and the overall U.S. goods/service deficit from $479 billion to $842 billion.**
The experience affirms the Econ 1 axiom: a country’s trade balance equals the difference between its savings and its investment. As a form of tax increase, higher tariffs (all else equal) should reduce government-sector “dissaving,” and so should reduce a deficit slightly. If accompanied by larger reductions in other taxes, though, “all else” isn’t equal, and government “dissavings” rise despite the tariff increase. Unless for some reason families and businesses decide to save more, trade deficits will rise. That’s what happened after 2017 (and also after the 1981 and 2001 tax bills).
The especially sharp rise in manufacturing deficits was less predictable. Here the 2018/2019 tariffs are likely a cause. Manufacturers import goods so as to turn them into other goods, and are big tariff payers. About 45% of all U.S. imports (per a San Francisco Fed paper) are this type of industrial input, or “intermediate good.” The permanent “MFN” tariff system mainly taxes consumer goods; the Trump tariffs more often tax industrial inputs. So the tariffs raised the costs of industries like automobiles, machinery, and toolmaking; they faced a bit more challenges competing against imports and succeeding as exporters; and the overall goods/services deficit grew more concentrated in manufacturing.
2. Manufacturing employment: Since 2018, manufacturing employment has continued to grow, but more slowly than before. Looking back to the Obama administration, the BLS’ count of factory jobs grew from 11.5 million in early 2010 to 12.4 million in January 2017, or by 900,000. Since then, it’s grown to 13 million, i.e. by 600,000. On average, manufacturing employment rose an average of 105,000 a year from 2013 to 2018; since then, with tariffs up, it has continued to rise but by an average of only 50,000 per year. To take a broader view, manufacturing jobs now make up 8.2% of the 158 million non-agricultural U.S. jobs, down from 8.5% in late 2017. Again, no reason to expect a bigger tariff experiment to fare better.
3. Manufacturing output: Job totals and employment growth, of course, don’t always directly relate to the health of “manufacturing” as such. By adding computers, robots, and other productivity-boosting technology, some factories can raise output while employing fewer people. In practice, though, U.S. manufacturing trends since 2018 seem to have paralleled those in employment: growth slower than before, and manufacturing output (though not down in actual dollars) reduced as a share of GDP. The Bureau of Economic Analysis reports that the manufacturing sector grew by $183 billion from 2013 to 2018 (from $2.03 trillion to $2.21 trillion) and accounted for 10.9% of U.S. GDP in pre-tariff 2018. Output in 2023 was $2.29 trillion, meaning $78 billion in growth from 2018 to 2023, with a GDP share of 10.3%. Sectors that buy fewer goods, and so are less burdened by tariffs, grew noticeably faster — real estate from 7.0% to 7.6% of GDP, information from 5.0% to 5.4%, and professional and business services from 12.5% to 13.0%.
So: Again, this fall’s policy debates aren’t as important as the constitutional and rule-of-law questions. But for those tracking policy, the 2017 assertions that tariffs would reduce trade deficits and pump up the manufacturing sector have gotten a fair test and proven wrong, and the 2024 claims shouldn’t get much credence.
* Use of nominal dollars, not inflation-adjusted “constant” dollars, is unsound. A better comparison, of the trade balance to GDP, shows a decline from the 3.7% of GDP deficit in 2000 to a 2.7% deficit in 2016.
** Since then it’s drifted back down a bit, to $773 billion in 2023, or more meaningfully from 3.6% to 2.9% of GDP.
… and for the big picture, U.S. exports, imports, and balances from 1960-2020 on one convenient page.
BEA’s GDP and GDP-by-Industry databases have the stats on trade balance/GDP, manufacturing/GDP, etc.
OMB’s Historical Tables tell you where the money comes from, and where it goes. Use Tables 2.1 and 2.5 for personal income tax and tariff revenue respectively.
Last week’s Trump campaign float of replacing the income tax with tariff money probably wasn’t a serious idea. More likely, it was a partially successful effort to move press coverage of the candidate’s Washington visit to something other than the Jan. 6 attack and the recent New York state court criminal proceedings. For the record, though, the concept is financially unworkable, and liable to induce fiscal crisis and rationing if tried. Here’s the arithmetic and the logical endgame:
1. In FY2023, the U.S. government collected $4.44 trillion in revenue: $2.18 trillion from personal income taxes, $1.61 trillion from payroll taxes, $0.42 trillion from corporate taxes, $0.08 trillion from excise taxes (on tobacco, alcohol, gasoline, etc.), also $0.08 trillion from tariffs, and $0.16 trillion from miscellaneous other fees and taxes. So, scrapping the personal income tax would cost the government half its revenue, and require a $2.18 trillion increase somewhere else simply to match the 2023 revenue.
2. If the tariff system is this “somewhere else,” a system now at $0.08 billion (and already inflated by the 2018/19 tariffs) must grow to $2.26 trillion. Imports of goods potentially subject to tariffs, meanwhile, totaled $3.1 trillion. So, where tariffs now raise $2.80 for every $100 spent on imports, they’d have to get $73. For example, U.S. hospitals, clinics, and drug stores bought $250 billion worth of medicines and medical devices from abroad last year, mostly duty-free. A 73% tax on them (assuming the buyers kept buying) would be $185 billion in new costs for the health system — for example, a $2 billion hike in hearing aid costs, $1.5 billion for crutches, etc.
3. In reality, of course, the buyers probably mostly wouldn’t keep buying; instead, a 73% tariff is likely to collapse trade, leaving us with oil shortages, OTC medicine price spikes, clothing and shoe rationing, and so on. Setting these aside, if imports collapse so does tariff revenue, leaving the U.S. Treasury without its extra $2.18 trillion but still on the hook to pay Social Security, Medicare, interest on previous debt, defense, and other bills. This in turn suggests a supplementary set of policies to prevent or reverse a collapse in revenue, interest rate spike, etc. The logical endgame, a year or so later, is pairing the new tariff system with a big “Buy Foreign” spending and subsidy scheme for businesses and consumers.
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.
FACT: Japanese firms are the top international investors in the United States.
THE NUMBERS: Japanese population –
Children and teenagers (0-19 years):
19.5 million
70 years and older:
21.2 million
WHAT THEY MEAN:
Speaking to Congress in Joint Session last April, Prime Minister Kishida radiates confidence in the U.S.-Japan alliance and takes some pride in the Japanese place in American economic life:
“We are on deck, we are on task. And we are ready to do what is necessary. The democratic nations of the world must have all hands on deck. I am here to say that Japan is already standing shoulder to shoulder with the United States. You are not alone. We are with you.” … “Japanese companies have invested around 800 billion dollars, creating almost one million American jobs. These are good jobs with half a million jobs in the manufacturing sector alone.”
Newly-minted PPI Senior Fellow and veteran economic journalist Yuka Hayashi picks up on his themes — alliance, partnership, Japanese industry’s American commitments — in PPI’s newest global-economy research paper “Behind Japan’s U.S. Steel Bid: An Aging, Shrinking Home Market,” through the lens of Nippon Steel’s proposed purchase of venerable Pittsburgh-based U.S. Steel.
To start there: Nippon Steel, the world’s fourth-largest steel producer at 43.7 million tons last year, has been a U.S. metal producer since 1984 and is currently the 50% operator of Alabama’s 5-million-ton capacity Calvert steel mill. Its 2023 bid for U.S. Steel, though approved by U.S. Steel’s Board and shareholders, has sparked some U.S. controversy and “economic nationalist” rhetoric. PPI’s Ed Gresser and Diana Moss have examined this through the lens of U.S. foreign direct investment policy and anti-trust law; Hayashi picks up the Japanese side of the story, with a picture of Japanese industrial and manufacturing excellence set against an aging population and in some ways shrinking domestic economy, and a consequent search by leading Japanese firms for options beyond the home islands.
Examined from the U.S. angle, science and industrial data add exclamation points to the PM’s point about the large role of Japanese industry in the U.S. economy. The U.S. Patent and Trademark Office, for example, granted 48,051 U.S. patents to residents of Japan in 2022 (the last year available), which was an eighth of all the 385,433 U.S. patents awarded in total and far beyond PTO’s grants to residents of any country apart from the United States itself. Japan-based businesses, meanwhile, have a “foreign direct investment” stock of $775 billion in the U.S. – a seventh of the $5.25 trillion world total, and more than any other country in the world. (Canada is second at $684 billion and the UK third at $661 billion.) The Japanese firms employ 1.04 million American workers, paying $107.6 billion in wages and salaries — about $103,000 a year on average — and put $13 billion into U.S. research and development. And Kishida’s half a million U.S. manufacturing jobs slightly lowballs the precise figure: the Commerce Department reports 544,000 of the U.S.’ 13 million manufacturing workers at work for Japan-based firms.
Hayashi’s paper, meanwhile, illuminates the Japanese side of the story: some of the impressive investment figures reflect Japanese businesses’ response to profound demographic and economic challenges at home. Japan’s population has fallen from a 2007 peak of 127.7 million people to 124.1 million and is dropping by over 600,000 per year. The country’s 21.2 million 70-and-olders now outnumber the 19.5 million Japanese children and teenagers. This means fewer workers each year, a smaller consumer base, and lower future growth prospects. The result, she explains, is that with Japan’s home economy slowly contracting, Japanese industry seeks growth by producing and selling abroad:
“Combined with sluggish wage growth in recent decades, demand for everything from housing, cars to snack food has been shrinking in Japan. The downturn is likely to intensify. That has pushed Japanese companies, big and small, to expand abroad if they can compete. Overall, Japanese manufacturers are projected to earn 39% of their revenues outside of Japan during fiscal 2023, up from 29% two decades ago, according to a survey of 534 companies by Japan Bank for International Cooperation, a government lender. The companies planned to manufacture 36% of their products outside of Japan, compared with 26% in fiscal 2003.”
Auto star Toyota, for example, sells 1.7 million of its cars at home and 8.6 million elsewhere; therefore, it now makes only 3 million of its 10 million vehicles in Japan itself, while producing another 3 million in China, the United States, and Thailand, and three million more in factories spread across Europe, Southeast Asia, and Latin America. Nippon Steel is making similar choices. With Japan’s own steel use down from a 99 million-ton peak in 1990 to 58 million tons in 2023, Nippon Steel is closing five furnaces in Japan; meanwhile, since 2019 it has launched a massive joint venture with Euro-Indian firm ArcelorMittal in India, and bought facilities in Sweden, Thailand, and Brazil. Hence its high interest in an American partner. Hayashi concludes that the idea makes sense for both countries:
“Nippon’s emergence as a bidder for a prominent American manufacturer is an inevitable outcome of a changing economic landscape. In the past, Japanese companies came to the U.S. to build factories to escape the impact of trade friction and currency appreciation. Now they are doubling down because there is no longer enough demand at home to support their growth. The U.S. is where they see opportunities. All of this will yield significant benefits for the American economy and workers should the U.S. welcome foreign investment by friendly nations like Japan.
…
“The beneficiaries, in particular, will be American workers without college degrees, who tend to reap greater rewards from good manufacturing jobs. Increased FDI will also mean more of the funding and innovative know-how the U.S. will need to improve productivity, reduce reliance on imports and withstand competition from China. That’s particularly true for the steel industry where companies have struggled with Chinese overcapacity even as they face enormous pressures and funding requirements to shift to greener technologies. The Biden administration’s own “friend-shoring” strategy calls for closer ties and cooperation with allies and like-minded countries. The goal is to strengthen supply chains for critical products in order to strengthen national security and respond to future emergencies. It is difficult to see the wisdom of any response to Nippon Steel’s bid short of embracing the vote of confidence in our marketplace that the Japanese company’s proposed transaction represents.”
The U.S. Patent and Trademark Office’s most recent patent data.
The Bureau of Economic Analysis’ annual look at international business investment in the U.S. has figures by country and industry, and topics from employment and wages to exports, imports, and R&D. A quick table of current FDI stock value (2022, the most recent year available) for the world, top five, and all others combined:
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.
