​One year after the Trump administration’s “Liberation Day” tariffs, the case for protectionism looks weaker, not stronger.

These tariffs did not revive the economy, restore manufacturing, or solve the trade deficit. They expanded government power, distorted price signals, and raised taxes on Americans in the name of helping them.

The Supreme Court’s rejection of the administration’s sweeping emergency-tariff theory mattered legally, but the deeper point is economic: even when tariffs are legal, they are still bad policy. America does not need more executive-led central planning. It needs more free-market capitalism.

Bad Diagnosis

Too many politicians still tell a simple story about the Rust Belt: foreign countries cheated, bad trade deals hollowed out American industry, and tariffs can bring it all back. That story is politically useful, but economically incomplete.

A lot of the damage was homemade. For decades, too many state and local governments in the industrial Midwest piled on forced unionism, bloated spending, high taxes, rigid labor markets, slow permitting, and overregulation.

Businesses first moved from the Frost Belt to the Sun Belt because it was easier to build, hire, invest, and produce there. A BLS review of manufacturing employment in the Southeast found the South Atlantic division increased its share of U.S. manufacturing employment by 5.8 percentage points over the last 30 years.
​
That matters because manufacturing did not simply “leave America.” In many cases, it first moved to places inside America that were freer, cheaper, and more competitive. Amity Shlaes provided a good reminder of these points.

That lines up with deeper research. An NBER study on the Rust Belt’s decline found the region’s share of U.S. manufacturing employment fell from more than half in 1950 to about one-third by 2000, with weaker competition, wage premia, and slower productivity growth playing major roles.

Many places priced themselves out of competitiveness before globalization finished the job. That is an uncomfortable truth, but it is the truth.

Competitive Strength

The best way to deal with adversaries is not to make America less free and more expensive. It is to make America more competitive domestically.

That means lower taxes, restrained spending, lighter regulation, reliable energy, flexible labor markets, secure property rights, and faster permitting. It means making the United States the best place in the world to build, invest, invent, and expand.

If we are worried about China or any other rival, the answer is not to copy the logic of state-directed economics here at home. The answer is to outperform them with openness, productivity, entrepreneurship, and capital formation. That is how free societies win. That is also how they stay peaceful and prosperous.
​
This is the core insight behind much of my own free-trade writing: the stronger America becomes at home, the less it needs clumsy protectionism abroad. This was brought up several times during the discussion with Dominic Pino, Don Boudreaux, and Erik Gartzke.

Trade Reality
​
Protectionists love to point to the trade deficit as if it is a scoreboard for national success or failure. It is not.

The 2025 U.S. international trade data from BEA show total exports rose 6.2 percent to $3.43 trillion, while imports rose 4.8 percent to $4.33 trillion. The overall goods-and-services deficit was $901.5 billion, basically unchanged from 2024. The goods deficit increased to $1.24 trillion, but the services surplus rose 8.9 percent to $339.5 billion.

That is the point: the American economy is more complicated than a bumper sticker. We run a large goods deficit, yes, but we also run a substantial services surplus because the United States remains highly competitive in finance, technology, business services, and other high-value sectors.

The broader balance-of-payments data from BEA make the same point more clearly. In 2025, the U.S. current-account deficit narrowed to $1.12 trillion, or 3.6 percent of GDP, down from 4.0 percent in 2024.

By the fourth quarter, it had fallen to $190.7 billion, or 2.4 percent of GDP, the lowest share since 2021. Meanwhile, the capital account remained tiny, and the United States continued to attract enormous foreign investment flows.

Trade balances reflect saving, investment, and capital flows, not just tariff schedules. You cannot bully those fundamentals with import taxes and patriotic slogans.

Productivity Wins

There is another myth here that needs to die. Many people still talk as if falling manufacturing employment proves America no longer makes things. That is wrong.

Manufacturing output is still near historically high levels, even though manufacturing employment is far below its old peak. The Federal Reserve’s industrial production data show manufacturing output continues to run at a high level, while BLS data on manufacturing employment show factory jobs peaked decades ago and have trended down over time.

That is not mainly because Mexico or China suddenly appeared in the 1990s and 2000s. A large part of the employment decline reflects rising productivity, automation, better technology, improved logistics, and doing more with fewer workers—a trend that was already underway well before the big China shock debates.

That is a good thing, not a bad thing. Prosperity comes from producing more value with less labor tied up in any one sector so workers and capital can shift into other valuable uses.

This is what happened in agriculture, too. America did not become weaker because fewer people worked on farms. America became richer because productivity rose and people were freed up to do other things. Manufacturing follows the same logic.

The goal is not to maximize the number of workers standing in factories. The goal is to maximize output, wages, innovation, and living standards across the economy.

Seen Unseen

This is where Frédéric Bastiat’s lesson on the seen and the unseen still matters. The seen is the politician standing in front of a factory claiming tariffs saved jobs. The unseen is everything else: higher input costs for manufacturers, less business investment, weaker productivity, retaliation against exporters, fewer opportunities for workers, and higher prices for families.

That unseen damage is not theoretical. The Trump administration’s trade policies have been a real drag on economic activity. Real GDP increased at just a 0.7 percent annual rate in the fourth quarter of 2025, according to BEA’s second estimate.

Broad tariffs inject uncertainty, raise costs, scramble supply chains, and reduce the room businesses need to plan and invest. And the burden does not fall mainly on foreign governments.

A Reuters report on new ECB analysis found that U.S. consumers and importers bore most of the tariff burden. So when Washington calls tariffs “revenue,” let’s be honest about what that means: Americans are paying the bill.

Mercantilist Myth

To be fair, the other side is not entirely crazy. They argue that tariffs can protect strategic industries, reduce dependence on rivals, and give domestic production breathing room. In a narrow and temporary national-security context, that argument deserves to be heard.

But that is not how broad tariff regimes work in practice. They do not stay narrow. They do not stay temporary. And they do not stay focused on genuine defense needs. They become an excuse for politicians to pick winners, punish disfavored countries, and manage commerce by decree.

That is why this is really a fight over political philosophy as much as economics.

President Trump, Peter Navarro, and other modern mercantilists treat trade less as voluntary exchange and more as a tool of political control. They see imports as weakness, trade deficits as surrender, and tariffs as strength. But they do not seriously reckon with the tradeoffs.

They focus on the factory they can see and the talking point they want to sell. They ignore the rest of the economy. Mercantilism is just bigger government dressed up in patriotic language. It means more control over prices, supply chains, capital flows, and private exchange. It means less freedom, less peace, and less prosperity.

Old Revenue Model

Historically, America did rely more heavily on tariffs to fund a far smaller federal government. Even then, tariffs were still inferior tax policy because they were narrow and distortionary. But at least there was a clearer revenue rationale in a country without today’s massive income-tax state, payroll-tax state, and sprawling administrative apparatus.

That world is gone. Today, the federal government is already enormous and financed through multiple major tax streams. Adding broad tariffs on top of that is not some return to constitutional simplicity. It is just another tax increase on Americans.

Worse, it is a narrow tax with carveouts, exemptions, favoritism, and political manipulation built into the design. Good tax policy should have a broad base, lower rates, and few if any exemptions so growth is not constantly choked by distortion.

Tariffs do the opposite.

They punish specific transactions, specific industries, and specific households. That is anti-prosperity by design.

Congress Matters

The constitutional issue matters, too. Congress has the power of the purse for a reason. Taxing trade should not become a backdoor way for presidents of either party to legislate by executive order.

The Supreme Court struck down the Trump administration’s sweeping tariffs under emergency authority, and the administration quickly pivoted to Section 122 workarounds reported by Reuters.

Even if every workaround were legal, that would not make them wise. Presidents should have far less unilateral power to tax trade on their own. If Congress wants tariffs, Congress should vote on them and own the consequences.

Better Path

The better answer is not complicated. End the tariffs. Reduce the size and scope of government at the federal, state, and local levels. Lower taxes. Restrain spending. Cut overregulation. End policies that punish work, investment, entrepreneurship, and production.

Let prices work. Let capital move. Let businesses respond to real demand instead of campaign slogans.

That has been my point in Econ 101: Free Trade = More Freedom, Protectionists Are Wrong: Free Trade Is the Path to Prosperity, and my broader trade and free-market work.

If policymakers really want to rebuild industrial strength, they should stop making America expensive, rigid, and hostile to production in the first place.

Trade is not the enemy of American prosperity. Trade is one of its engines. Free people trading freely will outperform politicians trying to manage commerce from Washington every single time.

For Policymakers

1. Stop treating trade deficits like a scoreboard. The current account and financial flows tell a much bigger story than a goods deficit alone.

2. Admit what helped hollow out the Rust Belt. Bad state and local policy drove firms away long before tariffs became the fashionable excuse. Competitiveness still matters.

3. Reject tariff central planning. Even when legal, tariffs are still taxes that distort investment, production, and prices. The economic tradeoffs are real.

4. Focus on productivity, not nostalgia. High manufacturing output with lower employment is often a sign of progress, not decline.

5. Keep Congress in charge of taxing trade. The president should have far less unilateral room to raise taxes through tariff workarounds. That is both a constitutional issue and an economic one.

Originally published on Substack. 

The best policy debates are not really about policy. They are about whether families have the freedom to build a life. Last week—between spring break with my kids and fights over AI, healthcare, lockdowns, and government overreach—that truth was impossible to miss.

The Highlight of the Week

Last week was spring break with my kids, and honestly, it was the highlight of my week.

We played soccer, baseball, and tennis. We watched movies, laughed a lot, and slowed down just enough to remember what actually matters. Those moments go fast if you are not paying attention.

They also remind me why I do this work in the first place.

Policy is not abstract. It is not about another flashy hearing or a “solution” designed by the same people who caused the problem. It is about whether families have the freedom, stability, and opportunity to build a good life.

It is about whether parents can afford groceries. Whether workers can find opportunity. Whether patients can control their care. Whether innovators can build. And whether government knows its limits.

That thread ran through everything I worked on last week. As I wrote in Prosperity Through Pain, the purpose of the work is not the work itself—it is what that work allows: the laughter in the yard, the time with your kids, the life you are building together.

Innovation Needs Room, Not Fear

I spent part of last week writing about how AI could transform banking and the broader economy—expanding competition, lowering costs, and helping smaller institutions compete.

That future is possible.

But only if Washington and the states do not regulate it into the ground before they understand it.

• More than 1,500 AI-related bills have already been filed across state legislatures this year.
• Even in Texas, HB 149 showed how quickly fear can override evidence.

The takeaway: Markets adapt. Entrepreneurs solve problems. Bureaucrats slow both down.

A patchwork of vague rules will not make America safer. It will make America slower.

And in a global race, slower means losing.

Six Years After Lockdowns

This week marked six years since COVID reshaped American life.

I was in the room when those decisions were made. I opposed the lockdowns then, and the data since has only reinforced that view.

The Great Lockdown did not save America.

It devastated small businesses. It disrupted learning. It weakened liberty. It eroded trust.

And the worst part?

The same central-planning instincts that drove those decisions are still with us today.

The takeaway: Central planning fails in crises—and in everyday life.

This was never just about a virus. It was about power.

Healthcare Still Misses the Point

Healthcare debates last week made one thing clear: policymakers are still treating symptoms instead of causes.
The fight over Medicare Advantage and proposals like Tennessee’s SB 2040 to ban PBMs are perfect examples.

As I wrote in Stop Scapegoating Middlemen in Healthcare, targeting one piece of the system does not fix broken incentives. It just rearranges them.

• TennCare alone faces about $66 million in added costs from these kinds of policies.

That is not reform. That is expensive political theater.

The real solution is Empower Patients:

• Put individuals in control
• Expand no-limit HSAs
• Strengthen doctor-patient relationships
• Restore real price signals

​The takeaway: Healthcare improves when patients—not bureaucracies—are in charge.

Affordability Is Not a Mystery

Across healthcare, housing, energy, and taxes, families are feeling squeezed.

That is not random. It is policy.

Government spends too much, regulates too much, distorts too much—and then acts surprised when costs rise.

Whether it is:

• Tariffs raising prices
• Overspending fueling inflation
• Regulations restricting supply

…the result is the same.

As I explain in Correcting America’s Financial Future and across my writings:

You don’t get affordability through control.

You get it through competition, production, and freedom.

That same issue shows up in Texas water and the electric grid.

Texas does not mainly have a scarcity problem.

It has a control problem.

Why This Fight Is Personal

Everything I worked on last week—AI, healthcare, lockdowns, taxes, infrastructure—comes back to one truth:

People do better when they are free.

Spring break reminded me of that in the simplest way.

Playing ball in the yard. Watching movies. Laughing with my kids. Just being present. That is the life worth protecting.

Bad policy erodes that life slowly—through higher costs, fewer opportunities, and more dependence on systems that cannot love your family or build your future.

Only people can do that.

Government’s job is not to run our lives. It is to protect the freedom that makes a good life possible.

Three Takeaways for Policymakers

1. Stop regulating fear—start enabling innovation. Let markets evolve and address real harms with evidence, not speculation.

2. Decentralize power—people outperform planners. Centralized systems fail repeatedly. Push decisions closer to individuals.

3. Fix affordability at its source—government excess. Restrain spending, remove barriers, and let competition work.

The Bottom Line

Freedom works. Central planning does not.

That was true during COVID. It is true in healthcare, banking, energy, and the broader economy. And it will still be true long after today’s policy debates fade.

I am grateful for the work. But I am even more grateful for the reason behind it. Time with family.

A Direct Challenge

If you are a policymaker reading this, here is the question:

Will you keep expanding control—or will you trust people?

Because that choice determines whether families merely get by…
or truly prosper.
​
Stay engaged, stay principled, and keep letting people prosper.

Originally published at The Daily Economy. 

If you only followed the political feed, you would think the world is splitting into billionaires on yachts and everyone else eating instant noodles forever. Then you see the data, and the narrative gets awkward, fast.
​
A recent Economist graphic, in the article “The world is more equal than you think”, underscores something many people do not want to say out loud: global living standards have been converging, meaning poorer countries have been catching up in ways that matter for real life. 

That is not a victory lap. It is a reality check.

The inequality debate matters because it shapes policy. When lawmakers believe the world is growing less fair by the day, they reach for bigger government as the default response. But if the real goal is upward mobility, opportunity, and a decent life for regular people, the biggest obstacle is not “the rich.” It is the policy machinery that blocks competition, inflates costs, and quietly transfers wealth toward the politically connected.

What The Global Story Actually Says

Researchers at Brookings point to two forces behind global inequality trends: the “between-country” gap (the difference in average living standards across countries) and the “within-country” gap (inequality within each country). They find that the between-country side has been an equalizing force because many developing countries have grown faster than advanced economies. They note that in 2000, cross-country income differences accounted for about 70 percent of global inequality, with that share falling as countries converge. They also highlight that the within-country component has been mixed but roughly constant on average since 2000, and is projected to become more important going forward. The share of global consumption for the world’s poorest half rose from about 7 percent in 2000 to 12 percent in 2025. That is still low, but it is movement in the right direction. (If you are scoring at home, “the poor getting more” is not supposed to happen in the apocalyptic version of this story.)

Now layer in a second data stream that is even easier to understand: are the poor in a given country seeing their incomes rise?

The Our World in Data chart tracks the annualized growth rate of real income or consumption for the bottom 40 percent of a country’s population, based on household surveys and the World Bank’s Poverty and Inequality Platform. It is not perfect, but it is grounded in the question people actually care about: are those nearer the bottom moving up?
This is what a healthy “inequality conversation” should sound like: less sermonizing about billionaires, more focus on whether people are gaining purchasing power and options.

The Alternative View Deserves a Hearing, Then a Cross-Examination

Oxfam’s 2026 report, “Resisting the Rule of the Rich”, argues that billionaire wealth is rising rapidly and that extreme wealth can undermine democracy. It claims billionaire fortunes have grown at a rate “three times faster” than the previous five years and that the number of billionaires has surpassed 3,000, while “one in four” people face hunger.

That is the kind of framing that fuels the “eat the rich” mood. But here is the problem: it often treats “wealth” as if it were a pile of cash stolen from everyone else, rather than a constantly changing market valuation of businesses that create products, jobs, and productivity. It also slides between important concerns (cronyism and corruption) and a very different claim (free enterprise itself is the culprit). That bait-and-switch is common.

If the real concern is political capture, that concern is understandable. The solution, however, is not to hand more power to the same institutions that create capture in the first place. The way to weaken oligarchy is to eliminate the deals, carve-outs, and barriers to entry that make oligarchy profitable.

And yes, big tech and “superstar” companies raise real governance questions. Even The Economist has highlighted the “superstar dilemma” in corporate pay and talent markets, a complex issue that is not always pretty. But the cleanest way to discipline superstar firms is not to freeze the economy into a regulator’s version of fairness. It is to keep markets contestable, meaning new entrants can actually challenge incumbents.

The Uncomfortable US Lesson: Growth Beats Dependency

Here is where the inequality myth really breaks down. If the concern is that markets cannot deliver broad progress, then we should look at periods when broad progress actually happened.

​A new NBER working paper by Richard Burkhauser and Kevin Corinth provides a blunt historical comparison of poverty trends before and after the War on Poverty. They build a consistent post-tax, post-transfer measure and find that from 1939 to 1963, poverty fell by 29 percentage points, and that the pace of poverty reduction after 1963 was no faster when measured consistently. They also emphasize that the pre-1964 reduction in poverty was driven mostly by market income growth, not by expansions in transfers.

That is not a claim that safety net programs have no value. It is a reminder that the most powerful anti-poverty program is still called a job in a growing economy, supported by rising productivity and competition. 

When politics replaces growth with managed redistribution, it can reduce measured poverty in a narrow accounting sense while trapping people in low-mobility systems and higher cost structures.

So what is the real driver of inequality, perceived or real? Policy.

If people feel the game is rigged, it is usually because it is, but not in the simplistic “the rich did it” way. It is rigged through four main channels.

Spending

Government spending is not “new money.” It is a transfer of scarce resources from private activity into political allocation. Once spending becomes the main tool for solving every social problem, the economy becomes a contest for subsidies, grants, and contracts. That is how you get corporate welfare and permanent bureaucracies that grow regardless of results. The cost is what you do not see: businesses not started, wages not earned, inventions not funded.

Taxation

Tax systems loaded with carveouts reward the people who can hire the best experts to navigate them. High rates plus Swiss-cheese loopholes do not produce equality. They produce lobbying. If lawmakers want more fairness, the answer is simpler and more neutral taxation that stops picking winners and losers.

Regulation

This is the quiet cartel-maker. Complex rules do not crush giant firms first. They crush the next competitor. Licensing, zoning restrictions, compliance mandates, and paperwork costs operate like a moat around incumbents. That means less competition, higher prices, and fewer ladders for people trying to move up.

Monetary policy

Central bank discretion can amplify inequality by inflating asset prices and distorting capital allocation. When money is too loose for too long, assets can surge while wages lag, and the gap between owners and non-owners widens. You do not need a conspiracy theory. You just need incentives and a printing press.

Put these together, and you get a simple but unpopular conclusion: if inequality is your headline concern, you should be far more skeptical of the modern policy state.

A Classical Liberal Approach That Actually Helps People Move Up

The goal is not equality of outcome. That is a slogan that turns into control. The goal is mobility, meaning the ability to improve your life through work, saving, entrepreneurship, and choice.

That requires a strict limit on government spending growth so the state stops sucking the economy’s oxygen. A simpler tax system that lowers the penalty on work, saving, and investment. Deregulation that targets barriers to entry, especially in sectors where families feel crushed. Clear fiscal and monetary rules that stop politicians from buying today with tomorrow’s prosperity.

If someone still insists that “inequality proves capitalism failed,” point them to the global convergence evidence in Brookings and the mobility-focused reality behind the Our World in Data bottom-40 growth rates. Then ask the question that separates economics from activism: if government expanded massively and the best eras of poverty reduction were still powered by growth, why are we so confident that more government is the answer?

The punchline is not “stop caring.” The punchline is “stop being fooled.” If you want a world where more people can thrive, the most reliable path is still the boring one: freer markets, real competition, and hard rules that prevent government from rigging the economy while claiming it is saving it.

Originally published on Fraser Institute. 

​South Carolina ranks 21st nationally with an overall score of 6.84 in the Economic Freedom of North America (EFNA) report published by the Fraser Institute. People have more economic freedom when they are allowed to make more of their own economic choices. Based on 2023 data, the ranking places the state comfortably above average but well short of the top tier. That middle position is not puzzling. It reflects a state in which core economic institutions work reasonably well, but a single persistent constraint prevents further progress.

The solid, if not stellar, strength of South Carolina's economic institutions has enabled South Carolinians to prosper. The labor market clearly shows South Carolina’s strengths. SC ranks fifth in labor market regulation, 35th in spending, and 25th in taxing. According to the Bureau of Labor Statistics, the state has experienced solid job growth in recent years. Unemployment rates have generally tracked at or below the national average, indicating healthy labor demand rather than artificial tightness. Firms continue to expand in South Carolina because labor markets remain flexible and adjustment costs are manageable.

The output data helps reinforce that picture. Bureau of Economic Analysis (BEA) state GDP figures show South Carolina's real GDP growing at a competitive pace, with strong gains in export-oriented manufacturing and transportation-related sectors. These outcomes are consistent with economic theory. When labor markets are flexible and regulatory barriers are moderate, investment responds.

Yet EFNA can explain why this growth has not translated into a higher ranking. The constraint is not state-level labor or tax policy. It is local government spending and taxation.

EFNA measures combined state and local burdens, and this distinction matters. While state-level fiscal policy in South Carolina has been comparatively restrained, local government spending has grown faster than population growth in many counties. Property taxes have followed. From an economic perspective, the total burden matters, not which level of government imposes it.

Local taxes are particularly distortionary. Property taxes can raise the cost of housing and commercial investment, reduce capital formation, and disproportionately affect small businesses that lack geographic mobility. EFNA captures this effect by measuring taxes relative to personal income rather than focusing exclusively on statutory rates or isolated policy changes.

The data shows the consequences. BEA figures reveal growing divergence in per-capita GDP growth across regions of South Carolina. Areas with faster local spending growth and higher effective property-tax burdens exhibit slower output growth than lower-tax peers. This is not a coincidence. Capital responds to relative returns, and local fiscal policy directly shapes those returns.

Directionally, South Carolina’s EFNA ranking has been remarkably stable over time. Stability, in this case, is not a feature. It indicates that while the state has avoided major policy mistakes, it has also failed to remove the constraints preventing upward movement. Other states with similar labor-market advantages moved ahead by pairing flexibility with tighter local fiscal discipline.

The timing of the data is important. Because the EFNA report relies on 2023 data, recent local reform discussions or proposals are not yet reflected in it. What the ranking captures is the cumulative effect of local fiscal decisions made over the past decade. EFNA moves slowly because institutions change slowly. That is precisely why it is useful for evaluating structural competitiveness rather than political momentum.

The Fraser Institute’s research shows a consistent relationship between economic freedom and prosperity. States with higher economic freedom experience stronger job creation, higher incomes, greater in-migration, and more resilient growth. South Carolina already benefits from several of these dynamics, but the gains are uneven and increasingly localized.

The economic lesson is straightforward. South Carolina does not need a new growth strategy. It needs spending restraint. State-level policies that support labor flexibility and investment are being undermined by state and local spending excesses that raise costs and reduce returns. Until those incentives are aligned, growth will continue, but it won't be as brisk as it would be if the state permitted its citizens more economic freedom.

Economic freedom compounds when constraints are removed systematically. South Carolina has addressed some of those constraints. The next gains will come not from doing more, but from allowing governments to do less.

​We talk a lot about opportunity in America—but far less about where opportunity actually exists and why.

Why do some states consistently help people climb the economic ladder while others trap families in place for generations? Why do well-intended policies often backfire? And why is “doing more” by the government so often the wrong answer when it comes to social mobility?

That’s exactly what we unpack in Episode 186 of the Let People Prosper Show with Dr. Justin Callais, Chief Economist at the Archbridge Institute and lead author of the new Social Mobility in the 50 States (2025) report.
Justin brings data, clarity, and—refreshingly—humility to one of the most politicized topics in economics. The findings challenge both the left’s obsession with redistribution and the right’s tendency to overlook the very real policy barriers that states create.

Watch the full episode on ⁠YouTube⁠, ⁠Apple Podcast,⁠ or ⁠Spotify⁠, Substack for show notes at⁠ vanceginn.substack.com⁠, and visit my website at ⁠vanceginn.com⁠ for more information about my work at Ginn Economic Consulting.