For The First Time In Four Years, Americans Aren’t Paying More For Their July 4 Cookouts
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The “C” grade FedEx founder Fred Smith received from a Yale professor on a paper outlining his vision for an overnight delivery service is much less remarkable than is often assumed. Naturally, Smith got a C. Rest assured that most investors gave him an F, assuming they bothered to hear Smith’s pitch in the first place.
Evidence supporting the above claim can be found in the billions Smith left behind, along with the market cap ($54 billion) of FedEx itself. Smith’s wealth and FedEx’s valuation are evidence of Smith’s entrepreneurial genius — his ability to see what others couldn’t, to act decisively, and to execute brilliantly on a vision that defied conventional wisdom.
At least rhetorically, Donald Trump sees interconnectivity as impoverishing. That’s too bad.
Stop and contemplate the miraculous nature of Smith’s innovation. No doubt many wished they could have next-day or two-day delivery. But as Smith’s billions yet again indicate, his greatest insight was in figuring out how to solve a problem that appeared insolvable: how to profitably move documents around the U.S. and around the world overnight. Investors didn’t believe it could be done, which is why opposite-thinking, passionate people like Smith are so crucial to progress.
Which brings us to economist Joseph Schumpeter’s notion of “creative destruction.” It was his way of saying that great business ideas are routinely replaced by even better ones. Stasis is death in business.
Adapt or die
Smith knew this well. Miraculous as overnight delivery was, the proliferation of fax machines in the 1970s and '80s could have been an existential threat to FedEx. Same with email, PDF attachments, hyperlinks, and eventually DocuSign in the 1990s and beyond.
The easy move would have been to sell or shut down what technology was rapidly rendering dated — but that wasn’t Smith. A free thinker to the core, according to people like Cato Institute co-founder Ed Crane (Smith served on Cato’s board), who knew him well, Smith no doubt grasped that a world increasingly connected by split-second technology would be a prosperous one. And prosperous people don’t just want market goods — they want them quickly.
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While many entrepreneurs might have sold in the face of a technological onslaught, Smith kept on building. He pivoted his business to become more valuable — ironically, the more free-market forces rendered FedEx’s initial purpose dated and obsolete. Documents were to FedEx what books were to Amazon: just the test case for a business concept that would have even greater purpose the more the world thrived based on the connectivity that had, in so many ways, vitiated FedEx’s original business.
Smith’s lesson for Trump
The free, rapid movement of people and communications was only existential for Smith and FedEx insofar as he was unwilling to pivot. In other words, the free trade that Smith venerated didn’t victimize him or, for that matter, any entrepreneur capable of seeing that prosperity born out of open trade frequently creates even better lines for businesses to expand into. That’s why FedEx didn’t die long ago. Smith was too smart — not just for Schumpeter, but also for President Donald Trump.
At least rhetorically, Trump sees interconnectivity as impoverishing. That’s too bad. As Smith’s towering achievements indicate, the only true barriers to prosperity are those that separate producers from one another.
It’s a long way of saying Trump could learn from Smith’s constant evasion of creative destruction. The latter isn’t just an understatement — it’s also urgent.
Editor’s note: This article was originally published by RealClearMarkets and made available via RealClearWire.
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Government-mandated minimum wage laws have regularly proven to be a disastrous economic policy. But apparently, Sen. Josh Hawley, R-Mo., didn’t get the memo. On Tuesday, Missouri’s senior senator introduced legislation called the “Higher Wages for American Workers Act,” which reportedly seeks to raise the federal minimum wage to $15 per hour and “call for an […]'Judicial tyranny': Federal court blocks 'Liberation Day' tariffs — but Trump could have last laugh
A New York-based federal court has temporarily handicapped the Trump administration, removing some of its leverage in trade wars with foreign powers.
A three-judge panel at the U.S. Court of International Trade on Wednesday voided and permanently blocked President Donald Trump's "Liberation Day" 10% baseline tariff on goods imported from most countries as well as his reciprocal tariffs on scores of individual nations.
The court unanimously held that while the president has authority to respond to national emergencies with tariffs, embargoes, and sanctions, the International Emergency Economic Powers Act he invoked "does not authorize the President to impose unbounded tariffs."
'The Worldwide and Retaliatory tariffs are thus ultra vires and contrary to law.'
The court suggested that letting Trump impose unbounded tariffs might run afoul of the Constitution's separation of powers, as the Constitution assigns Congress the power to regulate foreign commerce and impose tariffs. Critics have stressed, however, that Congress has over the years delegated much of this authority to the president and the executive branch — authority largely unchallenged until now.
"The Worldwide and Retaliatory Tariffs do not comply with the limitations Congress imposed upon the President's power to respond to balance-of-payments deficits," the court said in its opinion. "The President's assertion of tariff-making authority in the instant case, unbounded as it is by any limitation in duration or scope, exceeds any tariff authority delegated to the President under IEEPA. The Worldwide and Retaliatory tariffs are thus ultra vires and contrary to law."
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The decision halts Trump's existing IEEPA tariffs and prevents him from increasing tariffs, including the paused 145% tariff on imports from China and the recently threatened 50% tariffs on imports from the European Union. It also scraps Trump's orders applying 25% duties on Canadian and Mexican products.
The Trump administration immediately appealed the decision.
'The judicial coup is out of control.'
Since the Court of International Trade had effectively resolved two lawsuits before it in a single opinion — a lawsuit brought by the Liberty Justice Center on behalf of several businesses and a lawsuit filed by a gang of blue-state state attorneys general — the government asked the U.S. Court of Appeals for the Federal Circuit to consolidate its appeals.
Jeffrey Schwab, director of litigation at the Liberty Justice Center, said in a statement, "This ruling reaffirms that the president must act within the bounds of the law, and it protects American businesses and consumers from the destabilizing effects of volatile, unilaterally imposed tariffs."
Oregon Attorney General Dan Rayfield, one of the Democrats who fought to axe the tariffs, celebrated the ruling, stating, "President Trump's sweeping tariffs were unlawful, reckless, and economically devastating."
White House deputy chief of staff Stephen Miller noted on X, "The judicial coup is out of control."
Miller added Thursday, "We are living under a judicial tyranny."
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Regardless of whether the government is successful in its appeal, the Trump administration has other ways of pursuing its desired tariffs, including under Section 122 of the Trade Act of 1974, Section 232 of Trade Expansion Act of 1962, Sections 301 of the 1974 Trade Act, and Section 338 of the Trade Act of 1930.
Alec Phillips, managing director at Goldman Sachs, indicated that the president is authorized under Section 122 to tackle a balance-of-deficit, reported MarketWatch. Since that particular law does not demand a formal investigation or process, Trump could use it to immediately impose tariffs of up to 15%. The downside is that Section 122 tariffs are only good for 150 days.
Alternatively, the administration could apply tariffs under Section 301, although doing so would require investigations to set the stage.
"This would take longer, likely several weeks at a minimum and probably a few months to complete several investigations," said Phillips. "There is no limit on the level or duration of tariffs under Sec. 301."
'We already expect additional sectoral tariffs.'
Michelle Schulz, managing partner at Schulz Trade Law PLLC, told CNBC's "Squawk Box Europe" on Thursday, "We have had section 301 tariffs on Chinese goods even under the previous administration, which were pretty harsh. So I can imagine that the administration will look at these provisions again and see if they can use 232, or 301, or some other mechanism whereby they can enforce the tariffs."
According to Phillips, Section 338 enables Trump to impose tariffs of up to 50% on imports from nations that discriminate against the United States. While an available tool in the president's kit, it has reportedly never been used before.
Finally, Section 232 tariffs — which Trump has used for steel, aluminum, and automobiles and which were unaffected by the court's ruling — can be expanded to cover other sectors.
"We already expect additional sectoral tariffs — pharmaceuticals, semiconductors/electronics, etc. — and uncertainty regarding the IEEPA-based tariffs could lead the White House to put more emphasis on sectoral tariffs, where there is much less legal uncertainty," said Phillips.
Blaze News reached out to the Department of Commerce for comment but did not receive a response by publication.
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Comparative advantage was built on patriotism. That’s gone.
In a recent Financial Times column, economist Burton Malkiel slammed President Trump’s tariffs as economically “foolish,” arguing they violate the supposed universal truth of comparative advantage. He’s wrong — on both the economics and the reality.
First, comparative advantage only applies when nations trade goods for goods. Today, the U.S. trades goods for assets and debt. That alone breaks the model. Second, comparative advantage only holds when capital stays put. But in the real world — our world — capital moves. Factories relocate, labor follows, and production shifts across borders. That’s not a flaw in the theory. It’s a fatal contradiction.
America doesn’t need more academic theory. It needs factories. It needs jobs. It needs to win again.
Malkiel either doesn’t understand these limitations — or he does and hopes you don’t.
Ignoring the fine print
Comparative advantage, a theory made famous by David Ricardo in his 1817 work “On the Principles of Political Economy and Taxation,” says countries should produce what they’re best at and trade for the rest. This specialization, Ricardo argued, makes everyone richer by boosting global efficiency.
Malkiel trots out the textbook example: If Britain and France each devote 100 hours to making cloth and wine, both benefit more by specializing — Britain in cloth, France in wine — and trading. Total production rises, and both countries gain.
That’s the theory. It’s clean, tidy, and wrong — at least in the modern world.
Ricardo himself acknowledged the theory only works when countries trade goods for goods. If one country, like the United States, trades away past and future production — assets and debt — in exchange for foreign-made goods, comparative advantage fails.
When trade isn’t backed by production, it doesn’t encourage specialization. It incentivizes offshoring. In Ricardo’s own words: “It would undoubtedly be advantageous to the capitalists of England that the wine and cloth should both be made in Portugal.”
In other words, once capital moves, the model collapses. Malkiel conveniently ignores that Ricardo flagged this problem over 200 years ago.
Ricardo also assumed that capitalists would stay loyal to their country. “Most men of property,” he wrote, “will be satisfied with a low rate of profits in their own country.” But what happens when they’re not? What happens when loyalty gives way to margin-chasing?
You get modern America.
Ricardo’s world is gone
When Ricardo wrote, moving capital across borders was almost impossible. Machinery couldn’t be exported. Tariffs hovered above 50%. Capital markets barely functioned. Transportation was slow and expensive. Endemic warfare prevented a large-scale commodity trade. Ricardo’s world had walls. Comparative advantage worked because it couldn’t be easily gamed.
But after his death, many of those barriers fell. By the mid-19th century, British capital was pouring into overseas markets. In 1815, Britain had £10 million invested abroad. A decade later, it topped £100 million. By 1914, Britain held more than a third of its national wealth overseas — while domestic investment cratered.
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That same trend now defines America’s trajectory. Since 1974, the United States has run a trade deficit every single year. The cumulative value: $25 trillion. We paid for it by selling assets and IOUs. As a result, more than 60,000 factories closed, and seven million well-paying manufacturing jobs vanished.
And what did we get in return? Cheaper toasters. Pricier patriotism.
Tariffs provide the path back
Malkiel says tariffs violate economic law. But tariffs helped build American prosperity in the first place. They protected domestic industry. They ensured investment stayed here, not in Shanghai or Shenzhen. They gave workers stable, high-paying jobs — and gave communities a chance to thrive.
Today, tariffs offer the best chance to reverse the offshoring spiral. They don’t reject trade. They demand fair terms. They recognize that production equals power — and that giving away your manufacturing base in the name of theoretical efficiency leads to real-world decline.
Free trade zealots preach like high priests of a failed faith. They chant comparative advantage like it’s economic scripture. But America doesn’t need more academic theory. It needs factories. It needs jobs. It needs to win again.
And tariffs — not another foolish lecture from the Financial Times — offer the clearest way back.
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