It is indeed a historic visit to Israel. I’m confident it will add new momentum to the bilateral friendship between our nations. https://t.co/3dZpsf4Tqt
Attack of the Zombie Tariffs A brain is a terrible thing to have eaten ........... Never one to accept limitations on his power, Trump rushed to impose new tariffs using an obscure clause, Section 122 of the 1974 Trade Act. Section 122 tariffs have a 150-day limit, at which point they expire. So Trump officials are now claiming that they’ll find ways to reconstruct the tariffs using other legal loopholes before the expiration date is reached. ............. Why this desperate attempt to keep tariffs high? A MAGA loyalist would say it’s to preserve what those illegal tariffs have accomplished. But even before they were struck down, the tariffs had achieved none of their stated goals. In fact, they had put those goals further out of reach. .................. the U.S. trade deficit for all of 2025 was about the same as it was in 2024. .........
what Trump cited was a cherry-picked, misleading number that bears no relation to reality.
................ Trump also claimed that his tariffs would revive American manufacturing. In fact, manufacturing employment has declined since Liberation Day. ........... Trump likes to boast about the immense revenue generated by the tariffs. And they did indeed bring in some money — tariffs are taxes, and taxes yield revenue. .............. Revenue from the Trump tariffs, even pre-Court, wasn’t enough to make a large dent in the deficit. Moreover, it wouldn’t even pay for the increase in the deficit caused by the passage of Trump’s One Big Beautiful Bill tax cuts. Nor would it be enough to cover Trump’s call for a 50 percent increase in military spending — a rise so large that the White House hasn’t yet submitted a budget, two weeks past the statutory deadline, because the Pentagon hasn’t been able to figure out how to spend that much. .................. In reality, by the time of the Supreme Court ruling, Trump’s assertion that tariffs are a magic elixir that solves all problems wasn’t convincing anyone. Independent voters disapproved of his tariff policy by a three-to-one margin. Accordingly, when the Court’s decision came down, some Democrats immediately worried that the ruling would help Trump politically, giving him an escape route from an unpopular and ineffectual policy. ................. It has been clear from the beginning that a primary motivation for tariffs was that they empowered Trump personally. They allowed him to punish governments he didn’t like, demand subservience from other countries as the price of lower tariffs, and offer waivers and exemptions to companies that put money in his own pocket. And maybe Trump can’t bear the thought of losing that power. ................. The language of Section 122 calls for a flat-rate tariff on everyone. This means that nations Trump tried to punish — like Brazil, which faced high tariffs for daring to try Jair Bolsonaro for treason — have just received a big break. Meanwhile nations that groveled to Trump, like the UK, have just learned that they humiliated themselves for nothing: ...................... The obvious answer is that Trump can’t bring himself to acknowledge defeat. His tariff strategy is, by any reasonable standard, dead, and the tariffs should be dead too. But they won’t stay dead; they just keep shambling along.
Who Is Paying the Trump Tariffs? A wonkish guide for the confused .......... Until recently the question of who pays tariffs wasn’t controversial among economists. The overwhelming consensus was that under normal circumstances tariffs — taxes on imported goods — are passed on to consumers in the form of higher prices. There are caveats and exceptions to this consensus, but these caveats are well understood and for the most part don’t apply to the tariffs imposed by the Trump 47 administration. ............. Once tariffs became a centerpiece of Trump’s economic policy, however, views about their impact became politicized, and Trump supporters were obliged to echo his claim that foreigners, not U.S. consumers, bear the tariff burden. There was a slightly comical demonstration of this politicization during a recent House Financial Services Committee hearing, when Scott Bessent was asked whether, before joining the Trump administration, he had sent a letter to hedge fund investors declaring that “tariffs are inflationary.” At first, Bessent denied having written that. Confronted with proof that he had, he declared that he had been mistaken. ..................... Two reports released last week — the Congressional Budget Office’s latest report on the budget and economic outlook, and a study released by the Federal Reserve Bank of New York — both concluded that
the tariffs are overwhelmingly being borne by U.S. households and firms.
But Friday’s report on consumer prices showed fairly low inflation, rather than a big price spike from tariffs. .......................... The evidence that foreigners aren’t paying the tariffs, which means that Americans are, is rock-solid. ............ Conventional economic analysis says that the tariffs should have pushed consumer prices around 1 percent higher than they would otherwise have been. Parsing the data to isolate the tariffs’ effect suggests that they have in fact raised prices by something close to that amount.
That is what I said in my book months ago. Liquid Computing: The Future of Human-Tech Symbiosis https://t.co/VDimUsobtF
So thrilled to be in India for the AI summit in New Delhi! After landing, I get into my car and the driver gives me wifi immediately -) for the 30 min car ride. The Wi-Fi is faster than anything I had in Germany at the Munich security conference. Go India! ๐ฎ๐ณ
I am building an AI applied to Marketing tech startup and would greatly appreciate being able to do marketing for you as an outside consultant. AI + Marketing https://t.co/5SOfy3pYop
I'm joining @OpenAI to bring agents to everyone. @OpenClaw is becoming a foundation: open, independent, and just getting started.๐ฆhttps://t.co/XOc7X4jOxq
One guy, coding alone at 5am, built the fastest-growing GitHub repo in history. 194,000 stars. Faster than React, Linux, and Kubernetes combined.
OpenAI, with thousands of engineers and billions in compute, couldn’t build it first. Steinberger connected Claude’s API to WhatsApp… https://t.co/zPVkkV43zD
Just in case Gen Z is trying to understand what happened today:
Claude was mogging OpenAI for weeks. Then this gymcel dev ships Clawdbot which was the fastest growing OSS thing ever, absolute looksmax for the whole ecosystem.
Nothing has made me feel the AGI era as much as OpenClaw. Extremely excited to have Peter on the team to push us and bring that experience to everyone. https://t.co/hsKuPcMKw5
Attending the #AISummit in Delhi I feel a deep sense of pride.
I truly believe India is no longer preparing for the future, we are building it. From our digital public infrastructure to AI-led innovation in healthcare and enterprise, the scale and speed of our progress are… pic.twitter.com/5qg2lp9ImE
A Supreme Court Test of Presidential Power: The Fate of Trump’s Emergency Tariffs
In early November 2025, the U.S. Supreme Court heard oral arguments in Trump v. V.O.S. Selections, Inc., a case that could significantly reshape the balance of power between Congress and the presidency in matters of trade and economic emergency. At stake is the legality of sweeping tariffs imposed by President Donald Trump under the International Emergency Economic Powers Act (IEEPA)—a statute originally designed to address extraordinary national emergencies, not to serve as a standing trade weapon.
The Tariffs at Issue
Beginning in February 2025, the Trump administration imposed broad tariffs on imports from China, later extending them to Canada, Mexico, and several other trading partners. Unlike traditional tariffs enacted through congressional authorization or trade statutes such as Section 301 or Section 232, these measures were justified under IEEPA, a law that grants the president authority to regulate economic transactions during a declared national emergency.
The administration argued that persistent trade deficits and foreign economic practices constituted such an emergency. Critics, however, countered that this interpretation stretched IEEPA beyond recognition—turning a law meant for rare crises into a blank check for unilateral trade policy.
Lower Courts Push Back
Both the U.S. Court of International Trade and the U.S. Court of Appeals for the Federal Circuit ruled against the administration, finding that the tariffs exceeded the president’s statutory authority. The courts emphasized that IEEPA does not explicitly authorize the imposition of tariffs and warned that allowing such a reading would effectively sideline Congress’s constitutional power over taxation and trade.
These rulings set the stage for Supreme Court review, transforming what began as a trade dispute into a constitutional confrontation over executive power.
Where the Supreme Court Stands
As of January 25, 2026, the Supreme Court has not yet issued a decision. The Court declined to release an opinion on January 20, and the next scheduled opinion release date is February 20, though additional dates could be added. If not resolved in February, the case could extend into late spring or even June, the traditional end of the Court’s term.
Despite the uncertainty around timing, legal analysts largely agree on direction. Based on oral arguments, lower-court precedents, and expert commentary, the Court appears more likely than not to strike down the tariffs—either entirely or in significant part.
What the Markets Are Saying
Prediction markets offer a quantitative glimpse into expectations. Platforms such as Kalshi and Polymarket currently assign only a 26–29% probability that the tariffs will be upheld. In other words, markets are pricing in a roughly 70–75% chance that the Court will rule against the administration.
While not definitive, these markets aggregate the views of traders responding to legal analysis, judicial signals, and historical patterns—often serving as an early barometer of consensus.
Potential Consequences
If the tariffs are invalidated, the immediate effect could be substantial duty refunds for importers who paid billions of dollars under the disputed measures. However, such refunds would not be instantaneous; administrative processes could take months to unwind the tariffs and return funds.
More importantly, a ruling against the administration would draw a clear boundary around IEEPA, reinforcing that emergency powers are not a substitute for congressional authorization. It would signal that economic “emergencies” cannot be indefinitely invoked to bypass the legislative branch.
A Broader Constitutional Moment
Beyond trade and tariffs, Trump v. V.O.S. Selections represents a pivotal moment in the ongoing struggle over executive authority in the modern presidency. In an era where emergencies—real or perceived—are increasingly used to justify unilateral action, the Court’s decision will help determine whether IEEPA remains a scalpel for true crises or becomes a sledgehammer for routine policymaking.
However the Court rules, the case is likely to echo far beyond customs forms and supply chains. It speaks to a deeper question at the heart of American governance: where emergency ends, and constitutional order begins.
The other night had a dinner with autonomous vehicle pioneer @AdrianKaehler1 who wrote the computer vision system for the Stanford team that became @waymo.
He told me at dinner that he didn’t believe @elonmusk could finish Robotaxi.
I appreciate @chetan_bhagat for opening up a necessary conversation around wheelchair usage at airports, even if the reality is more layered than it appears.
I’m not sure it’s fair to call this “abuse” without context.
China’s Trade Surplus, Part III How should policy respond? ........ China’s immense trade surplus. In a saner world — a world in which the United States weren’t ruled by a madman — this surplus and its disruptive effects would be the biggest issue confronting the global economy. ........... China has an enormous economy and is relying on its export prowess to make up for its domestic failures. And the political economy that has set China on this path isn’t likely to change any time soon. ........... there is a theoretical case for simply buying the cheap stuff China supplies. But in practice China’s massive surplus creates serious problems for the rest of the world, and therefore requires a serious policy response. ............... “The rest of the world” for this discussion mostly means the United States and Europe, who are the key global economic players outside China. While other nations also have choices to make, only the US and the EU are big enough to influence China’s behavior. ........... I realize that offering serious policy advice to the current U.S. government is like preaching to baboons: You won’t get heard over the hooting, and even if they did hear, they wouldn’t understand. .............. how big that surplus is relative to the world economy. .......... China’s trade surplus in manufactured goods — exports of manufactures minus imports — is a larger share of world GDP than any country has ever captured in the past: ........... I don’t want to engage in crude mercantilism and portray China’s trade surplus as an unmitigated bad for the rest of the world. China isn’t “stealing” from other countries by selling more than it buys. If anything, China is subsidizing the rest of us by selling us goods cheaply. Also, because the balance of payments always balances, the counterpart of China selling more goods than it buys is China purchasing more overseas assets than it sells. In practice China buys an enormous quantity of U.S. Treasury bills and other safe assets that pay low interest rates — and helps keep those rates low. ..............
China is like a store that offers merchandise at highly discounted prices and also offers buy-now-pay-later plans with low financing charges. In effect, China is subsidizing the rest of us.
.................. China’s surging exports are economically and socially disruptive. The “China shock” caused by the rapid growth of Chinese exports between the late 1990s and around 2010 eliminated well over a million jobs in the United States, with job losses concentrated in a relatively limited number of communities. ................ In terms of overall US employment, these job losses were offset by job gains in industries not in the path of the Chinese export surge, such as in healthcare. But most of the workers and communities displaced by the China Shock were not able to take advantage of these new opportunities. So while overall U.S. employment and economic growth do not appear to have suffered from Chinese competition, significant numbers of workers and their communities did. .................. The second reason that China’s enormous trade surplus is harmful to its trading partners rests on an old argument against completely free trade — the importance of retaining domestic capacity in industries crucial to national security. This concern has much more force now than it did, say, 30 years ago. As Abraham Newman and Henry Farrell have argued, we are living in an age of “weaponized interdependence,” in which governments that have control over economic “chokepoints” — crucial nodes in the world production system — can and do use that control to throttle, or threaten to throttle, geopolitical rivals. .................... After winning the Cold War, the United States controlled most of these chokepoints. And until Trump II, the U.S. exercised restraint, mostly respecting international agreements and the rule of law. As a result, the targets of weaponized interdependence tended to be rogue states like Iran. ............. Today, under Trump II, America is looking more and more like a rogue state itself. .............. massive Chinese trade surpluses threaten to give the Chinese government control of multiple chokepoints. And China is an authoritarian state that can’t be expected to refrain from weaponizing the rest of the world’s dependence on its exports. .................. China recently used its dominance of rare earth production and especially rare earth processing to put the screws on the United States, Japan and the EU amid trade disputes. In a recent dispute between the Dutch government and China over unauthorized technology transfer, China threatened to disrupt the entire EU automotive industry by withholding critical supplies of semiconductor chips. So it’s entirely reasonable to harbor concerns over allowing China to acquire leverage over chokepoints in the global economy. ...................... there is the risk that China will lock in a long-term advantage in the industries of the future. ............... U.S. leadership over Europe in information technology. ........... that dominance overwhelmingly arises from high-tech clusters in the Bay Area and Seattle, where an early lead has created a self-reinforcing “ecology” of skilled workers and specialized suppliers that makes it very hard for Europe to break in. ............... China already appears headed for a similar lock on a number of industries, such as solar panels and electric cars, and other industries will follow if massive trade surpluses continue. .............. For example, can we be sure that China won’t embed monitoring capabilities in its information technology – a risk that has been associated with Huawei? ................
There’s a widespread perception that economists have nothing to say about globalization other than “Yay free trade!” In reality, while economists do often act as cheerleaders for free trade, they have also devoted considerable attention to the conditions under which policy should deviate from pure free trade. Equally important, when those conditions are met, economics has a lot to say about how policy should deviate from free trade.
......................... The case for free trade is the same as the general case for letting markets work. If importing a good is cheaper than producing it domestically, then limiting imports and/or subsidizing domestic production is usually a misallocation of resources. That is, those resources could have been used more productively making goods for the domestic market or for export, instead of competing with lower-priced imports. Consequently, government policy shouldn’t try to overrule the market by supporting domestic production against imports unless an industry satisfies a key condition: that maintaining domestic production generates sufficient benefits that aren’t taken into account by markets. If that condition is met, the government should engage in an industrial policy to support that industry. ....................... the European digital industry was never able to successfully compete with Silicon Valley because it started too late and the EU never engaged in policies to shelter it from American competition. ................. The bottom line is that free trade isn’t an inviolable principle. There are good reasons to intervene to in order to protect some industries from the effects of foreign, and especially Chinese, competition. ............ If the goal is to aid an industry, tariffs are almost always the wrong policy tool. Subsidies are almost always a better choice. ............. subsidies — possibly targeted subsidies that, say, promote employment — are almost always a better policy than tariffs. For while tariff protection may help a domestic industry facing import competition, it also raises prices for consumers. Furthermore, if the targeted imports are “intermediate goods” — inputs into the production process, like steel – tariffs will raise the cost of production for the final good. Hence Trump’s tariffs on steel imports have raised the cost of domestic production of autos. .............. Approximately half of U.S. imports are intermediate goods, some of which — like steel and many products made from copper — now face high tariffs. The way these tariffs have raised production costs is one of the reasons manufacturing employment, which Trump’s tariffs were supposed to boost, has steadily declined since last spring. ............. Subsidies, which don’t raise prices, avoid this kind of collateral damage. If you say that subsidies to preserve an industry would cost too much, you’re really saying that the industry isn’t worth saving. Why? Because a tariff actually costs morethan a subsidy that achieves the same results, once you take the adverse effects on consumers and downstream industries into account. ................. A necessary condition for supporting an industry is that it be an example of at least one of the three basic reasons I gave that China’s burgeoning surplus is a problem. That is, it must be an industry in which a rapid decline would be strongly disruptive to workers; or an industry where retaining a strong domestic presence is crucial for national security; or an industry that may be key to the economic future.
