Two quick notes on Trumponomics today. Mr. Trump’s tariffs have been a political loser for the majority of the country since they raise prices (in some goods significantly) at a time when rising prices is the key issue for Americans. This week the Trump administration announced plans to roll back it’s tariffs on imported beef on a temporary basis.

The Trump administration is opening the way to import more steaks and ground beef from overseas, part of a broader effort to address record-high beef prices. The administration is planning to temporarily reduce tariffs on beef imports as soon as Monday, according to people familiar with the matter. The move would suspend the annual tariff-rate quota—which applies a higher tariff rate after a certain level of beef imports are reached—on all beef-exporting nations, enabling more of the product to enter the U.S. at lower tariff rates.

The administration also plans to direct the Small Business Administration to increase loans and access to capital for U.S. ranchers, and to reduce protections for gray and Mexican wolves under the Endangered Species Act, a focus of rancher complaints. The administration will reduce some regulations for U.S. cattlemen, including Agriculture Department rules requiring them to use electronic ear tags on livestock.  A White House official said the tariff decision aims to address short-term supply issues with beef in the U.S., while the deregulatory efforts will help lower ranchers’ costs over time.  The pair of executive orders aims to tackle one of the most persistent sources of inflation for U.S. consumers. While prices over the past year and a half have eased for eggs, milk and other products, beef has continued to rise. Ground beef prices are up 40% from five years ago. The administration in February allowed more beef imports from Argentina in a bid to bring down domestic prices.

Now if he would only just eliminate the tariff completely and permanently. But on to our second issue. To address the most vexing price hike for the administration, the price of gas, Mr. Trump advocated suspending the national gas tax, which Republican Josh Hawley promptly embraced. Now this is good politics, or at least making the best of the bad situation, but it’s terrible economics. The problem we have with gas is that the supply has been significantly reduced. The only real solution is to increase supply, which is incredibly difficult in the short run. The market reaction to ration limited supply is to increase prices, and that works to discourage consumption (as well as stimulate additional production*). And in the presence of reduced supply, economically we want prices to rise to encourage conservative of a now more scare resource. I shouldn’t be out ripping through the gears in my hot rod, and a higher price discourages me from doing so. Now I know that Mr. Trump is not wanting me to do that, and he really wants to help those that are economically challenged now with this temporary situation–and he is right to do that. But a far better way to do that would be something like a gas bonus check that we could spend on anything, while keeping higher gas prices. We would be incentivised to conserve, yet we would have more income to handle the increased prices and could make the tradeoff if we want to use the money on gas or other things. I don’t really like direct subsidies, but it would be better than the alternative. I know it’s difficult, but it’s not that long ago we sent checks to people. Simply have the IRS send checks out to those below a certain income level and be done with it. I realize the economist’s proposal has no political heft, but hey, it’s what I do.

* the incentive effect to expand production will be limited since the tax is on top of what producers are getting. Eliminating the tax will not change (much if at all) what the producers receive and therefore won’t have much stimulative effect.