A New Model

Under Trump’s “New Model” the US will tax imports and exports.

“I think we could see it in other industries over time,” Bessent told Bloomberg TV on Wednesday. “I think right now this is unique, but now that we have the model and the beta test why not expand it?”

Bessent said that allowing Nvidia to sell H20 chips in China would make them “the bellwether for Chinese technology” while also swelling the US government’s coffers and allowing it to pay down debt.

Amusing Linked-In Comments

• It’s a corporate tax on gross revenues determined company by company, product by product, by way of private negotiations. No risk of corruption in this set-up, of course. (Did I see flying pigs?) But it’s a corporate tax on gross revenues, regardless.
• Aren’t export taxes prohibited by the Constitution…? Ah…. But they are not export taxes… They are “profit-sharing.” 😉
• Apologies for relating with a book I avoided. I think it may be called the “Art” of making a backward deal ? I’m sure

Unconstitutional

Q: Are export tariffs legal in the US?
A: No, the United States Constitution prohibits export tariffs.

Export Clause: Article I, Section 9, Clause 5 of the US Constitution explicitly states: “No Tax or Duty shall be laid on Articles exported from any State”.

Purpose: This clause was a compromise to protect the economies of Southern states that relied on exporting agricultural products.

On August 11, I commented Trump Imposes Export Taxes on NVDIA and AMD, Unwise and Unconstitutional

Unwise

Chip exports either represent a security risk or they don’t.

Collecting an export tax does not mitigate security risks. If there is a security risk, Trump should ban the exports.

But if there is no security risk, what is Trump’s action other than an export tax or an illegal shakedown?

Beta Test Expansion of the Unconstitutional

Given the move is both unwise and unconstitutional, the idea of taxing imports and exports seems insane.

However, Bessent zeroes right in.

“I think right now this is unique, but now that we have the model and the beta test why not expand it?”

So hey, let’s not call it an export tax, let’s call it “voluntary profit sharing”.

And why stop there? Why not let Trump negotiate individually with every company in the world how much profit they are entitled to?

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