Connect with us

Economics

Has Ron DeSantis gone too far in Florida?

Published

on

Listen to this story.
Enjoy more audio and podcasts on iOS or Android.

Your browser does not support the <audio> element.

More people live in Florida than in New York state, where the budget is nearly twice as big. From kindergarten through high school New York spends more than twice as much as Florida to educate each pupil, yet eighth-graders in both states score comparably on standardised tests, and Florida achieves higher high-school graduation rates, particularly for black and Hispanic students. Florida is building homes faster and, along with cheaper housing, it has a higher rate of home ownership and a lower incidence of homelessness than New York. At 3.1% in December, the unemployment rate was a third lower in Florida.

Florida has its relative demerits, including more people without health insurance and a higher rate of homicide. But for its services the state charges its citizens no income tax, whereas New York imposes some of the highest rates in the country. Corporate taxes are also lower in Florida. Overall, Americans are concluding the balance favours Florida: its population grew by another 365,000 last year, while New York’s shrank by 102,000, continuing a four-year trend.

All of which is to say that Democrats should be grateful that Governor Ron DeSantis of Florida, for reasons of conviction or perceived political interest, proved to be such a ferocious culture warrior. Had he been capable of running his state, and running for president, as a sunny champion of low-cost, effective government—the kind of candidate for whom reasonable people in both parties yearn—who knows how far he might have gone, and how little hope Democrats in Florida might have of ever clawing their way back to political daylight.

True, they are in a deep hole. From an advantage of 260,000 registered voters when Donald Trump took office in 2017, Democrats were trailing by almost 800,000 by December. That swing came thanks to bad candidates and feeble organising in the face of a disciplined Republican operation. Failure begat more failure as donors closed their chequebooks. Republicans now hold all elected statewide offices and a supermajority in the legislature.

But Florida politicos of both parties think Mr DeSantis weakened himself with his oafish presidential bid. Because of Florida’s term limits, he cannot run for governor again and so has less political leverage than he once did. In January Democrats flipped a state-House district in central Florida that a Republican carried easily in 2022. The Democrat there, a navy veteran, stressed bread-and-butter issues and protecting the right to abortion, whereas his opponent inveighed against “the woke mob”. Democrats also did the hard work to turn out the vote that they had been neglecting.

Democrats were further heartened by the uproar last month after a teacher in Miami-Dade County sent a permission slip home asking parents to authorise the reading of “a book written by an African-American”, as part of Black History Month. Mr DeSantis testily insisted no such slip was required under his parental-notification law, known as the “Stop WOKE Act”. But other news reports have described the frustration of teachers and parents over having to fill out new forms for pupils to hear from speakers such as a Holocaust survivor.

The politics of abortion will supply the surest indication of whether one-party rule has led Mr DeSantis to overreach, as Democrats have at times in Democratic states like New York. In his first term Mr DeSantis signed a ban on abortion after 15 weeks of pregnancy. After he got the supermajority in 2022 and set his sights on the White House, he signed a six-week ban. Neither is in effect because the state Supreme Court is reviewing the 15-week ban. If the court upholds it, the six-week limit would take effect a month later. Polling suggests even most Republicans oppose it.

Early this year opponents of the ban produced the 891,000 signatures required to put a referendum on the ballot this autumn to protect abortion until about 24 weeks. They overcame new obstacles imposed by the legislature by mobilising some 10,000 volunteers. The referendum is also before the state Supreme Court.

Florida is not a swing state this year, though President Joe Biden will probably try to bait Mr Trump into spending money there. State Democrats are looking beyond Mr Biden and Mr Trump. (Isn’t it reassuring that some people are?) They want to rebuild their voter base and political bench with an eye to 2028 and beyond. With north Florida solidly red, the state party is focusing on central and south Florida, in particular the most populous county, Miami-Dade. In a sign of how serious the Democrats’ problems are, and of how seriously the leadership takes them, the state party leader in early March suspended three local party chairmen she thought were underperforming, including in Miami-Dade.

Night and Dade

The party is embarking on a voter-registration drive in Miami-Dade. Operatives point to one Democratic candidate for county office there whose father was kidnapped by leftist Colombian guerrillas, and another whose family fled from Cuba, as evidence that Democrats have learned from their damaging dalliance with Bernie-Sanders-style “socialism”. They are also resisting putting causes like LGBTQ rights front and centre, having seen how that can backfire. “All we’ve done in the last two years is take the trans community and, worse, trans kids, and put them on the radar of Republicans to be shot at,” says one experienced Democratic strategist. He says Democrats instead need to emphasise protecting freedoms for everyone—and stop using terms like “LatinX”, which irritates many Latino voters, among others.

Republican electoral successes in New York have prompted Democratic leaders to press back against some excesses of their own one-party rule. Whether or not Florida ever becomes a presidential swing state again, its citizens would benefit from a return to the intense, respectful partisan competition that provided Mr DeSantis with the happy story he did such a poor job of telling.

Read more from Lexington, our columnist on American politics:
Vladimir Putin hardly needs to interfere in American democracy (Feb 29th)
The flaws that China’s chief ideologue found in America (Feb 22nd)
Donald Trump’s tremendous love (Feb 16th)

Also: How the Lexington column got its name

Economics

How did the U.S. arrive at its tariff figures?

Published

on

U.S. President Donald Trump speaks during a “Make America Wealthy Again” trade announcement event in the Rose Garden at the White House on April 2, 2025 in Washington, DC.

Chip Somodevilla | Getty Images

Markets have turned their sights on how U.S. President Donald Trump’s administration arrived at the figures behind the sweeping tariffs on U.S. imports declared Wednesday, which sent global financial markets tumbling and sparked concerns worldwide.

Trump and the White House shared a series of charts on social media detailing the tariff rates they say other countries impose on the U.S. Those purported rates include the countries’ “Currency Manipulation and Trade Barriers.”

An adjacent column shows the new U.S. tariff rates on each country, as well as the European Union.

Chart of reciprocal tariffs.

Courtesy: Donald Trump via Truth Social

Those rates are, in most cases, roughly half of what the Trump administration claims each country has “charged” the U.S. CNBC could not independently verify the U.S. administration’s data on these duties.

It didn’t take long for market observers to try and reverse engineer the formula — to confusing results. Many, including journalist and author James Surowiecki, said the U.S. appeared to have divided the trade deficit by imports from a given country to arrive at tariff rates for individual countries.

Such methodology doesn’t necessarily align with the conventional approach to calculate tariffs and would imply the U.S. would have only looked at the trade deficit in goods and ignored trade in services.

For instance, the U.S. claims that China charges a tariff of 67%. The U.S. ran a deficit of $295.4 billion with China in 2024, while imported goods were worth $438.9 billion, according to official data. When you divide $295.4 billion by $438.9 billion, the result is 67%! The same math checks out for Vietnam.

“The formula is about trade imbalances with the U.S. rather than reciprocal tariffs in the sense of tariff level or non-tariff level distortions. This makes it very difficult for Asian, particularly the poorer Asian countries, to meet US demand to reduce tariffs in the short-term as the benchmark is buying more American goods than they export to the U.S., ” according to Trinh Nguyen, senior economist of emerging Asia at Natixis.

“Given that U.S. goods are much more expensive, and the purchasing power is lower for countries targeted with the highest levels of tariffs, such option is not optimal. Vietnam, for example, stands out in having the 4th largest trade surplus with the U.S., and has already lowered tariffs versus the U.S. ahead of tariff announcement without any reprieve,” Nguyen said.

The U.S. also appeared to have applied a 10% levy for regions where it is running a trade surplus.

"Absolutely nothing good coming out" of Trump tariff announcement, veteran economist Rosenberg says

The Office of the U.S. Trade Representative laid out its approach on its website, which appeared somewhat similar to what cyber sleuths had already figured out, barring a few differences.

The U.S.T.R. also included estimates for the elasticity of imports to import prices—in other words, how sensitive demand for foreign goods is to prices—and the passthrough of higher tariffs into higher prices of imported goods.

“While individually computing the trade deficit effects of tens of thousands of tariff, regulatory, tax and other policies in each country is complex, if not impossible, their combined effects can be proxied by computing the tariff level consistent with driving bilateral trade deficits to zero. If trade deficits are persistent because of tariff and non-tariff policies and fundamentals, then the tariff rate consistent with offsetting these policies and fundamentals is reciprocal and fair,” the website reads.

This screenshot of the U.S.T.R. webpage shows the methodology and formula that was used in greater detail:

A screenshot from the website of the Office of the United States Trade Representative.

Some analysts acknowledged that the U.S. government’s methodology could give it more wiggle room to reach an agreement.

“All I can say is that the opaqueness surrounding the tariff numbers may add some flexibility in making deals, but it could come at a cost to US credibility,” according to Rob Subbaraman, head of global macro research at Nomura.

 — CNBC’s Kevin Breuninger contributed to this piece.

Continue Reading

Economics

Analysts react to latest U.S. levies

Published

on

Charts that show the “reciprocal tariffs” the U.S. is charging other countries are on display at the James Brady Press Briefing Room of the White House on April 2, 2025 in Washington, DC. 

Alex Wong | Getty Images

U.S. President Donald Trump on Wednesday laid out the “reciprocal tariff” rates that more than 180 countries and territories will face under his sweeping new trade policy.

The announcement sent stocks tumbling and prompted investors to seek refuge in assets perceived to be safe.

Analysts generally had a pessimistic take on the announcement, with some even predicting an increased risk of a recession for the U.S.

Here is a compilation of reactions from experts and analysts:

Tai Hui, APAC Chief Market Strategist, J.P. Morgan Asset Management

“Today’s announcement could potentially raise U.S. average tariff rates to levels not seen since the early 20th century. If these tariffs persist, they could materially impact inflation, as U.S. manufacturing struggles to ramp up capacity and supply chains pass on costs to consumers. For instance, advanced semiconductor manufacturers in Taiwan may not absorb tariff costs without viable substitutes.

“The scale of these tariffs raises concerns about growth risks. U.S. consumers may cut back on spending due to pricier imports, and businesses might delay capital expenditures amid uncertainty about the tariffs’ full impact and potential retaliation from trade partners.”

David Rosenberg, President and founder of Rosenberg Research

“There are no winners in a global trade war. And when people have to realize, when you hear this clap trap about how consumers in United States are not going to bear any brunt. It’s all going to be the foreign producer. I roll my eyes whenever I hear that, because it shows a zero understanding of how trade works, because it is the importing business that pays the tariff, not the exporting country.

And a lot of that will get transmitted into the consumer, so we’re in for several months of a very significant price shock for the American household sector.”

Anthony Raza, Head of Multi-Asset Strategy, UOB Asset Management

“They’ve come up with the most extreme numbers that we can’t even comprehend. How they’re coming up with these? And then in terms of timing, I think we were hopeful that maybe this would be something that was rolled out over the course of a year, that would allow like time for negotiations or whatever. But it does seem like the timing is much more immediate and is, again, worse than our worst-case type scenario in terms of flexibility.”

David Roche, Strategist, Quantum Strategy

“These tariffs are not transitional. They are core to President Trump’s beliefs. They mark the shift from globalisation to isolationist, nationalist policies – and not just for economics. The process will last several years and be felt for decades. There will be spillovers into multiple policy domains such as geopolitics.

Right now, expect retaliation, not negotiation by the EU (targeting U.S. services) and China (focusing on U.S. strategic and business interests). The Rose Garden tariffs will cement the bear market. They will cause global stagflation as well as U.S. and EU recession.”

Shane Oliver, Head of Investment Strategy and Chief Economist, AMP

“Our rough calculation is that the 2nd April announcement will take the US average tariff rate to above levels seen in the 1930s after the Smoot/Hawley tariffs which will in turn add to the risk of a US recession – via a further blow to confidence and supply chain disruptions – and a bigger hit to global growth.

“The risk of a US recession is probably now around 40% and global growth could be pushed towards 2% (from around 3% currently) depending on how significant retaliation is and how countries like China respond with policy stimulus.”

Tom Kenny, Senior International Economist, ANZ

“Today’s announced US reciprocal tariffs are worse than expected. The effective tariff rate on U.S. merchandise imports is likely to climb to the 20-25% range, the highest since the early 1900s.

Yields on inflation-indexed bonds were higher and equities sold off after the announcement, suggesting the market thinks these tariffs will hurt growth and add to inflation. Market pricing of the federal funds rate points to cuts from the Federal Reserve coming sooner.”

Continue Reading

Economics

EC President von der Leyen

Published

on

The European Union is preparing further countermeasures against U.S. tariffs if negotiations fail, according to European Commission president Ursula von der Leyen.

U.S. President Donald Trump had imposed 20% tariffs on the bloc on Wednesday.

Von der Leyen’s comments come after retaliatory duties were announced by the bloc after the U.S. imposed tariffs on  last month in a bid to protect European workers and consumers. The EU at the time said it would introduce counter-tariffs on 26 billion euros ($28 billion) worth of U.S. goods.

Previously suspended duties — which were at least partially in place during Trump’s first term as president — are set to be re-introduced alongside a slew of additional duties on further goods.

Industrial-grade steel and aluminum, other steel and aluminum semi-finished and finished products, along with their derivative commercial products, such as machinery parts and knitting needles were set to be included. A range of other products such as bourbon, agricultural products, leather goods, home appliances and more were also on the EU’s list.

Following a postponement, these tariffs are expected to come into effect around the middle of April.

This is a developing story, please check back for updates.

Continue Reading

Trending