Vox clamantis in deserto
Kent Jones: Trump’s lust for tariff power threatens economic democracy and encourages corruption
Effects of an import tariff, which hurts domestic consumers more than domestic producers are helped. Higher prices and lower quantities reduce consumer surplus by areas A+B+C+D, while expanding producer surplus by A and government revenue by C. Areas B and D are dead-weight losses, surplus lost by consumers and overall.
— From Wikipedia
From The Conversation, except image above
Kent Jones is a professor emeritus of economics at Babson College, in Wellesley, Mass.
He does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.
The future of many of Donald Trump’s tariffs are up in the air, with the Supreme Court expected to hand down a ruling on the administration’s global trade barriers any day now.
But the question of whether a policy is legal or constitutional – which the justices are entertaining now – isn’t the same as whether it’s wise. And as a trade economist, I worry that Trump’s tariffs also pose a threat to “economic democracy” – that is, the process of decision-making that incorporates the viewpoints of everyone affected by the decision.
Founders and economic democracy
In many ways, the U.S. founders were supporters of economic democracy. That’s why, in the U.S. Constitution, they gave tariff- and tax-making powers exclusively to Congress.
And for good reason. Taxes can often represent a flash point between a government and its people. Therefore, it was deemed necessary to give this responsibility to the branch most closely tied to rule of, and by, the governed: an elected Congress. Through this arrangement, the legitimacy of tariffs and taxes would be based on voters’ approval – if the people weren’t happy, they could act through the ballot box.
To be fair, the president isn’t powerless over trade: Several times over the past century, Congress has passed laws delegating tariff-making authority to the executive branch on an emergency basis. These laws gave the president more trade power but subject to specific constitutional checks and balances.
Stakes for economic democracy
At issue before the Supreme Court now is Trump’s interpretation of one such emergency measure, the International Emergency Economic Powers Act of 1977.
Back in April 2025, Trump interpreted the law – which gives the president powers to respond to “any unusual and extraordinary threat” – to allow him to impose tariffs of any amount on products from nearly every country in the world.
Yet the act does not include any checks and balances on the president’s powers to use tariffs and does not even mention tariffs among its remedies. Trump’s unrestrained use of tariffs in this way was unprecedented in any emergency action ever taken by a U.S. president.
Setting aside the constitutional and legal issues, the move raises several concerns for economic democracy.
The first danger is in regards to a concentration of power. One of the reason tariffs are subjected to congressional debate and voting is that it provides a transparent process that balances competing interests. It prevents the interests of a single individual – such as a president who might substitute his own interests for that of the wider public interest – from controlling complete power.
Instead it subjects any proposed tariffs to the open competition of ideas among elected politicians.
Compare this to the way Trump’s tariffs were made. They were determined in large part by the president’s own political score-settling with other countries, and an ideological preference for trade surpluses. And they were not authorized by Congress. In fact, they bypassed the role of Congress as a check and balance – and this is not good for economic democracy in my view.
A protester holds a sign as the U.S. Supreme Court hears arguments on President Donald Trump’s tariffs on Nov. 5, 2025. Bill Clark/CQ-Roll Call, Inc via Getty Images
The second danger is uncertainty. Unlike congressional tariffs, tariffs rolled out through the International Emergency Economic Powers Act under Trump have been altered many times and can continue to change in the future.
While supporters of the president have argued that this unpredictability gives the U.S. a bargaining advantage over competitor nations, many economists have noted that it severely compromises any goal of revitalizing American industries.
This is because both domestic and foreign investment in U.S.-based industries depends on stable and predictable import-market access. Investors are unwilling to make large capital expenditures over several years and hire new workers if they think tariff rates might change at any time.
Even in the first year of the Trump tariffs, there is evidence of large-scale reductions in hiring and capital investment in the manufacturing sector due to this uncertainty.
The third danger concerns that lack of accountability involved in circumventing Congress. This can lead to using tariffs as a stealth way of increasing taxes on a population.
Importing companies generate revenue for the government through the additional levies they pay on goods from overseas. These costs are typically borne by domestic consumers, through increased prices, and importing companies, through lower profit margins.
Either way, Trump’s International Emergency Economic Powers Act interpretation has allowed him to use tariffs in a way that would – if allowed to stand – bring in additional government revenue of more than US$2 trillion over a 10-year period, according to estimates.
Trump frames the revenue his tariffs have raised as a windfall of foreign-paid duties. But in fact, the revenue is extracted from domestic consumer pockets and producer profit margins. And that amounts to a tax on both.
Corruption concerns
Finally, the way Trump’s used the act to roll out unilateral and changeable tariffs creates an incentive for political favoritism and even bribery.
This is down to what economists call “rent seeking” – that is, the attempt by companies or individuals to get extra money or value out of a policy through influence or favoritism.
As such, Trump can, should he wish, play favorites with “priority” industries in terms of tariff exemptions. In fact, he has already done this with major U.S. companies that import cell phones and other electronics products. They asked for special exemptions for the products they imported, a favor not granted to other companies. And there is nothing stopping recipients of the exemptions offering, say, to contribute to the president’s political causes or his renovations to the White House.
Smaller and less politically influential U.S. businesses do not have the same clout to lobby for tariff relief.
And this tariff-by-dealmaking goes beyond U.S. companies looking for relief. It extends into the world of manipulating governments to bend to Washington’s will. Unlike congressional tariffs under World Trade Organization rules, International Emergency Economic Powers Act tariffs discriminate from country to country – even on the same products.
And this allows for trade deals that focus on extracting bilateral deals that take place without considering broader U.S. interests. In the course of concluding bilateral Trump trade deals, some foreign governments such as Switzerland and South Korea have even offered Trump special personal gifts, presumably in exchange for favorable terms. Presidential side deals and gift exchanges with individual countries are, as many scholars of good international governance have noted, not the best way to conduct global affairs.
The harms of having a tariff system that eschews the normal checks and balances of the American system are nothing new, or at least shouldn’t be.
Back in the late 1700s, with the demands of a tyrannical and unaccountable king at the front of their minds, the founders built a tariff order aimed at maintaining democratic legitimacy and preventing the concentration of power in a single individual’s hands.
A challenge to that order could have worrisome consequences for democracy as well as the economy.
Lauren Beitelspacher: Beware stores’ new return policies
The Babson Globe, at the college’s campus, in Wellesley, Mass.
From The Conversation, except for images above.
Lauren Beitelspacher is a professor of marketing at Babson College, Wellesley Mass.
She does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.
’Tis the season for giving – and that means ’tis the season for shopping. Maybe you’ll splurge on a Black Friday or Cyber Monday deal, thinking, “I’ll just return it if they don’t like it.” But before you click “buy,” it’s worth knowing that many retailers have quietly tightened their return policies in recent years.
As a marketing professor, I study how retailers manage the flood of returns that follow big shopping events like these, and what it reveals about the hidden costs of convenience. Returns might seem like a routine part of doing business, but they’re anything but trivial. According to the National Retail Federation, returns cost U.S. retailers almost US$890 billion each year.
Part of that staggering figure comes from returns fraud, which includes everything from consumers buying and wearing items once before returning them – a practice known as “wardrobing” – to more deceptive acts such as falsely claiming an item never arrived.
Returns also drain resources because they require reverse logistics: shipping, inspecting, restocking and often repackaging items. Many returned products can’t be resold at full price or must be liquidated, leading to lost revenue. Processing returns also adds labor and operational expenses that erode profit margins.
How e-commerce transformed returns
While retailers have offered return options for decades, their use has expanded dramatically in recent years, reflecting how much shopping habits have changed. Before the rise of e-commerce, shopping was a sensory experience: Consumers would touch fabrics, try on clothing and see colors in natural light before buying. If something didn’t work out, customers brought it back to the store, where an associate could quickly inspect and restock it.
Online shopping changed all that. While e-commerce offers convenience and variety, it removes key sensory cues. You can’t feel the material, test the fit or see the true color. The result is uncertainty, and with uncertainty comes higher rates of returns. One analysis by Capital One suggests that the rate for returns is almost three times higher for online purchases than for in-store purchases.
When the COVID-19 pandemic hit, the move toward online shopping went into overdrive. Even hesitant online shoppers had to adapt. To encourage purchases, many retailers introduced or expanded generous return policies. The strategy worked to boost sales, but it also created a culture of returning.
In 2020, returns accounted for 10.6% of total U.S. retail sales, nearly double the prior year, according to the National Retail Federation data. By 2021, that had climbed to 16.6%. Unable to try things on in stores, consumers began ordering multiple sizes or styles, keeping one and sending the rest back. The behavior was rational from a shopper’s perspective but devastatingly expensive for retailers.
The high cost of convenience
Most supply chains are designed to move in one direction: from production to consumption. Returns reverse that flow. When merchandise moves backward, it adds layers of cost and complexity.
In-store returns used to be simple: A customer would take an item back to the store, the retailer would inspect the product, and, if it was in good condition, it would go right back on the shelf. Online returns, however, are far more cumbersome. Products can spend weeks in transit and often can’t be resold – by the time they arrive, they may be out of season, obsolete or no longer in their original packaging.
Logistics costs compound the problem. During the pandemic, consumers grew accustomed to free shipping. That means retailers now often pay twice: once to deliver the item and again to retrieve it.
Now, in a post-pandemic world, retailers are trying to strike a balance – maintaining customer goodwill without sacrificing profitability. One solution is to raise prices, but especially today, with inflation in the headlines, shoppers are sensitive to price hikes. The other, more common approach is to tighten return policies.
In practice, that’s taken several forms. Some retailers have begun charging small flat fees for returns, even when a customer mails an item back at their own expense. For example, the direct-to-consumer retailer Curvy Sense offers customers unlimited returns and exchanges of an item for an initial $2.98 price. Others have shortened their return windows. Over the summer, for example, beauty retailers Sephora and Ulta reduced their return window from 60 days to 30.
Many brands now attach large, conspicuous “do not remove” tags to prevent consumers from wearing items and then sending them back. And increasingly, retailers are offering store credit rather than cash or credit card refunds, ensuring that returned sales at least stay within their company.
Few retailers advertise these changes prominently. Instead, they appear quietly in the fine print of return policies – policies that are now longer, more specific and far less forgiving than they once were.
As we head into the busiest shopping season of the year, it’s worth pausing before you click “purchase.” Ask yourself: Is this something I truly want – or am I planning to return it later?
Whenever possible, shop in person and return in person. And if you’re buying online, make sure you familiarize yourself with the return policy.
Babson College to open Dubai branch
"The Babson Globe,'' on the college's campus in Wellesley.
From our friends at the New England Council (newenglandcouncil.com)
"Babson College (in Wellesley, Mass.) recently announced its plan to expand internationally, opening a new location in Dubai, in the United Arab Emirates, to offer graduate and executive education programs for working professionals across the region. The expansion is part of an effort to extend its reach and impact around the world, adding to its existing hubs in Wellesley and Boston, MA, San Francisco, and Miami
The Babson MBA – Dubai will be delivered through a blended online and face-to-face format, and will launch in January 2019. Babson Executive Education will be working with organizations in the region to develop customized programs in addition to offering specialized open enrollment programs at part of the Academy at Dubai International Financial Centre (DIFC).
Babson College President Kerry Healey said, 'At Babson, we believe that the success of entrepreneurs is critical to economic growth and sustainability around the world. By bringing Babson’s recognized leadership in entrepreneurship education to Dubai, we will support the U.A.E.’s long term economic development goals, make Entrepreneurial Thought & Action accessible to more people and places, and educate global leaders who will create great economic and social value everywhere.'''
The New England Council congratulates Babson College on this expansion and commends its efforts to promote economic growth around the world. Read more on the Babson College Web site.