Did Elon Musk Sentence Millions to Death by Dismantling USAID?

The study cited by Rep. Ro Khanna as the basis for that claim is statistical nonsense

By Aaron Brown of Reason. Aaron Brown teaches statistics at New York University and at the University of California at San Diego. Excerpts:

"As I explained when I first wrote about the Lancet study for Reason in July of last year, with some basic arithmetic and a bit of common sense, you can see why the study's topline figures are nonsense. Just put the claim that nearly 92 million people were saved by USAID between 2001 and 2021 into perspective: During this period, the world's total death rate fell substantially. If the death rate prior to 2001 had remained steady for the next 20 years, about 79 million additional people would have died, according to data from the United Nations.

So how could USAID have saved 92 million lives? That's more than 100 percent of the global mortality decline, meaning that not only was USAID responsible for saving all 79 million people who didn't die thanks to the fall in the total death rate, but it saved an additional 13 million who otherwise would have died if not for USAID's charitable efforts.

Since I wrote about this study, its authors have effectively backed away from their number. The Lancet published formal critiques and a non-response reply. None of this produced a correction, a retraction, or a single follow-up story in the outlets that ran the 92 million figure. The number is still in circulation, still being cited by Khanna, and still generating threats of litigation from Musk.

Reason emailed several of the study's co-authors, laying out the criticisms cited in this article and video. They didn't respond.

The study's authors failed to establish that USAID saved any lives at all because they built a statistical model based entirely on correlation: Funding for USAID doubled during the study period. Since global mortality fell over the same time span, the two trends correlate, which is all their evidence adds up to. The authors did do a lot of complex statistical hocus-pocus, which they explained in a dense, technical online appendix, making the analysis look sophisticated. But all they were doing was correlating two lines with no evidence that one affected the other."

"On February 2, 2026, Lancet Global Health, a sister journal of The Lancet, published by the same house, ran a paper titled "The Impact of Two Decades of Humanitarian and Development Assistance and the Projected Mortality Consequences of Current Defunding to 2030.""

"The new paper looks at all official development assistance: every donor country, every agency, roughly $250 billion in 2023—and found it associated with a 23 percent reduction in age-standardized all-cause mortality across low- and middle-income countries. The original paper looked at USAID alone, which, at its peak, was somewhere around a sixth of global official development assistance, and found it associated with a 15 percent reduction.

These estimates don't square. The same research group, using the same technique, has now credited one agency with roughly two-thirds of the mortality effect of all foreign aid on Earth."

Related post:

Did USAID Really Save 90 Million Lives? Not Unless It Raised the Dead: A Lancet study’s inflated numbers are being used to push a partisan narrative, not inform public policy (2026) 

Birthright Citizenship and Youth Crime

Evidence from Germany

From Jeffrey Miron.  

"A study of German immigration reform provides evidence for the debate over immigrant assimilation.

The study looked at the

Act to Reform Nationality Law … [under which] children born in Germany on or after January 1, 2000, automatically acquired citizenship if at least one parent had legally resided in Germany for at least eight years at the time of birth.

Researchers found

a sharp decline in offenses committed by non-Germans born after the reform. … [T]he actual increase in offenses committed by Germans was smaller than the decline in offenses committed by non-Germans, suggesting that birthright citizenship reduced crime among immigrant children. Specifically, [the] calculations reveal a 70 percent reduction in youth crime among children who obtained citizenship because of the reform.

Altogether, these

findings suggest that inclusive citizenship policies can reduce crime and its associated costs, which could strengthen social cohesion. Moreover, other research has shown that the German reform improved the educational outcomes of immigrant children and promoted their social integration."

The Binmen of Birmingham (equal pay laws make it harder to find garbage men while the refuse piles up)

By Alex Tabarrok.

"I was on the British CapX Podcast talking about the Equality Act, riffing off my two posts Equality Act 2010 and The Apples and Oranges Tribunal. One thing I discussed in the podcast which I haven’t blogged on is the amazing Birmingham dustbin dispute.

In 2010 an employment tribunal ruled that Birmingham City Council had discriminated against thousands of female workers — cooks, cleaners, care assistants, caretakers — who were denied bonuses paid to the mostly male binmen, gardeners, and gravediggers. Why were the binmen given bonuses? Well, refuse collection is filthy, heavy, outdoor work and not many people want to be gravediggers. Thus, these jobs command a premium for exactly the reason Adam Smith gave in 1776 — compensating differentials. Or was it sexism? Well, note first that there is nothing stopping women from becoming “binpersons” and indeed there are female binpersons and they earn the same bonuses as their male counterparts (just as with the Next case). Moreover, we can test the sexism versus compensating differentials theory. Let’s see what happened.

Here’s the problem, which contributed to Birmingham going bankrupt in 2023. The council employs roughly 400 binmen and something like 6,000 women in comparable graded roles. Every extra pound paid to a binman therefore implied about fifteen pounds owed to the cooks and cleaners. The council simply didn’t have the money to pay everyone binman wages so they cut the binmen’s wages. But the market wage for collecting rubbish is what it is, so when Birmingham finally deleted the premium in January 2025, the binmen went on strike — and they are still on strike, nearly eighteen months later. The rubbish piled up, 17,000 tonnes of it, and the city declared a major incident.

Here’s the most amazing part. The council hired an outside contractor to take over its rubbish collection and it now pays roughly triple its pre-strike outsourcing bill–more than it was paying its own employees. So much for sexism. Apparently the premium wasn’t a favor to men; it was the price of the job. If you want your rubbish picked up and your graves dug, you must pay the market wage. This was pure regulatory arbitrage, of course. Because the new binmen were contractors they legally had a different employer than the Council’s female caregivers and the Act’s comparator rules stop at the employer’s nexus.

The government mandarins, of course, want to close the “loophole” adding yet another bureaucratic requirement to push the equal pay madness up the supply chain. The rubbish piles up."

Related posts:

The Apples and Oranges Tribunal (2026)

The Equal Pay Madness Just Got Madder (2026) 

How to Escape the Productivity Slump

Removing policy barriers can unleash a new era of productivity and abundance. 

By Jeremy Horpedahl. 

"Summary: For the past half-century, much of the developed world has experienced a puzzling slowdown in productivity growth—the rate at which workers and businesses become more efficient over time. While digital technologies have advanced at a remarkable pace, innovation in the physical world has slowed considerably. The problem is not a lack of scientific breakthroughs or a shortage of good ideas. Rather, it is a failure to translate discoveries into products, infrastructure, and services that improve everyday life. This slowdown is largely the result of policy choices. By reforming outdated permitting systems, using innovation incentives such as R&D prizes and Advance Market Commitments, and reducing barriers created by protected local monopolies, we can accelerate the spread of new technologies and usher in a new era of prosperity.

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In a previous exploration of the housing affordability crisis, I observed a sobering reality: artificial scarcity is often a policy choice. We have placed arbitrary limits—mostly through local governments—on our ability to build homes, driving up costs and restricting opportunity. But this pattern of self-imposed constraint does not stop at the edges of our neighborhoods. It extends into the institutions and policies that shape economic growth. It is one of the primary reasons why, despite living in an age of extraordinary digital innovation, we remain stuck in a decades-long productivity slump.

Economists often measure technological progress using a concept called Total Factor Productivity (TFP). In simple terms, TFP measures how efficiently an economy turns labor, land, and capital into goods and services. When TFP rises, society discovers better ways to produce more with the same resources.

From the 1920s through the early 1970s, TFP in the United States and much of the developed world grew at more than 2 percent per year. This was the era that gave us commercial aviation, widespread electrification, antibiotics, and the Apollo program. The physical world was transformed in a single generation.

Since the early 1970s, however, productivity growth has slowed dramatically to less than 1 percent in most years. As investor Peter Thiel famously quipped, “We wanted flying cars; instead, we got 140 characters.” Digital technologies have advanced rapidly, while progress in energy, transportation, infrastructure, and advanced manufacturing has been far slower. We can send vast amounts of information across the globe in milliseconds, yet we often struggle to build major infrastructure projects on time or on budget.

A 2020 paper by Nicholas Bloom and co-authors argues that good ideas are getting harder to find – that is, more investment in research and development has become necessary for each new patentable idea. However, more recent research by Teresa Fort and co-authors (currently in working paper form) suggests that this is not the case. The Bloom et al. result may, in fact, be an artifact of focusing on manufacturing firms, which were dominant from about 1970 to 1990. Fort and her co-authors show that patenting and innovation have shifted in recent decades, becoming dominated by firms in information, management, and professional services.

Because manufacturing is a physical process, it is much more likely to be subject to, for example, environmental regulations, whereas an IT firm operates in a much less regulated sector. So, our relative stagnation may not be the result of a scientific drought after all. Universities and research laboratories continue to produce remarkable discoveries. We are not failing at invention; we are failing at diffusion, the process of turning new discoveries into widely used products and services.

The Diffusion Deficit and the Permitting Veto

Innovation does not benefit society until it escapes the laboratory and enters the marketplace. The journey from a peer-reviewed paper to a consumer-ready product is long, expensive, and uncertain. Over time, policymakers have added layer upon layer of regulatory complexity to that journey.

Physical innovation requires physical construction. New technologies need testing facilities, advanced laboratories, semiconductor fabrication plants, energy infrastructure, and transportation networks. Yet building almost anything of significance in the modern West often requires navigating years of environmental reviews, public-comment periods, and multi-agency approvals.

Laws such as the National Environmental Policy Act (NEPA) and state-level counterparts such as the California Environmental Quality Act (CEQA) were originally intended to prevent environmental harm. Over time, however, they have increasingly become tools for the delay of progress. Because these laws frequently allow opponents to challenge projects on procedural grounds, they have contributed to what political scientist Francis Fukuyama calls a “vetocracy”—a system in which many actors can block decisions but few can make them. Average NEPA environmental impact statements now take almost four years to complete, with many extending far beyond a decade. Thankfully, the median is a bit shorter, but still about 2.5 years.

Consider the recent push to reshore semiconductor manufacturing. While the government has allocated billions of dollars in subsidies to build these vital factories, the physical construction is bottlenecked by years of permitting and environmental reviews. A state-of-the-art fabrication plant (commonly called a “fab”) that takes 18 months to build in Taiwan or South Korea can take three to five years just to obtain a permit in the United States.

The result is predictable: projects take longer, cost more, and become less attractive to investors. Even when governments provide subsidies for strategic industries such as semiconductor manufacturing, years of permitting can slow implementation. Time is money, and prolonged regulatory uncertainty discourages investment in capital-intensive industries.

The solution is straightforward, even if politically difficult. Critical infrastructure, advanced manufacturing facilities, and research laboratories should face streamlined approval processes. If projects satisfy clearly defined environmental and safety standards, they should be approved in months rather than years.

Pull Mechanisms: R&D Prizes and Commercialization

Reducing regulatory barriers is only part of the solution. We must also rethink how innovation is encouraged and financed.

In addition to corporate financing, most governments try to support innovation through “push” funding. Researchers receive grants to conduct experiments, purchase equipment, and explore new ideas. This model, some economists argue, can be effective for basic science, especially when commercial applications may be years away.

Commercialization presents a different challenge. Many promising technologies fall into what innovators call the “Valley of Death” – the difficult period between a successful laboratory demonstration and a commercially viable product. At this stage, development costs rise sharply while uncertainty remains high.

That is where “pull” mechanisms become valuable. Instead of paying for research inputs, policymakers reward successful outputs. An Advance Market Commitment (AMC), for example, guarantees that a buyer will purchase a product if it is successfully developed. Rather than funding every possible approach, the sponsor commits to paying for results.

Economist Michael Kremer helped pioneer this approach through vaccine development programs. More recently, Operation Warp Speed demonstrated its effectiveness. The government did more than fund vaccine research; it guaranteed large future purchases for successful vaccines. By reducing market risk, policymakers encouraged firms to accelerate development and manufacturing simultaneously. The result was one of the fastest vaccine-development efforts in history.

Consider other approaches. Throughout history, prizes have also stimulated innovation. The Longitude Prize helped solve a critical navigation problem for maritime trade, while the Ansari X Prize helped launch the private spaceflight industry. Pull mechanisms align private incentives with public goals by rewarding success rather than political connections or grant-writing skill.

Breaking Local Monopolies and Regulatory Capture

When people hear the word “monopoly,” they often think of large technology companies. Yet some of the most significant barriers to innovation exist at the local level.

The electric utility sector provides a clear example of how regulatory design shapes technological adoption. Because most utilities operate as regulated monopolies with government-guaranteed rates of return on capital investments, their business model relies on continuous, large-scale infrastructure growth. 

Put simply, utilities make more money the bigger power plants and power lines they build, so they usually prefer huge projects over things like rooftop solar panels that let people generate their own power without the utility having to build as much infrastructure.

Decentralized energy technologies—such as local battery storage, micro-grids, and advanced management software—directly threaten this model by optimizing the existing grid and reducing the need for new capital projects. As a result, studies from the MIT Energy Initiative and industry financial analysts indicate that utilities frequently leverage legacy regulatory processes to delay or block these decentralized innovations from integrating into the wider network.

Similar dynamics exist elsewhere. State dealership franchise laws frequently restrict direct-to-consumer automobile sales, making it more difficult for new manufacturers to enter the market. Occupational licensing requirements now affect roughly one-fifth of American workers and can create barriers to entry that limit competition and labor mobility.

Innovation depends on what economist Joseph Schumpeter called “creative destruction” – the replacement of older, less efficient business models with better ones. When established interests use regulation to shield themselves from competition, they slow technological adoption and reduce future productivity growth. Encouraging competition and reducing regulatory barriers at the state and local level would help accelerate the diffusion of new ideas throughout the economy.

Choosing Abundance

The productivity slowdown is not an immutable law of nature. It is, at least in part, the consequence of policy choices. Human ingenuity remains as powerful as ever. We have more scientists, more capital, and better tools than any previous generation. The challenge is not generating ideas; it is allowing those ideas to spread.

By streamlining permitting processes, expanding the use of R&D prizes and Advance Market Commitments, and reducing barriers created by protected local monopolies, we can accelerate innovation in the physical world.

An additional one or two percentage points of annual productivity growth may sound insignificant. Yet when compounded over decades, the effects are transformative. Higher productivity means higher incomes, better health outcomes, more abundant energy, and greater opportunities for future generations. The ideas already exist. The question is whether we will allow them to flourish."

At Senate Hearing, Fauci Takes the Fifth To Avoid Accounting for Inconsistent Statements About a Lab Leak

Diary entries show the former public health official acknowledged that U.S.-supported researchers were conducting gain-of-function research in Wuhan that could have caused the pandemic.

By Christian Britschgi of Reason.

"At a hearing of the Senate's Homeland Security and Government Committee today, Anthony Fauci invoked the Fifth Amendment to avoid answering questions about gain-of-function research his former agency, the National Institute of Allergy and Infectious Diseases (NIAID), funded in Wuhan, China, and the role that research might have played in starting the pandemic. 

"I believed in and respect the value of legitimate congressional oversight," said Fauci, who had been subpoenaed to appear before the committee that's chaired by Sen. Rand Paul (R–Ky.), in a brief opening statement. 

"Given Sen. Paul's obvious obsession with calling for my prosecution, his repeated slanderous comments about me, and recently his publicly releasing my unredacted personal diary aimed at embarrassing and intimidating me," Fauci said that he would refuse to answer the committee's questions. 

Even after Paul directed Fauci to answer the committee's questions, noting that he'd received a pardon from President Joe Biden covering his conduct going back to 2014, when the U.S. government first paused funding of gain-of-function research, Fauci repeated the invocation of his Fifth Amendment right to not answer questions. 

At a hearing of the Senate's Homeland Security and Government Committee today, Anthony Fauci invoked the Fifth Amendment to avoid answering questions about gain-of-function research his former agency, the National Institute of Allergy and Infectious Diseases (NIAID), funded in Wuhan, China, and the role that research might have played in starting the pandemic. 

"I believed in and respect the value of legitimate congressional oversight," said Fauci, who had been subpoenaed to appear before the committee that's chaired by Sen. Rand Paul (R–Ky.), in a brief opening statement. 

"Given Sen. Paul's obvious obsession with calling for my prosecution, his repeated slanderous comments about me, and recently his publicly releasing my unredacted personal diary aimed at embarrassing and intimidating me," Fauci said that he would refuse to answer the committee's questions. 

Even after Paul directed Fauci to answer the committee's questions, noting that he'd received a pardon from President Joe Biden covering his conduct going back to 2014, when the U.S. government first paused funding of gain-of-function research, Fauci repeated the invocation of his Fifth Amendment right to not answer questions. 

When Fauci's attorney attempted to address the committee on behalf of his client, Paul said he was not a recognized witness, and eventually ordered him removed from the hearing room. 

Gain-of-function research refers to experiments in which viruses are manipulated in laboratory settings to become more virulent. Fauci has long been a proponent of this controversial research, which some scientists consider dangerous for its potential to create new pandemic viruses. 

While under Fauci's leadership, the National Institute of Allergy and Infectious Diseases (NIAID) issued multiple grants to researchers working at the Wuhan Institute of Virology to support their work making novel coronaviruses that could more easily spread in humans. 

When Paul pressed Fauci about these grants in past Senate committee hearings in 2021, Fauci strenuously denied that these grants funded research that would meet the federal government's definition of gain-of-function research.

He emphatically stated that this research was not subject to the government's gain-of-function funding pause, which ran from 2014 through 2017, and did not qualify for enhanced scrutiny under the subsequent vetting system established after that pause. 

"The [National Institutes of Health] has not ever and does not now fund gain-of-function research" at the Wuhan Institute, said Fauci in response to Paul's questioning during a May 2021 hearing. 

"You do not know what you are talking about," he said in a July 2021 hearing, when Paul pressed him on the NIAID's support for a paper co-authored by Chinese virologist Zheng-Li Shi describing how novel coronaviruses were made in the Wuhan lab to infect human lung cells.  

Today's hearing produced no new statements on this subject, given Fauci's invocation of the Fifth Amendment. 

In subsequent public statements and congressional testimony, Fauci continued to assert such research could not have possibly led to the creation of the virus that caused the pandemic, given how different the published viruses researchers were manipulating were from the virus that causes COVID-19.

When asked by Paul and others whether Chinese researchers might have performed similar unpublished experiments with different viruses that could have led to the creation of the pandemic virus in the Wuhan lab, Fauci pleaded ignorance of Chinese activities. 

"I do not have any accounting of what the Chinese may have done," he said in his May 2021 Senate testimony. 

These denials are contradicted by Fauci's own diary entries from early in the pandemic, in which he took the possibility that research being conducted by the NIAID-supported Shi, which he casually referred to as gain-of-function research, could have created the COVID-19 virus in a lab. 

Fauci's diary entry from January 31, 2020, confirms the previously reported detail that the NIAID director was contacted by researchers who believed that SARS-CoV-2, the virus that causes COVID-19, might well have been engineered given the virus' furin cleavage site on its spike protein that allows it to bind with human cell receptors. 

He took this suggestion seriously enough to convene a call with experts the following day to discuss whether the virus was natural or man-made. 

In a diary entry dated February 1, 2020, Fauci said that all but two researchers on that call "felt that deliberate insertion [of the furin cleavage site] was possible." 

"Given the fact that Dr. Zheng-Li Shi at the University of Wuhan has been working for years in GOF in coronaviruses to allow adaptation of the spike protein to bind to the human" cell receptors, "we could not let this go," reads Fauci's diary entry. 

GOF is the shorthand for gain-of-function research.

That entry shows that, at least at the time, Fauci recognized that NIAID-supported researchers were conducting funded gain-of-function research in Wuhan, and that this research could plausibly have created SARS-CoV-2. 

This contrasts with his later, emphatic testimony that the NIAID never supported gain-of-function research in Wuhan and that Fauci himself was ignorant of Chinese researchers' activities there. 

The experts assembled on that February 2020 call later produced the Proximal Origin paper, which completely dismissed the possibility that SARS-CoV-2 was an engineered virus. Fauci provided editorial input on that paper. 

Repeated tranches of Slack messages from several of the authors of that paper show that before and after publication, they privately believed, in contrast to the paper's conclusions, that the virus could have been engineered in a lab. 

"Our paper was pretty strong in saying 'there's no way' [the virus was engineered], but I have less confidence in that statement at this stage," said Proximal Origin co-author Kristian Andersen, a Danish researcher at Scripps Research, in a Slack message to his co-authors. 

Andersen had been one of the researchers who first contacted Fauci in January 2020 about the possibility that the furin cleavage site on SARS-CoV-2 had been deliberately inserted. 

In later diary entries, Fauci's private statements hew more closely to his public position that NIAID-funded research could not possibly have played a significant role in a possible lab leak. 

"I unfortunately have been drawn into being a target of the far right because I represent something that is antithetical to them, namely, the truth," wrote Fauci in an October 2021 diary entry. "It is stunning how much time is consumed on warding off the egregious lies about the [NIAID] grant that funded [sic] hey small project in the Wuhan institute of virology." 

On that February 1 call, one of two participants to completely dismiss the possibility that COVID came from a lab was Dutch researcher Ron Fouchier, who had conducted gain-of-function experiments on flu viruses that proved so controversial they led to the 2014 pause on U.S. government funding of such research. 

In his diary entry, Fauci thus took Fouchier's belief in a natural origin of SARS-CoV-2 with a grain of salt, saying "this is expected of him since he was the original GOF person."

In other words, the NIAID director believed that one's past conduct of gain-of-function experiments might color one's judgment on whether such research could create a deadly pandemic virus. 

Yet in the years before the pandemic, Fauci was himself a primary champion of government funding of gain-of-function research, who repeatedly argued the potential benefits of this research were worth the acknowledged risks that it could create a pandemic via a lab leak. 

By Fauci's own standard, we might similarly take his own protestations that NIAID-supported research in Wuhan didn't create the pandemic with a grain of salt. 

Fauci has quite ably turned the debate about the risks of the research his agency supported in Wuhan into a semantic discussion about the precise regulatory definition of gain-of-function research. 

Those regulatory definitions themselves require subjective determinations by public health officials about what kinds of experiments might be likely to produce new pandemic viruses. 

Despite his later denials, Fauci's diary entries seem to concede that research meeting that regulatory definition was in fact going on in Wuhan with Fauci's knowledge and NIAID support. 

As Paul said at today's hearing, questions about precise regulatory definitions distract from a more basic question: "The real question is whether [this research] was dangerous; was it wise to fund it?"

How “Liberation Day” Cost America Its Tourists

By Alfredo Carrillo Obregon of Cato.

"Perhaps one of the most puzzling developments in the aftermath of the Trump administration’s multiple tariff salvos has been the lack of retaliation by the governments of affected countries. Most US trading partners have (so far) refused to impose duties on American exports, and many have even negotiated “reciprocal” trade agreements with the administration. Yet, as my colleague Scott Lincicome explained in a column for The Dispatch last year, amid this lack of tit-for-tat response by foreign governments, private individuals abroad are pushing back against Trump’s trade policies by limiting their consumption of American goods and services—most notably, tourism in the United States. 

While survey and government data already pointed to declines in foreign visits to the United States (see figures 1 and 2), a recent working paper finds that the “Liberation Day” tariff announcements in April 2025 led to a significant decline in tourism to the United States, costing the sector over $1 billion in lost revenue per month.

Using the “Liberation Day” announcements as a quasi-experiment and benchmarking tourist arrivals in the United States against those in Canada, the study measures the impact of singling out 75 countries and assigning them a “reciprocal” tariff rate higher than the universal 10 percent baseline. Controlling for origin-country income and bilateral exchange rates, the authors calculate that 315,000 fewer tourists from these 75 countries (i.e., “Annex I countries”) visited the United States each month through September 2025, relative to tourists from countries subject only to the 10 percent baseline rate. 

The finding that Trump’s announcement of the “reciprocal” tariffs led to substantial declines in tourist arrivals from these countries—and thus tourism revenue for the US economy—also holds when the authors alternatively benchmark US tourist arrivals against those in Spain. The authors also rule out increased Immigration and Customs Enforcement (ICE) arrests, USAID cuts, and other Trump-era policy changes as alternative explanations. Importantly, because the authors’ estimates only capture the incremental effect of the “reciprocal” tariffs above the 10 percent baseline, the actual tariff-driven decline in tourist arrivals to the US might be even larger.

More notable than the study’s topline estimates, though, is its finding that the tariff-induced decline in tourism in the United States resulted less from foreigners being unable to afford US travel and more from foreigners having a diminished view of the United States following the “Liberation Day” announcements. On the one hand, other studies have found that Americans bore most of the tariffs’ costs and that the dollar weakened in the aftermath of the 2025 tariffs. On the other hand, the authors calculate that among tourists from the 75 countries assigned a higher “reciprocal” tariff rate than 10 percent, those from North Atlantic Treaty Organization (NATO) countries (i.e., “long-standing US allies”) reduced their travel to the US more than tourists from non-NATO countries. 

The authors also find that tourists from countries assigned an above-median “reciprocal” tariff rate reduced their travel to the US to a similar degree as tourists from countries assigned a below-median “reciprocal” tariff rate. In sum, the authors’ results, differing “by the strength of existing geopolitical relationships but not by the magnitude of the tariff rates,” suggest that the decline in US tourism from these 75 countries is connected to a decline in America’s reputation abroad.

Having estimated a substantial reduction in monthly tourists due to the administration’s tariffs[i], the authors then calculate that the tourism sector lost more than $1 billion in monthly revenue after April 2025. But as if this were not enough, the authors also calculate that tourism firms—“firms where inbound foreign tourism plausibly represents a meaningful share of revenue (e.g., hotels, airlines, entertainment)”—experienced lower stock returns (by two to three percentage points) than other firms one to three days after “Liberation Day.” In sum, the decline in visitors also translated to financial hardship for the sector—both from actual foregone revenue and from negative investor expectations.

With more US tariffs coming down the pipeline and more uncertainty about the future of bilateral trade deals negotiated by the Trump administration with foreign countries, we will see whether foreign governments retaliate more aggressively against US exports. Yet, studies like the one discussed in this blog post confirm what anecdotal evidence has long suggested: Private individuals abroad are not waiting for their governments to respond before they adjust their consumption of US goods and services. More concerningly for the US and Americans, if such actions stem from a diminished US reputation abroad, repairing the damage from the Trump administration’s trade policies might be less straightforward than simply removing existing tariffs.

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[i] In addition to estimating 315,000 fewer monthly travelers from the 75 countries subject to “reciprocal” tariff rates higher than 10 percent, the study finds that the implementation of “fentanyl” tariffs on Canada and Mexico in March 2025 led to a 20 percent decrease in the average number of monthly visitors from Canada and to slower growth in monthly visits from Mexico. Though these results are less definitive than those of the authors’ main model given the limited sample size and the absence of control destinations, their findings on Canadian tourism are consistent with other evidence that Canadians avoided travel to the US in 2025 in response to Trump’s tariffs. In fact, a recent Statistics Canada report finds that leisure-related visits by Canadians to the United States declined by 21.5 percent in 2025 (about 3.2 million visits) while leisure-related visits by Canadians to overseas destinations increased by 12.2 percent in 2025 (about 1.1 million visits). The same report finds that spending on leisure-related visits by Canadians to the United States decreased by $2.2 billion in 2025, while spending on leisure-related visits by Canadians to overseas destinations increased by $3.6 billion."

Industrial carbon tax and carbon capture requirements increase the cost to produce energy, making Alberta uncompetitive with U.S. counterparts

By Jack Mintz. He works at The School of Public Policy, University of Calgary.

Impact of Carbon Policies on Competitiveness in Oil, Natural Gas, and Electric Power: An Alberta–US Comparison

• This study, based on a newly developed methodology to assess the impact of corporate, royalty, and energy taxes on production, estimates the impact of taxes and carbon policies on marginal cost of production in Alberta, Texas, and New Mexico for oil, gas, and power industries.
• In the absence of carbon policies, the existing tax and royalty system in Alberta is tax competitive except for conventional oil, despite the differences in tax systems among the three jurisdictions.
• US and Canadian capital subsidies encourage carbon, capture, utilization, and storage investments but do not improve cost competitiveness since the subsidies are offset by CCUS costs for marginal investments.
• With the existing Alberta carbon tax at $95, not only is Alberta’s conventional oil tax disadvantaged but the oil sands lose most of its tax advantage compared to projects in New Mexico or Texas (with enhanced oil recovery). Natural gas production remains tax competitive. With a carbon tax at $170, oil sand investments are somewhat tax disadvantaged.
• As Alberta’s effective carbon tax rate is increased by raising the rate and/or limiting allowances, both oil and natural gas production will be heavily disadvantaged compared to Texas.
• While much focus has been paid to the impact of the carbon tax on the oil sands, the biggest impact will be on the electric power industry. The carbon tax will noticeably increase power prices in Alberta which will impact competitiveness of many industries. This illustrates well the competitiveness issue for Alberta when carbon taxes apply in Canada but not the United States.