Your correspondent is scheduled to attend a conference this week; the Morning Briefing will return next Monday. We apologize for the interruption.

Today's been a very good news day for the Administration on trade.

First, he US Court of Appeals for the Federal Circuit has delivered a "Big!" (in the words of JD Vance) victory for the Trump Administration in its fight to set its own tariff policies. granted an extended stay, allowing Trump's tariffs to remain in place while the appeal proceeds. This was an expansion of their earlier May 29 temporary administrative stay.

Unlike the May 29 ruling, the new extension gives the Trump tariffs a more secure legal foundation while the appeals process continues. This allows the executive branch more flexibiilty for dealmaking.

Second, Donald Trump announced a new and more detailed trade deal with China, including some key and interesting provisions, such as: China will provide "full magnets, and any necessary rare earths," "up front". This resolves a major sticking point - China, which controls 90% of the global processing of rare earths, imposed export restrictions on some minerals and magnets on April 4 at the height of the tariff war. The U.S. will in turn make certain concessions such as allowing Chinese students to attend U.S. colleges and universities

Trump said the US would impose a total of 55% tariffs on Chinese goods, but it's unclear whether it's a new tariff or whether President Trump is just restating preexisting tariffs. This would include the 20% "fentanyl" and migration tariffs, plus the 10% "Liberation Day" tariffs, plus the Section 301 tariffs of 7.5-10% on certain goods, plus the Section 232 tariffs of 25% on steel, aluminium, and auto part imports. In other words, it's not a 55% across-the-board tariff.

Finally, new CPI numbers dropped, and Core CPI rose just 0.1%, way below analysts and economists' expectations. Of course, this is—or at least will be seen, rightly or wrongly—as a rebuke to the warnings from many analysts that Trump's tariffs would increase inflation. JD Vance commented: "the refusal by the Fed to cut rates is monetary malpractice."

So just a very good news day overall on the trade front for the Admin.

Policy News You Need To Know

#LARiots — The excellent Park McDougald interviews Kyle Shideler, Director and Senior Analyst for Homeland Security and Counterterrorism at the Center for Security Policy, on the origins of the LA riots in the organized far-left.

#LAriots — Speaking of: Senator Hawley has announced that, in his capacity as chairman of the Judiciary Subcommittee on Crime & Terrorism, he is launching an investigation into the origins and funding of the riots. Good.

#MAHA #Vax — The official justification for RFK, Jr.'s purging of a vaccine advisory board was conflicts of interest. The Editorial Board of the Journal believes that that's not true.

#Savings — The House version of the Big Beautiful Bill includes new tax-advantaged savings accounts called "Trump Accounts." If you're the kind of person who likes efficiency, this already sets your teeth on edge. Alex Muresianu at the Tax Foundation argues for replacing currently existing tax-advantaged savings schemes with a single universal savings account.

#Housing — We recently mentioned a recent paper by Ed Glaeser, the great urban economist at Harvard (and a Republican, at least last we checked) and Joseph Gyourko. The title is self-explanatory: they bemoan a "closing of the suburban frontier." Basically, for decades large coastal cities have had building restrictions in place that made them unaffordable, but people could still move to the suburbs. However, also in suburbia, "insiders increasingly use regulations to protect their own rents and keep outsiders out." Important paper.

#Trade #Tariffs — Here's a very good idea: the so-called "de minimis" exemption from tariffs for low-cost imports has allowed Chinese manufacturers and e-commerce companies to flood America with cheap low-quality goods, which certainly wasn't envisioned at the time the exception was created. It's a form of regulatory and tax arbitrage. At The Daily Economy, Bryan Riley argues for getting rid of the exemption in the Big Beautiful Bill.

#Patents — If you remember debates around copyright and software in the 2000s, you remember "patent trolls," these entities that would purchase patents on the cheap, then sue software companies, often frivolously, over alleged infringements, in the hope of extracting settlements. Well, we learned from Wayne Brough at R Street, patent trolls exist in biotech too. And that's obviously a problem. Here are his ideas on how to reform the system.

#Medicaid — Jack Salmon of Medicaid writes about a "shell game" that states play in Medicaid funding: "states impose taxes or fees on Medicaid providers, typically hospitals, nursing homes, or managed care organizations (MCOs). The providers pay this tax to the state. But the twist is that the providers often get their money right back from the state, either directly through enhanced Medicaid payments or indirectly through supplemental programs and rate increases. The state then uses this higher spending level to trigger a larger Federal matching payment, even though much of that spending wasn’t borne by the state at all, and was merely the state returning providers’ money right back to them. Everyone inside the loop wins except, of course, the federal taxpayer, who picks up the tab through increased federal Medicaid outlays sent from Washington." Ouch. Not good. The rules in the House version of the Big Beautiful Bill improve this, he says, but the Senate should pass a complete fix.

#EnergyDominance — Another thing we learned today: California's cap-and-trade scheme has led to a drop of one third (!) in oil production. Is there a Federal role here, given the national impacts on energy generation and the trade deficit?

#Immigration #H1B — There's high-skill immigration in theory. and then there's the H-1B program, which, as all industry insiders know, and an increasing number of outsiders are realizing, is rife with fraud. Hence, good news: "“The Justice Department announced today that it has secured a settlement agreement with Epik Solutions, a California technology recruiting company, to resolve Epik Solutions’ violations of the Immigration and Nationality Act (INA) by preferring to recruit foreign H-1B visa holders over U.S. workers. 'A top priority of the Justice Department's Civil Rights Division is protecting American workers from unlawful discrimination in favor of foreign visa workers,' said Assistant Attorney General for Civil Rights Harmeet K. Dhillon.”

#FertilityCrisis — You know we like to write about the fertility crisis, and it has mostly been shouting into a void. Which makes it noteowrthy that the UN (the UN!), which for decades has tried to reduce population, has produced an official report deploring the fertility crisis.