According to the Substance Abuse and Mental Health Services Administration (SAMHSA), over 6.1 million people over age 12 have opioid use disorder (OUD). Increasing access to OUD treatment would reduce the number of people who seek drugs in the dangerous black market and, in turn, reduce the risk and incidence of overdose deaths. 

In the United States before 1972, primary care physicians would prescribe methadone to people with OUD. Since 1972, however, only government-approved opioid treatment programs (OTPs) have been allowed to dispense methadone to treat OUD. SAMHSA places regulations and restrictions on organizations that seek to operate OTPs. OTPs must obtain certification from the Drug Enforcement Administration (DEA) to operate a narcotics treatment program. States must also license OTPs, imposing additional regulations, costs, and restrictions. 

The various layers of regulations hinder the proliferation of OTPs. These and other government obstacles explain why only about 400,000 individuals with OUD received methadone in 2019, while 1.6 million US residents reported developing OUD that year. Recognizing these barriers, Congress has attempted incremental reforms. For the past few sessions of Congress, the bipartisan Modernizing Opioid Treatment Access Act (MOTAA) has failed to pass. If enacted, MOTAA would expand access to methadone treatment by allowing board-certified addiction medicine physicians to prescribe methadone in their offices and clinics. 

However, President Donald Trump’s February 19 executive order implementing his “Department of Government Efficiency” Deregulatory Initiative provides an opportunity to expand access to methadone treatment for people with opioid use disorder (OUD). Seizing on this deregulatory momentum, the American Society of Addiction Medicine (ASAM) has spearheaded a letter to Attorney General Pam Bondi and Acting DEA Administrator Derek Maltz, calling for a review of methadone treatment regulations. The letter argues that these regulations are “not based on the best reading” of the underlying law and “constitute a significant regulatory action that materially harms competition in health care delivery.” The American Society of Health-System Pharmacists, the National Commission on Correctional Health Care, the National Community Pharmacists Association, and the R Street Institute endorsed the letter. 

Many policymakers have long believed that the current methadone treatment regime is mandated by federal statute. In reality, much of it was created by federal regulatory agencies— specifically the Drug Enforcement Administration (DEA) and the Department of Health and Human Services (HHS)—pursuant to authority delegated by Congress. 

The direct legislative sources are the Narcotic Addict Treatment Act (NATA) of 1974 and 21 U.S.C. § 823(h). NATA authorized the use of narcotic drugs like methadone to treat addiction but required practitioners dispensing such drugs to be registered with the DEA and that SAMHSA and the DEA approve treatment programs. 21 U.S.C. § 823(h) states that the attorney general, through the DEA, “shall register an applicant to dispense narcotic drugs to individuals for maintenance treatment or detoxification treatment” in compliance with standards set and certified by the Secretary of HHS.

Congress didn’t specifically require the DEA to set up OTPs. It authorized the DEA to set up some sort of registration and regulatory system. The DEA decided to implement 21 USC Sec 823 (h) by requiring OTPs. 

In its letter to Bondi and Maltz, ASAM argues that because 21 U.S.C. § 823(h) does not explicitly mandate the use of OTPs — but instead grants the Attorney General (through the DEA) the authority to register practitioners “in accordance with” HHS standards — the requirement that methadone be dispensed only through OTPs is a regulatory choice, not a statutory mandate.

Before discussing how the regulatory change can help, it’s worth clarifying a key distinction: addiction and dependency are not the same. Opioid addiction and opioid dependency are two distinct subsets of OUD. Dependency refers to the physiological adaptation to the drug such that abrupt cessation can cause a physical withdrawal reaction. Addiction is a behavioral disorder characterized by compulsive use despite negative consequences. People with addiction still feel compelled to use opioids even when they are no longer physically dependent. 

Methadone and buprenorphine are time-tested, evidence-based medications used to treat OUD. Clinicians have been using methadone to treat OUD since the 1960s. They’ve been using buprenorphine since the 1990s. Some patients respond better to methadone; others do well with buprenorphine. 

If the ASAM-inspired initiative is successful, the Trump administration will implement regulatory reforms that could remove obstacles preventing people with OUD from accessing methadone treatment. These reforms can go even further than MOTAA’s modest, incremental reform. The administration can permit all licensed clinicians who are interested in treating OUD to register with the DEA to provide methadone treatment. The administration could remove regulatory barriers to patients with OUD accessing methadone through primary care clinicians, including nurse practitioners, in their community offices and clinics. The DEA and SAMHSA have already implemented this policy for buprenorphine prescribing. 

Critics of treating methadone prescribing like buprenorphine prescribing worry that patients might “divert” the methadone to the black market. But the evidence suggests otherwise. 

In March 2020, the Substance Abuse and Mental Health Services Administration (SAMHSA) temporarily loosened methadone take-home restrictions for opioid treatment programs (OTPs), permitting “stable” patients to receive up to a 28-day supply. The policy proved so effective that SAMHSA made it permanent. Researchers from the Centers for Disease Control and Prevention and the National Institute on Drug Abuse analyzed the effects of this change and reported in JAMA Psychiatry in July 2022 that “monthly methadone-involved overdose deaths remained stable after March 2020.” The National Institutes of Health reported that same month that “the percentage of overdose deaths involving methadone declined between January 2019 and August 2021.” 

It often surprises people that the DEA allows any clinician with a standard narcotics license to prescribe methadone for pain yet prohibits them from prescribing it for addiction treatment. According to the National Institute on Drug Abuse, “Methadone diversion is primarily associated with methadone prescribed for the treatment of pain and not for the treatment of opioid use disorders. In one survey, giving methadone away was identified as the most common form of methadone diversion, which aligns with other findings that 80 percent of people who report diverting methadone did so to help others who misused substances.” 

Of course, no reform is secure unless Congress codifies it. One drawback of relying on executive actions and regulatory reassessments is that they can change in subsequent administrations. While the Trump Administration can move quickly to improve access to methadone treatment, a subsequent administration could revert to the old approach. Ideally, Congress should codify any regulatory reforms in statute.

In a Cato Policy Brief, Sofia Hamilton and I point out that clinicians in Australia, Canada, and the UK have been prescribing methadone to patients with OUD in their offices and clinics for nearly 60 years. They coordinate with community pharmacists who are part of the treatment team. Regulators in those countries defer to clinicians to exercise their medical judgment in deciding the timing and amount of take-home methadone. We argue that clinicians and patients in the United States deserve the same freedom.

We call on lawmakers to enable patients with OUD to receive methadone treatment from sources other than government-approved OTPs. Providers should include office-based addiction specialists, primary care physicians, nurse practitioners, and physician assistants. These treatment options can coexist with more traditional inpatient or outpatient treatment programs.

Ideally, lawmakers should end drug prohibition. As a result of the failed war on drugs, federal bureaucrats, police, SAMHSA, and the DEA regulate how clinicians practice medicine. Prohibition lets lawmakers, policymakers, and law enforcement agents intrude into clinical decision-making and the patient-doctor relationship.

As President Donald Trump threatens so-called “reciprocal tariffs” on US trading partners, some countries are offering lower duties to avoid the US leader’s wrath. Vietnam recently announced that it is cutting tariffs on a range of US exports, including energy and agricultural products, as well as approving the Starlink satellite internet system owned by Trump ally Elon Musk. Similarly, India appears willing to cut its tariffs on approximately half of all US imports, and Israel is removing all remaining tariffs on US goods (although the move’s practical import is less dramatic, as the vast majority of US exports were already duty-free thanks to a 1985 trade deal). 

More countries may follow. 

At least on the surface, such developments seem to vindicate Trump’s aggressive approach. Merely the risk of higher tariffs has prompted countries to offer lower duties, with attendant benefits for US exporters. It’s not difficult to see why some might claim this as an example of the president’s much-ballyhooed dealmaking prowess in action.

But let’s not put this in the win column just yet. 

Although tariff cuts on US exports are always welcome, they must be balanced against the totality of Trump’s record. That looks set to include not only tariff reductions by the likes of India (which received $41.8 billion in US exports in 2024) and Vietnam ($13.1 billion), but also retaliatory tariff increases by key trading partners such as Canada (a $349.4 billion export market in 2024) and the European Union ($370.2 billion).

That the benefits of lowered tariffs from some countries will outweigh the burden of looming retaliatory tariffs on US exporters is not clear.

Additionally, whatever tariff cuts US trading partners announce in response to Trump’s pressure could prove fleeting. The unilateral reductions announced by India and Vietnam, for example, are not secured by binding agreements. Absent such a deal, there is nothing to prevent these countries from raising their tariffs in the future.

Lastly, whatever tariffs Trump imposes as part of his reciprocal tariff policy will harm the US economy as businesses and consumers contend with higher prices. Just as trade is mutually beneficial, barriers to trade, such as tariffs, create losses on both sides of the exchange.

Between retaliation and the burden of higher tariffs, the pain caused by Trump’s approach will almost surely outweigh any (potentially short-lived) gains.

Furthermore, there’s also a significant opportunity cost here. If Trump is interested in securing a reciprocal lowering of tariffs, there’s a far better way of doing it. 

Rather than rattling his tariff saber, Trump should pursue new free trade agreements (FTAs). Through such deals, the US and its trading partners can lower (ideally, eliminate) tariffs, remove non-tariff barriers (e.g., “Buy America” rules and the Jones Act), and agree upon a common set of rules for conducting trade and more deeply integrating their economies. Such agreements—which the United States has negotiated with 20 countries—offer far greater tariff reductions than whatever the likes of India, Vietnam, or anyone else are likely to offer.

This isn’t theoretical. Under the Trans-Pacific Partnership FTA signed by the United States in 2016, Vietnam was slated to permanently reduce or eliminate the vast majority of its tariffs on US exports. Trump, however, withdrew from the deal shortly after taking office in 2017, and now the US must content itself with Vietnam cutting tariffs on a more modest range of products.

All of this assumes, of course, that President Trump is truly interested in a mutual lowering of tariffs and not merely searching for new justifications to raise US duties. Unfortunately, that seems an increasingly dubious proposition. 

As momentum for closing the US Department of Education gains steam, questions about the transition are starting to surface, with the biggest ones concerning student loans. While we have argued for the privatization of student loans (full report or blog summary), which would eliminate the need for a new home for student loans, most of the current discussion revolves around keeping the existing loan programs but moving them to another department or agency, with the Department of the Treasury and the Small Business Administration (SBA) being the most discussed new homes. Treasury is the better choice for three reasons.

First, just under 40 percent of students are repaying through an income-driven repayment (IDR) plan, which requires information on income, information that the Treasury already has but SBA does not. Under IDR plans, payments are a set percentage of income (typically 10 percent) each month. With monthly payments varying, the length of the loan varies too, with high earners repaying their loans more quickly. Since the Treasury already collects income information (through the Internal Revenue Service) needed for IDR, it is better positioned to manage IDR plans than the SBA.

Second, the Treasury already has systems set up and running to deal with troublesome loans. For example, the Treasury Offset Program is used to collect unpaid taxes and student loans from borrowers who default by garnishing their tax refunds and other government payments. The SBA would have to set up its own system or outsource the task to Treasury.

Third, SBA’s experience facilitating loans is irrelevant for student loans. One of the main things the SBA does is provide loan guarantees to private lenders, which means it has considerable experience evaluating the quality of loans (often called underwriting). But student loans do not go through underwriting as eligibility and loan terms are all set by Congress, which renders SBA’s greater experience in underwriting irrelevant. Relatedly, SBA’s experience with loan guarantees is likewise irrelevant, because student loans should not have loan guarantees.

Overall, if student loans are moved, the Department of the Treasury would be a better choice than the Small Business Administration. 

Number eight in our series of occasional roundups on election law and policy:

• I had a few things to say last week about President Donald Trump’s executive order purporting to overhaul election law by decree, something an American president doesn’t have the power to do. Our friend Stephen Richer supports some substantive elements of the scheme, including a firm Election Day cutoff on ballot receipt, but gives the order a failing grade on governance: “The president pretends as if we don’t have a Congress, and he rides roughshod over the states.” Trump’s demand that states turn voter files over to his agencies replays a similar data demand in his first administration with which 44 states refused to comply. [Rick Hasen] The funding cudgel won’t be very menacing if limited to election funding since the federal government doesn’t dispense much of that to the states [VoteBeat] Expect to see backflips on federalism as some Democrats who promoted H.R. 1’s trampling of state election authority now find merit in state autonomy after all, even as some Republicans accomplish the reverse [Dan Balz, Washington Post]
• For those who want to get into the finer details, I recommend this resource from the Institute for Responsive Government, which discusses transformation of the independent, bipartisan Election Assistance Commission into an instrument of the president’s will, big new unfunded mandates for some states, hassles on proof of citizenship for military/​overseas voters, loss of jobs by noncitizens who’ve long worked uneventfully at election vendors, and hyped-up fraud claims once DOGE and DHS publicize data entry errors or simple misunderstandings of the voter file. Also: “Why Trump wants to ban barcodes on ballots, and what it means for voters and election officials.” [VoteBeat]
• Having pulled a similar stunt in Pennsylvania last year, which I wrote about at the time, Elon Musk is now promising money to registered voters in Wisconsin. Will the law catch up with him at some point? [Associated Press, Rick Hasen, Alexander Shur/​VoteBeat]
• You can watch my recent appearance before the Montgomery County, Maryland Board of Elections on a panel discussing ranked choice voting, especially implementation. The conversation starts at about the 0:37 minute mark and—be warned!—goes on for well over two hours. And I discussed proposals to use RCV presidential primaries in Maryland presidential primaries on WBAL’s Torrey Snow show; 
• I agree with the authors’ take here: even though there are now roughly balanced amounts of pro‑R and pro‑D gerrymandering in races for the US House of Representatives, that’s no reason to stop working for redistricting reform. Each of the individual biased maps undermines political fairness and voter choice in its state. [Nicholas Stephanopoulos, Eric McGhee and Christopher Warshaw, Washington Post]
• New York high court rules that under the state constitution, New York City can’t authorize noncitizens to vote in its municipal elections (they’re already barred by law from voting in elections at the state and federal level) [Derek Muller]
• A bad enforcement action, withdrawal was the proper course: feds will withdraw Biden administration suit over Georgia election enactments [AP; earlier here, here, etc.]

President Trump is moving to shut down the federal Department of Education. Congress will need to make any cuts permanent, but downsizing the federal education bureaucracy is a long-overdue reform. The department, however, is not the only way that the federal government intervenes in the nation’s schools.

The government also spends $35 billion a year on school food programs through the Department of Agriculture. The school lunch program was enacted in 1946 and has morphed into an array of breakfast, lunch, after-school, and summer food programs that now cover 30 million children.

My new op-ed at National Review discusses four reasons to axe federal school food programs and allow the states to adopt their own policies.

My full study on the issue is here.

The Fed’s audited financial statements for 2024 show that it suffered operating losses of $77.6 billion. That’s on the heels of losing $114.3 billion in 2023, for a two-year total of $191.9 billion. The culprit of these losses? The large amounts of interest it pays on bank reserves.

The Fed drastically changed its operating framework during the financial crisis of 2008. At the time, most of the attention fell on the Fed’s quantitative easing program. But the size of the Fed’s emergency lending programs dramatically inflated aggregate reserves, prompting the Fed to begin paying commercial banks interest on reserves. At that time, interest rates were relatively low. But as many pointed out, unless the Fed shrunk the pool of reserves, interest rates would eventually rise and put the Fed in a political pickle.

Well, that time is finally here.

As Figure 1 shows, the Fed’s interest payments have increased exponentially. (All dollar values have been adjusted for inflation by converting to their equivalent in 2024 dollars.) Moreover, the rate of increase in interest expenses closely mirrors the rate of increase in the rate the Fed pays out on the reserves (the “IOR” rate). This latter fact was not true in the late 2010s when the Fed raised the IOR but kept interest payments in check because it only paid interest on excess not all reserves, a policy it changed during the pandemic.

As Figure 2 shows, these large interest expenses resulted in the Fed’s only recorded losses since 2008 and the only losses on record since the data became available. The Fed has mostly hand-waved these losses away and used financial gimmickry to label them “deferred assets” that they have promised to balance with future profits.

But this should worry taxpayers. There is no guarantee that rates will come down to their pre-pandemic levels, reducing the Fed’s interest burden and allowing its financials to turn back from red to green. Even if the Fed manages to turn a profit, taxpayers are unlikely to reap those benefits. It will likely take years of future profits to offset the nearly $200 billion the Fed has already lost in the past two years alone—profits that would usually go to the Treasury to help relieve some of our massive fiscal deficit.

Moreover, the politics of these policies are baffling. The IOR program provides billions of government dollars to large financial institutions as risk-free interest, essentially giving banks a massive government handout. Populists from both parties, who are usually quick to bash the financial sector, are silent while the Fed continues to give banks hundreds of billions of dollars in cash. This is particularly troubling seeing as the average American earns close to nothing on their own savings accounts at these same institutions.

Senators Sherrod Brown and Elizabeth Warren want to decide which financial firms can and cannot merge. Senators Josh Hawley and Bernie Sanders want to decide what private financial firms can and cannot charge as interest on their loans. These are bad policies that still draw populist support. But the populists stay silent when the government is giving free cash to large banks and hemorrhaging money. These losses highlight the need to shrink the Fed’s balance sheet—and for Congress to call for the Fed to stop handing out money to banks.

President Donald Trump’s decision this week to implement a “permanent” 25 percent tariff on imported automobiles and automotive parts represents one of his most brazen—and foolish—moves yet. For the moment, we’ll leave aside that the president relied on data at least eight years old to ridiculously argue that imported cars threatened national security, that his latest move blows up his own USMCA trade agreement, and that his tariffs can’t both raise substantial revenues (which requires more imports) and boost domestic jobs and investment (which requires fewer imports) as he claims. 

Instead, we’ll focus today on just the tariffs’ economics, which—given the reality of global automotive manufacturing and reams of prior analysis—most likely portend higher prices for American consumers, chaos for the US automotive industry, and less domestic production and fewer American automotive jobs in the future.

A Globally Integrated Automotive Industry

To grasp why Trump’s tariffs will cause massive disruptions, consider how integrated the global automotive industry is today, particularly in North America, thanks to decades of open trade (zero tariffs, streamlined procedures, etc.).

Today’s industry is characterized by sophisticated and highly interconnected regional supply chains spanning multiple national borders. In the North American supply chain, the manufacturing of a component like a transmission or engine may require it to travel between the United States, Canada, and Mexico multiple times before finally being incorporated into a finished vehicle.

When tariffs are applied in such an integrated market, costs do not simply rise incrementally—they compound. A single component could therefore be subjected to multiple rounds of tariffs, resulting in exponential increases in the overall cost of manufacturing. In a previous Cato blog post, for example, we showed how a simple car seat capacitor crossed borders five times. According to Canadian manufacturer Linamar, which produces transmissions via factories in the US, Mexico, and Canada, parts cross the three borders seven times, with the transmission finally assembled in Michigan.

Even if cars and parts don’t cross borders multiple times, the tariff costs for American vehicle manufacturers will be significant because they source significant quantities from abroad. Like a “Made in China” iPhone that contains parts from all over the world, an automobile that’s “Made in America” is assembled with parts from the United States, Canada, Mexico, and elsewhere. Here, for example, is the rear suspension of a vehicle manufactured in North America:

(Source: Flavio Volpe)

As shown in the following charts, this kind of global sourcing is standard practice in today’s automotive industry. Table 1 provides an indicative list of popular US-assembled automobiles that have foreign content shares of anywhere between 30 and 91 percent. (Note that the US and Canada are so interconnected that the government’s data collectors don’t bother to separate the two countries.)

As we see in Figure 1, moreover, imported parts account for more than half of the content in what people would call an “American” vehicle (e.g., Ford and Tesla) made in the USA.

Figure 2 tells a similar story for foreign-nameplate vehicles assembled in the United States.

This does not mean, as TV personality Jim Cramer recently alleged, that US automotive production involves merely the rudimentary assembly of foreign-made engines, transmissions, and other parts. For starters, assembly itself is economically valuable. The BMW plant in Spartanburg, SC, for example, employs more than 11,000 Americans (with junior production roles today starting at $22/​hour with benefits), annually produces more than 400,000 vehicles, and was the United States’ top automotive exporter by value ($10 billion) last year.

Domestic automotive manufacturing also entails far more than assembly. In fact, NHTSA data show that the engines/​motors in 80 of 143 US-assembled models are made entirely (64) or partly (16) in America, while 82 of those same models have transmissions made here (75 in full; 7 in part).

Collectively, these data reveal the interdependent and complementary nature of US and global automotive production and trade: vehicles and parts are made here; vehicles and parts are made abroad; and both producers and consumers are better off for it.

Imports and Foreign Investment Complement the US Automotive Industry

On the production side, it is widely accepted among automotive industry experts that open trade has been a boon for US manufacturers, and that imports and exports complement domestic sales and production. As shown in Figure 3, for example, automotive imports into the United States have corresponded closely with an overall increase in US automotive production. Contra the (mistaken) White House view of trade deficits, moreover, US deficits in automotive goods have aligned with enhanced domestic output and greater production capacity.

As Lincicome detailed in December, these and other data show why industry insiders and analysts uniformly agree that open markets—not costly Reagan-era protectionism—have fueled the growth and stability of North American automotive production since the 1990s and helped American companies and workers better compete against automotive supply chains in Europe and Asia. By permanently reducing trade barriers, trade agreements like NAFTA have been credited with attracting more foreign investment and boosting overall industry competitiveness by lowering production costs (e.g., via imported inputs), utilizing national comparative advantages, and opening overseas markets. In fact, US automotive manufacturing output and employment were stronger in the 1990s and early 2000s than in the quota-ridden 1980s and stronger than US manufacturing overall during that latter period.

The industry’s need for open markets underscores why economists and industry experts today strongly oppose Trump’s new tariffs and why, as Lincicome documented weeks ago, all automakers producing here expressed similar views during the 2018–19 investigation that underpins them. Even Elon Musk noted this week that Tesla, which has substantial US production, will face a “significant” tariff cost. Burdened with such costs, as well as those from other Trump tariffs (e.g., on steel and aluminum), continued policy uncertainty, and foreign retaliation, it’ll be many US-based automotive manufacturing plants from Michigan to Georgia—and their workers—that suffer. 

Impact on American Consumers

Of course, consumers will suffer too from higher automobile prices. As Cato scholars and many others have discussed, tariffs operate as a hidden tax on American consumers—one that they pay directly on imported goods and indirectly via higher-priced domestic alternatives that face less import competition. Given the aforementioned supply chains, moreover, domestic alternatives will face higher-priced parts and equipment, adding further price pressures.

The impact on consumers will be significant. Bryan Riley of the National Taxpayers Union estimates the new tariffs could add an average of $6,500 to the price of vehicles imported from Europe, Japan, and Korea. Vehicles imported from Mexico might see price hikes averaging around $4,500. Anderson Economic Group estimates that the cost increase for cars assembled in North America would range from $4,000 to $12,000 or more. Other estimates show similar pain, which even President Trump himself has recognized, reportedly warning automakers against raising prices in response to his new tariffs.

Tariffs will also limit consumer choices. History shows that manufacturers facing new tariffs often reduce available options or eliminate certain models altogether due to higher costs and potential retaliatory tariffs from trading partners. This helps to explain why, thanks to a longstanding 25 percent US tariff on imported pickup trucks, many smaller truck models aren’t available here. And just today, Reuters reported that industry analysts expect automakers to “spread [tariffs’] cost between US-produced and imported models, cut back on features, and in some cases, stop selling affordable models aimed at first-time car buyers, as many of those are imported and less attractive if they carry a higher price tag.” 

As is so often the case with tariffs, the biggest losers will be lower- and middle-income Americans.