President Donald Trump announced that his completely insane 25% tariffs on Canada and Mexico begin tomorrow.
These tariffs are beyond dumb, like “Can you outsmart a 1st grader?” dumb. Here’s a few reasons why.
- Canada and Mexico are literally the U.S.’s two biggest trading partners. Everything from oil to electricity to automobiles to consumer products come from these partners. And we sell a lot back to them, of course. A tariff war would severely weaken our economy because we so much to lose. We’re not talking tariffs against some small country here.
- The severity of the tariffs is unheard of. 25% is a huge tax on trade. Imagine your sales tax going up 25% tomorrow. There would be riots in the streets. By the way, Trump’s tariff on China, a country which is not an ally of the US, is 10%. Explain that.
- Trump doesn’t seem to understand the basic facts of our trading with the two countries. He says that trees are a big import of ours from Canada. Wrong. It’s way down on the list. Electricity, oil, cars, and machinery are the big ones. And because so many in the US rely on these imports, an increase in their prices has the potential to affect prices of thousands of products that American consume. Trump also believes, or wants us to believe, that Canada, for example, has been getting away with a huge trade imbalance in its favor. He cites the figure of $64 billion in trade deficit. The real figure is a fraction of that, around $50 billion, which is small in the grand scheme of things. He seems to have this irrational fear of another country taking advantage of us in trade. That unfounded fear is going to cost the average American a lot at the grocery store.
- This trade war will hit Americans hard in the pocketbook at the same time as Trump is moving to deport millions of immigrants who do much of the work that feeds the country. These deportations will only raise food prices as farmworkers, poultry workers, and meatpacking plant workers, to name a few, are arrested and sent to who knows where.
Can Americans really expect to weather this storm? And for what? What is the end goal here by Trump? No one knows. I don’t think he even knows. He appears to have lost any understanding of basic economics at the marco or micro level. If his supporters think inflation was bad under Biden, they’ve seen nothing yet.
