As I recently wrote on Cowen's blog, a lot of the electorate doesn't know how tariffs work.
Say I manufacture a widget in [country]. At present, there is no manufacturer of that widget in the USA. We export to the USA, and now the US importer or distributor pays a ~25% tariff on the declared value to Fedgov. Then that US importer or distributor receives the widgets and sells them. Because its margin is down, it raises its price. Who paid first? The US business that imported the widgets. Who pays in the end? The US customer.
Now say I manufacture some specialty aluminum rods in [country]. We export to a heatsink manufacturer in the US. As they need our rods, they pay the tariffs. Their product is now considerably more expensive and there's more friction in their supply chain.
The only way this ends is with Americans paying more for goods. It could be a lot worse than routine inflation.
The right way to go about things would be to shore up US manufacturing capabilities first, and then utilize tariffs selectively. Right now, there's really no way around foreign inputs in manufacturing and/or wholly foreign-made goods, so there's going to be a lot of pain.
>The right way to go about things would be to shore up US manufacturing capabilities first
The US has basically "full employment" (the economic measure when more employment is inflationary). In a vacuum the idea that you're "bringing home the jobs" makes sense, but it makes zero sense when you simply don't have the capacity to build more. If Americans thought inflation was unacceptable under Biden, they're in for a real shock now.
Americans have no idea how good they have it. They're the biggest consumer of goods on the planet, and basically want their cake and to eat it too. It doesn't work like that.
And really, the US essentially has balanced trade with Canada, and if you exclude oil the US has a massive trade surplus with Canada. So when Canada and Mexico both "shore up" their own capabilities and stop buying the $1T of goods from the US, where does that leave the US? It enjoys a massive internal economy -- an irrationally large one -- but much of that is illusory and built on a myth.
Liberal trade is the reason the US became the richest country on Earth. Trump thinks everything is easy and is about to crash it to the ground.
This also pushes long term bond rates higher to price inflation into the yield, pushing both government borrowing and long term consumer borrowing (mortgages) costs higher.
I don't know why the left always presents this "full employment" thing when defending the Biden administration when they know full well how misleading that is and who are not counted in those numbers and the fact that it does not account for "under-employment", it's kind of intellectually dishonest. You can make these implications that inflation will get much worse under Trump but I doubt anyone on the left will come back with any admission or credit when it turns out to be false, surely they will just say "it was really Biden's economy that got better" or something to that effect.
So, when Trump threatened Columbia with up to 50% tariffs, did the cost of coffee go up for the consumer, or is it about to, or did the Columbian president offer his presidential plane to pick-up people?
[country] may have no other place to sell to, at least immediately, and at the same transportation cost. Moreover, unlike US, [country] may not have diversified its trade. The US may be able to control inflation like last time, by buying some of these goods from elsewhere and through interest rates etc.
Maybe. And maybe it goes in reverse, like it did the the China vs Australia trade war. China was the big boy in that dispute, and it's Australia's biggest trading partner by country. It wasn't pleasant for either side, but in the end Australia diversified much faster the China.
Interestingly, Australia didn't retaliate against China. We keep buying the Chinese stuff at the usual cheap prices, and found other markets for our goods they banned. China paid more, or did without. So we didn't have any leverage, but China normalised trade with Australia after a while anyway.
I have no idea which way it will go here, but "USA big, Canada little, so USA wins" isn't a foregone conclusion.
Perhaps the most nimble nation wins. The most nimble nation usually isn't the one putting up trade barriers and antagonising neighbours and friends. I reckon you'll know the outcome by the end of Trump's term, if it said term doesn't continue forever.
good example. worth noting that there may well be strong appetite to rapidly diversify and lock in other trade agreements in Canada to offset this battle with America.
America will not be able to do the same right now (due to Trump's rabid isolationism, and declining trust on the part of other countries).
USD to CAD has front ran a lot of this already. 1.45 is crazy.
The idea Canada can so easily re-route trade is absurd. Especially when the trade is going to be settled in USD.
I have been trying to understand the point of all this and come up empty this morning. I would have to assume it is for enormous leverage in the trade deal that ultimately ends all this. The leverage this gives the US in a trade deal, especially with Canada is pretty incredible.
25% is just so insane that it probably does cause Mexico and Canada to concede to whatever Trump wants in a trade deal and in short order. I think this is why Trump won't even take a call from Trudeau right now. It is a leverage tactic and then when they do talk what leverage does Trudeau have? Basically zero.
Yes, the USA has massive leverage over Canada on basically every front. We are a small child standing next to a massive person with a gun. But what is the point of destroying us?
Our economy is already down. All of our tech elite move to Silicon Valley. Our energy infrastructure cant get off the ground. The USA dictates so much of what Canada is able to do.
What is the point of squeezing us more? We have so little we can offer you.
We've already given you the lives of our soldiers as we follow you into pointless wars. What more do you want? The pennies in our pockets?
We are hoping the electorate in the US doesn't want to find out. US leadership has threatened Canada and other countries with using economic or military force for annexation. Canadians are hoping that saner heads will prevail, but it's not looking very good. We are very much aware that our military has been underserved in every way by Canadians, and that was part of the reason I chose not to continue my military career.
In the meantime, we are carefully and cautiously reminding the United States that we fought many of the same wars and learned the same lessons as the US military about how insurgencies are fought, and while many of our friends, family, and neighbours are American, we are not, and do not want to, and will not be American. Do with that what you will.
Retaliatory tariff why? US tariff are self inflicted harm. If you see your neighbor slashing their wrists, slashing your own doesn't improve the situation. Canadian taxpayers will be the ones eating that cost.
> Their strategy is to make sure Americans feel the pain too. But they are likely to focus on what experts call precision strikes against U.S. exports from Republican strongholds and industry groups with political leverage in Washington.
> Late Saturday, Canadian Prime Minister Justin Trudeau said his country would impose 25% tariffs on more than $105 billion of U.S. goods. “We didn’t ask for this, but we will not back down,” he said, warning that American jobs in their auto and manufacturing industries were at risk.
> A first wave, set to take effect Tuesday, will hit $20 billion of imports from the U.S., including alcohol, coffee, clothing and shoes, furniture and household appliances. On Sunday, Canada released a list of tariff targets, including products from Republican-leaning states, such as whiskeys from Kentucky, oranges from Florida and appliances from South Carolina. Government officials on Sunday also said they were targeting motorcycles in Pennsylvania, which has a Harley-Davidson plant in York, Pa.
> A second wave on an additional $85 billion of goods would include tariffs on cars and trucks, agricultural products, steel and aluminum and aerospace products. The second phase will begin in three weeks, to give businesses enough time to stockpile and find alternatives.
The only reason America will feel significant pain from our own tariffs on Canada is because without it, the tariffs on Mexico are voided as Canada has free trade agreement with mex that would make black market proxying through Canada trivial. I suspect that's what this is really about, Canada has to be in lockstep or themselves tariffed for the Mexico tariffs to be persuasive upon Mexico. Otherwise cartels just route white market goods to Canada under shell companies and then to us at no tariff.
The Canadians should find some other way to punish us than cutting off their nose to spite their face imo. A tariff is totally unpersuasive especially in light of the comparative trade dynamics.
I think it’s prudent to see what damage the actions of Canada, Mexico, and China can do with regards to economic retaliation and if they need to iterate accordingly.
I think Canadians are more likely to find themselves in a situation in which all of their land is owned by Chinese and other foreign interests than an occupation by the U.S. that requires "insurgents", and it seems like they are happy to do it.
I fear that in hoping cooler heads will prevail, you've only set yourself up for failure. Trump and Musk will take advantage of your willingness to see them as better than what they are. That's how they win. Just remember they are doing Nazis salutes and setting up a concentration camp in Cuba. There are no more cooler heads.
Well, that's nonsense. No one is doing "Nazi salutes" nor setting up concentration camps. I mean if the ADL say it was not such a salute, methinks thou doth protest too much. As far as concentration camps, this is just leftist hyperbole. Visit Germany and Poland go see what real such things were like, this is more offensive to those victims of atrocities then the made up things you are referencing.
Musk literally did a Nazi salute behind the presidential seal. And Trump announced concentration camps at Guantanamo Bay, so you're wrong there as well. I'm not getting my news from leftists, I'm getting it from the two co-presidents. You just have to watch what they do and say in public to come to these conclusions.
Again, the ADL literally said it was not such a salute. Also, those are not concentration camps of the kind of Nazi Germany. This is highly offensive to those that suffered in the holocaust to conflate these things.
"Also, those are not concentration camps of the kind of Nazi Germany. This is highly offensive to those that suffered in the holocaust to conflate these things."
Yeah, they are like 1933 Nazi camps, not 1945 Nazi camps...
The road to Nazi Germany was paved by people, like you, who looked at the obvious and dismissed it as hyperbole until the truth became unbearable. You're literally that guy in the "are we the baddies?" meme.
They are doing Nazi salutes and setting up out-of-country concentration camps to which they will send individuals they deem "illegal" who have been labeled by the head of state to be "poisoning the blood" of our nation.
This sentence is true in America today, and in 1933 Nazi Germany.
As for anyone who is offended, send them my way and they can give me an earful, and we can talk it out. But when I see a Nazi salute, I'm calling it out; I don't care who it offends.
The world is transitioning from a "rule of law" order to a "rule of jungle" order, where might makes right.
People who understand this will have an easier time in the new world order. The goal now is to make it through the inevitable war, and try to set up a better rule of law next time.
Canada is the first test. The way to handle America is to use the only language bullies know: force and strength. Never back down. Never give an inch. If Canada tries to negotiate, it's done. Whatever agreement is reached, America will renege, and Canada will lose.
The problem is that the USA is capable of far more force and strength than Canada is. It's like an abusive relationship, but one where due to geography, Canada cannot simply leave.
I blame Canadian leadership. There should have understood the risk long ago. There are other problems as well due to weak management.
The claim about drugs is a legal justification for the use of emergency power. Canada isn’t causing problems for US. These tariffs are harmful and unfair to Canada.
Canada’s leadership could have done better in the past decades (not that they are directly responsible for these tariffs).
* Canada funds and invents new technologies in early stages, but fails to commercialize them: AI, smartphones, pharmaceuticals, …
* Canada hasn’t introduce measures to retain its talent. It’s too easy to be trained in Canada and work in USA.
* Canada hasn’t diversified its trade. It exports around 80% of exports to a super power, putting itself in a vulnerable position.
* Canada’s economy focuses on natural resources, oil, finance and services. It should do a better job in more productive sectors (tech, manufacturing, etc).
* Canada’s immigration is insane.
* The housing crisis, inflation, reduced GDP per capita and productivity are the result of poor management.
* Canada should stay neutral with respect to internal politics of major powers. The power swings, and liberals should not speak ill of republicans.
* Canada should meet its NATO commitments. It contributes less than most members. It should think of defense.
* Canada’s universal healthcare system seems to me costly and hard to sustain, and needs to be reformed to lower public costs.
Thankfully, tariffs are delayed, and hopefully will not be slapped back.
There's basically nothing that's manufactured only in Canada...
The vast majority of our exports are raw materials, and of our manufactured goods most are foreign multinationals that set up shop to take advantage of our cheap(er) labour versus the US... They can and will move to the US because of these tariffs.
This will decimate our economy and it really feels like Trudeau simply wants someone to blame our shit economic performance on...
Unless the world demand for these raw material goes down or production elsewhere goes up someone will still buy these raw materials. If tarriff is high enough to force US to source from and Canada to sell to more distant places the world will be less efficient.
Hugely important for agriculture, barely produced in the US at all, mostly imported from Canada.
If Canada retaliates by barring or limiting potash exports, it would be so harmful to the American agriculture sector that Trump would go ballistic.
> They can and will move to the US because of these tariffs.
That's a lot easier said than done, and as US policies might change at any time -- it's a coin-flip what'll be the case in four years -- they'll probably just decide to wait it out and let US consumers eat the tax.
Seriously, you might think it's easy to relocate, e.g., a car manufacturing plant, but it sure ain't...
Potash is important yes. Canada also imports a majority of our fruit and vegetables from the US. Over 90% of our leafy greens come from the US. We already have a massive cost of living crisis. And I'm not sure if American commentators have been paying attention to our economy or not but Canada's GDP per capita has gone down for 6 straight quarters.
I don't think anyone is saying it won't hurt Canada; trade wars hurt both sides. The discussion is whether Canada can make it hurt Trumps supporters enough to pressure him to remove the tariffs.
My perspective is as a Canadian. The US GDP per capita is 7% above pre-Covid numbers, Canada's is 2% below. Or you can say our GDP per capita has diverged by 9% since COVID. Canada's cost of living is actually untenable right now. Canada can't hold the line long enough to do anything to the US.
We'll do it for political reasons until the election this year but it's going to decimate our economy even further.
Cost of living in Canada has been untenable for the past decade. The choice is to bend the knee or suffer more with the hopes you’ll at least go down with pride. I have no idea how the hell the government across the border got their citizens to start hating on us within a couple of weeks.
They didn’t. The vast majority of Americans don’t hate Canadians. You don’t need a popular referendum to set tariffs, the president can just do it. One of the many downsides of electing a crazy person as president.
Fair, apologies for having a knee-jerk reaction to it. It just sucks to scroll a tiny bit on forums and get bombarded with pure hate. I understand that it doesn’t represent the majority, but makes you scratch your head and think why so many level headed people are willing to throw away trust that was built throughout decades. Like I get the whole America First approach, and understand the desire to build out the manufacturing locally… but is it worth it to turn away all of your allies and make them get closer with the actual super power that wants to dethrone you?
To be fair Canada and most of the EU haven't come close to fulfillment our NATO requirements since, well, ever. For better or worse most of the free world freeloads off the US' security shield.
Canada is especially egregious, where we have a bunch of tariffs and regulations protecting certain Canadian corporations while expecting the US to protect us and buy our products. All the while smugly criticizing them for it.
> To be fair Canada and most of the EU haven't come close to fulfillment our NATO requirements since, well, ever. For better or worse most of the free world freeloads off the US' security shield.
USA is only country that used article 5. Other NATO countries served USA til now not other way around. But it seems that this will end soon. At least in EU, where pro-Russian parties are gaining power.
US gets unquestionable currency dominance from US' security shield. Don't get me wrong, but if that was a real concern, they would've started the tariff war 4, 6, 8 years ago. Economical and political headwinds are showing potential Chinese dominance across all manufacturing and export industries. This is the actual time when US is being threatened and trying to bully others, because they can't fix the problem themselves.
sentiment differences are powerful though -- some Americans might rally behind Trump, but if cost of living goes up significantly they won't be patient about it, especially given it's clear that Trump started this whole thing.
meanwhile -- excepting those who CAN'T, for whom there may well be govt assistance -- Canadians are angry and will endure (relatively more) pain to prove a point.
not saying I want this outcome, but I think the willingness to endure pain to harm the opposing party is different in each country.
You also have to account for how much Trump cares about his supporters vs how much any Canadian politician with sufficient power to act cares about their supporters. Trump is already elected, so whatever self-interested concern he had for his supporters is gone. I doubt Canadian politicians, with an election looming, are as willing to throw their supporters under the bus.
They state they think the temporary pain to consumers and the loss of good will with Canada and Mexico is worth some other goal that will be achieved like they think this will cause American manufacturers to decide to expand in America, also they always talk about tax cuts and tariffs are a way to increase federal revenue without a change in the tax code. There's also the stated justification of fentanyl and undocumented immigrants from Canada and Mexico but the vast majority of both of those comes from Mexico with Chinese connections for some avenues of fentanyl so the Canada thing feels like it's a flimsy excuse to be included just for some bargaining on some other subject, or just to have an accomplishment, like how Trump in first term pushed for TikTok ban, then after winning 2024, Trump undoes ban he initiated in first term to claim that as an accomplishment. Versus say the border wall he promised in 2016 campaign but had a paltry result by 2020.
It's like they think a factory or manufacturing plant can be spun up in a few weeks.
I didn't say I agreed with them, merely summarized what they said in 2024 campaign and speculated on other motivations. I think they are entirely serious in their other motivations, they are flooding the zone with actions listed in Project 2025, just doing as many executive actions as possible to keep opponents busy so some will stick.
My guess is that Trump does not want the Chinese manufacturers and other multinationals to just jump ship from Mexico where they currently are, to Canada. He wants the manufacturing to be in US.
Also, I think he is serious about the fentanyl trades via Canada
US Customs and Border Patrol recognizes three regions where fentanyl crosses into the country. These regions are the northern border dividing the US and Canada, the southwest border dividing the US and Mexico, and coastal and interior ports of entry.
your source shows that last year 50lbs of fentanyl was seized at the canadian border vs 20,610lbs seized at the mexican border. when looking at the total seizure of fentanyl, only .2% of it was at the canadian border. it is hard to take the fentanyl justification seriously given such a dramatic difference.
Canada was specifically warned not to retaliate in any manner, which is basically an acknowledgement that Canada has some powerful levers. This is farcical and of course Canada is going to retaliate. The $450B of American goods sold to Canada is going to collapse. The F35 purchase will be cancelled. Various other projects with the US will be abandoned. Oil will be export tariffed. Every American service -- Netflix, Disney, Prime, Apple services -- need to have enormous tariffs applied. We can handle without them, and every enabler of this insanity needs to suffer. Literally the single military threat Canada faces is an increasingly rogue and insane United States, so it's time to start a nuclear program again, which can be quickly completed.
Which will cause Trump's various sprogs to write mean, threatening tweets, and for Trump to redouble again.
This is going to spiral out of control very quickly.
And for those not caught up, this has absolutely nothing to do with secure borders. Canada contributes a rounding error to US border problems, and the reverse is much more the case. Trump outright said there was nothing we could do. He truly thinks income tax can be replaced by tariffs, despite the latter being incredibly regressive, and the ridiculous fentanyl lie justifies his outrageous abuse of your country's limits of power, allowing him to invent an imaginary threat to push his agenda.
> Prime Minister Justin Trudeau said Canada will respond by placing 25% counter-tariffs on C$155 billion ($107 billion) worth of American-made products. That will include tariffs on C$30 billion worth as of Tuesday, with the rest coming later in February, to allow Canadian companies to adjust their supply chains and find alternatives.
> American beer, wine, food and appliances will be among the many items subject to Canadian tariffs, and the country is also considering measures related to critical minerals, Trudeau said. He encouraged Canadians to buy locally made products and skip US vacations.
Canada is specifically going after goods from red states. Imagine if every nation Trump goes after targeted the same states that Canada has? They can't devastate the entire USA but they can absolutely devastate a few US states if they play smart and work together. Especially poorer red states.
They could start a joint nuclear program with Ukraine. Canada has the Canadian shield which is rich in Uranium.
Both Canada and Ukraine get nukes (Ukraine has a bridge that needs blowing up), Ukraine gets safety, Canada gets huge reputation gains in trade with Ukraine.
NB: Ukraine will be the fastest growing western economy post war for at least a decade or two.
Nukes for everyone yay! Hey Georgia is also under Russian threat, why don’t they also get a nuke or two? Then maybe their neighbor Armenia will think to themselves “why not me, I’m also under threat by an ex-Soviet country”? Then maybe Azerbaijan, then Turkey, then Saudi Arabia, everyone gets a nuke, I freaking love it! Then maybe other countries that got invaded by a bigger power like maybe Vietnam? Iraq? Why not!
I mean...why not? What moral right does the US have to nuclear weapons that others don't? US exceptionalism?
Just looking at what is happening in the US right now -- an astonishingly corrupt banana republic increasingly led by an insane Christian nationalist movement that bizarrely doesn't seem to understand a thing about Christ's teachings -- I have more faith in North Korea's management of nuclear weapons than the US.
Nuclear non-proliferation relied upon a global order where borders were fixed and there was in essence an international law and detente. Now we have an America openly musing about militarily taking countries and land as if it's just casual talk.
Yes, everyone should have nuclear weapons. And many of them should be pointed at US cities. The US is undeniably the most dangerous nation on Earth right now, and has lost any and all credibility as a rational player.
Exactly. I can bet that every country on the world having a nuclear bomb would actually make the world a safer place. We are still primitive, so the threat of us being destroyed at any time should keep us at bay.
No country that holds nukes should be considered a pillar of morality. That's stupid beyond belief.
That is assuming everyone has a working survival instinct. Religious fanatics notoriously do not have this instinct. You just need one country with a religious fanatic at its head, who thinks that it is better we all go to heaven than to let evil win, and boom.
Now you can you argue the current US president is a fanatic if you want. But I do not see how adding more bombs to more countries reduces the odds of nuclear warfare in the future.
The current equilibrium has worked well enough. I do not see why we need to hand over nuclear weapons to countries currently embroiled in bloody civil wars.
Where is this ruling insane Christian nationalist movement? I don't see one. Are you just talking about people that think men are physically more dominant at sports and other physical activities, that is insane? I think that's what all of the world thought for thousands of years and probably 99% or more of people in the world think today. This is just more the Henny Penny stuff that I don't think helps the left much.
The Christian nationalist movement are the people saying things like “Many people have told me that God spared my life for a reason, and that reason was to save our country and to restore America to greatness” - Trump
I think you like naming fallacies without knowing what they are. That is a common tactic among Flat Earthers (oh I'm sure I'll be hit with another charge here). It is is not "No True Scotsman" to say that it is hyperbolic to suggest that say that statement was Christian nationalism.
You asked for an example, and then when presented with one, said, no, that’s not really an example.
Your argument to antiquity: “that's what all of the world thought for thousands of years”
Your argument to popularity: “probably 99% or more of people in the world think today”
Not that you’re trying to use those points in a cogent way. You heard “christian nationalist” and proceeded to attack a strawman of gender advantage, which has nothing to do with it. I gave you a salient example, and you went off with a half cocked opinion, conveniently sidestepping any further discussion of the actual implications.
That's the direction things are going, yes. It's being made clear that the old rules no longer apply, and that might makes right. What's more mightier than a nuke?
Would Ukraine have been invaded if it had nukes? Unlikely.
Will trump invade Canada? The odds are >0%, so nukes are pretty good defense mechanism.
Unfortunately we already have a few Canadian run streaming services and they're utter shit... As in constant buffering, won't cast to TVs properly, that sort of thing.
Yeah, but e.g. if the gov suspended Netflix copyright protection and had Crave load up Netflix's entire catalog... I don't know how many people would opt to still pay for Netflix just to avoid Crave's UI/UX.
> Every American service -- Netflix, Disney, Prime, Apple services -- need to have enormous tariffs applied. We can handle without them, and every enabler of this insanity needs to suffer.
No need to wait for tariffs. I started cancelling all American services today. Netflix and Prime were first. I will not send money to a country that has declared an unwarranted trade war on my country.
And it truly is unwarranted. The current trade agreements were negotiated by Trump in his last term, and are well balanced. The only reason for any current surplus is that oil prices are currently high. In general, Canadian raw resources go to the U.S. to be manufactured by skilled labour into end goods that are then imported back into Canada at a large markup. Trump has cited fentanyl and immigration as sticking points while providing no specific demands or suggestions. Less than 1% of illegal immigration to the U.S. comes via the Canadian border. It's incredibly frustrating to be utterly betrayed by a friend in this way.
Please get your government to work with Mexico and China to put tariffs on specific red states. You can absolutely devastate the economy of a few states, especially poorer red states and other states Senators would then think twice before voting in favor of things that could turn those tariffs to their state.
Given that all this (and there's a whole lotta other extra this) is coming straight out of the White House without any legislative votes, the future vote that is going to matter involves impeachment and removal from office.
That should guide how other countries' decide to structure their retaliation.
Impeachment is unlikely because the GOP has to kowtow to Trump to survive him and his base. The path is to beat down red states and their electorates with tariffs. The direct economic harm is the only lever to pull, and therefore a coalition of nation states is needed to specifically target red states collectively.
> What do you think would be the actual result of such actions in the real world?
In regards to the potential impact of retaliatory tariffs, I’d expect to see layoffs and business closures in red states, where voters are already economically disadvantaged; auto industry, agriculture (potash), etc. Increased grocery and basic food pricing. Farmer suicides are already 3.5x the general population, I’d expect to see the suicide and deaths of despair rate tick up from this economic impairment. These states already primarily rely on the federal government for financial assistance, financial assistance the new admin has said needs to be cut.
Canada specifically stated they are targeting red states. That’s not copium, it’s just smart policy. That’s where the voters are who voted for this. So, you impair jobs and economic opportunity in those states with tariffs and other cross border policy.
> The U.S. auto industry could shut down within a week, by some estimates, thanks to these tariffs. Even if it doesn't, there is no automaker that's set up to operate in a world of high-friction North American border duties.
…
> “Farm Bureau members support the goals of security and ensuring fair trade with our North American neighbors and China, but, unfortunately, we know from experience that farmers and rural communities will bear the brunt of retaliation. Harmful effects of retaliation to farmers ripple through the rest of the rural economy.
> “In addition, over 80% of the United States’ supply of a key fertilizer ingredient — potash — comes from Canada. Tariffs that increase fertilizer prices threaten to deliver another blow to the finances of farm families already grappling with inflation and high supply costs.
> “Farm and ranch families answer the call to feed America’s families and the world, and these tariffs and the promised retaliation will put further stress on their livelihoods. More than 20% of U.S. farm income comes from exports, which are dominated by these three markets. Just last year the U.S. exported over $30 billion in agricultural products to Mexico, $29 billion to Canada and $26 billion to China – our top three markets and nearly half of all exports by value combined.
> The current trade agreements were negotiated by Trump in his last term, and are well balanced.
I'd contend that they were already unbalanced in favour of the US. Canada gets some supply management, while the US gets to maintain softwood lumber tariffs and greatly extends copyright protection.
The figures I have seen in a trade war with Canada is Canada causes a -.2% hit to US GDP while Canada gets a -2% hit. That is not going to work for Canada.
These aren't abuses of power though. We just largely got use to the president not trying to do all that much.
Obama issued 275 executive orders and Franklin Roosevelt issued 3721. Calvin Coolidge issued 1203. I think all the presidents during my lifetime combined issued less than Woodrow Wilson at 1803.
That is not to say I think a trade war with Canada is a good idea. It really makes no sense to me at all.
Is it going to shut up shop and close down? What does "not going to work" mean? The US is the one who chose this path, not Canada, and Canada is going to do what needs to be done for the situation the US forced it into. And FWIW, many Americans are a little in denial about how fragile your entire economy and social order is, and how little it takes to topple it. The impact of a trade war is likely to be much more significant than the "well it's just a trillion dollars of exports" rhetoric claims.
Canada has to "retaliate", in that it will adjust economic levers that will force production that currently happens in the US, serving the Canadian market, to adjust to players in Canada. Canada foolishly treated the US as an ally and partner and integrated our economies, so of course there is going to be pain. But to let you in on a little secret, a lot of Canadians have wanted this for a long time: There will be pain for a while, but Canada has increasingly become a branch office of the US. Despite enormous geographical, educational and social benefits it keeps falling behind. Trump is really just looking to MCGA. Next we can punt all of the US corporations out of Canada -- again, the ability for US businesses to operate freely in Canada is courtesy of NAFTA/USMCA. That agreement is defacto shredded now. The Canadian government needs to do everything possible to prevent discretionary dollars from travelling South of the border.
>These aren't abuses of power though.
Claiming a "border security" emergency -- a complete BS lie that only the incredibly stupid take at face value -- to push through an economic plan is absolutely, by every measure, a grotesque abuse of power. Americans are so accustomed to it now that it's just normal. If you think it isn't an abuse for your president to lie to you to have powers that he doesn't have, you have lowered your standards to corrupt banana republic levels.
Again, Canada and the US were operating under the trade agreement Trump forced on us the last time around. I don't see any clean exit of this where things return to normal. Canada must not ever treat the US as a sane, rational, responsible player on the world stage, as it constantly 180s on everything as American voters treat government like some perverse reality show.
> If you think it isn't an abuse for your president to lie to you to have powers that he doesn't have, you have lowered your standards to corrupt banana republic levels.
By not prosecuting George W Bush and his lies about WMDs in Iraq as crimes, we set the stage for the lies today about Canada to be excused as business as usual. Which… yeah it kind of is, and that’s what makes USA dangerous.
In fact, many of the people who preached unity and bygones back then are cheer leading the lies against Canada today. So the pst is coming back to haunt us.
It's likely that Canada will target exports from Trump-supporting states, which is a strategy that seems to have worked before. It may not have a large impact on the whole US economy but it can concentrate the pain to optimize the political impact.
You would have a better point is Trump was only messing with Canada. But they are threatening so many countries at the same time that it's enivitable to start forming free trade agreements outside of America.
That would be seriously destabilising to America for the future.
China, Canada, and Mexico will all retaliate, there is zero consequence for the governments doing so and a lot of consequence for not doing do (Trump is very unpopular in all of these countries, so giving into him or agreeing to his terms won’t be seen as very viable). So get the popcorn ready, this weekend and especially Monday will be really interesting.
I bet this concludes with a free trade treaty between China, Canada, and Mexico.
I’m actually sympathetic to the fent problem, but all that comes in untariffed anyways, or maybe the plan was to have the smugglers busy with illicit legos and bananas instead?
If this were limited to China and Mexico, the fentanyl thing might have been a rational argument. Adding Canada, which is the source of a vanishingly small amount, betrays the lie. He needed the excuse to claim an emergency, rather than the incredibly self-destructive "recreate federal funding through tariffs" policy, which coincidentally (and forebodingly) led to the great depression.
Living near the border, we send way more drugs Canada's way than come back down to us. Maybe before weed was legal more was coming the other direction, but fent/mexi's are going from us to Canada.
Canada is a member of CPTPP, which was the replacement for TPP that Trump backed the US out of.
Canada really doesn't have a bad relationship with China. We had a tiff previously when we arrested Meng Wanzhou on behalf of the US, and in return China arrested the Canadian "two Michaels"[1] and both countries used Canada as a pawn.
Never take pictures of naval/military installations in China, even when they are right next to popular tourist sites. It’s like if in San Diego, taking a picture of a carrier parked downtown could land you in prison. There are also so many laws on the books (mostly unenforced until convenient) that most foreigners touring or resident in China can be used as a hostage if necessary.
He's financed by billionaires. And he's adding tariffs that will make everything expensive for normal people, while at the same time cutting corporate taxes of those same billionaires that fund him. Basically it's just a continuation of ever increasing inequality, where in the end the top few % will own everything and the rest will fight over scraps.
Of course Canada was warned - the last thing a bully wants is retaliation. Others might get the same idea.
I have never seen any article saying tariffs will "only" hurt American consumers. They hurt both sides and every article I have seen acknowledges this. However, American news sites tend to focus on the effects in the US, while Canadian news sites focus on the effects in Canada.
I may have worded that wrong. Articles say that they will hurt American consumers and don’t address the actual purpose of the tariffs, which is to put political pressure on their targets. If the tariffs didn’t have at least some chance of succeeding at this, the targets wouldn’t be talking about retaliation.
> If the tariffs didn’t have at least some chance of succeeding at this, the targets wouldn’t be talking about retaliation.
… Eh? Retaliation is an absolutely standard part of a trade war; it virtually always happens, and, unfortunately, it can’t really be foregone. Like, people are talking about retaliatory tariffs because that is _how it works_; that is what always happens and really must happen.
Again: articles claim that tariffs are pointless because target countries simply pass the cost along to consumers. But if that were the case, there would be no reason for the targets to “retaliate”.
Does anybody else have hazy childhood memories of those kids who would hit others but throw a bewildered crying tantrum when they were hit back in direct response?
Targets talk about retaliation if they think the tariffs have some chance of succeeding, true. Targets also talk about retaliation if they think retaliation has a chance of succeeding.
> The other is to roll over. You only do this if you don't think you'll win the trade war. That's what Columbia did.
The situation is a bit different IMO, Colombia had a clear reason for getting tariffs and it was possible for them to roll over.
Canada though, it's not even clear why the tariffs are there or what Canada could do not to have tariffs. There isn't really anything for Canada to do except retaliate.
Political pressure to what end? Trump said “jump” on border measures and Canada jumped even before the tariffs.
The retaliation is posturing for the other party and for the electorate. If you’re driving in a car and your passenger pulls the pin on a grenade, you can “retaliate” by pulling the pin on your own grenade.
Tariffs do of course cost the target; they reduce the market for its goods, because consumers and businesses in the country applying tariffs can no longer afford to buy them. Now, how much they hurt will depend to some extent on whether there are other markets, etc.
Imagine there are two countries, A, B. A exports $1bn in raw materials annually to B. B exports $1.1bn in finished goods to A. B imposes a 25% tariff on A. Businesses buying the raw materials will generally not be able to afford a 25% increase in input price (very few manufacturing businesses have margins anything like that high) so will fold. A no longer has B buying its stuff, so the raw material production will halt, leading to losses there. A will no longer be able to afford to buy B’s finished goods (even if A does not impose retaliatory tariffs, which it almost certainly will), so even if some of B’s industry can survive the input cost hike, it has a smaller market.
Obviously this is _extremely_ simplified (for a start, other countries exist, and you might see more of a _rerouting_ around A, a little like what has happened to post-Brexit UK. But it’s a serious mistake to think of this as a zero-sum game. In general high broad tariffs hurt everyone.
They do cost the target, the claim is not they cost nothing. But, if they costed the target nothing, you would safely retaliate, because that is rational response to someone trying to target you.
You mean ... supposed pressure for Canada over the fentanyl? What exactly is to be gained there? It is political pressure for the sake of political pressure and looking like a macho man.
In that setup, Canada has no choice but retaliating. Trump is a bully and so is Musk. If you do what they want, they will bully you further. So, you have to retaliate if you can.
Tariff war with all main trading partners ? According to Trump EU tariffs are coming in soon.
US can win any tariff war against a single country. They maybe could win against China or EU or Canada / Mexico alone. But all of them at once ? This is going to be a disaster for the US.
Because of current sky-high stock market valuations, US thinks it's the only game in town. We will soon see if it's the case.
The tide is turning, and it's only when the tide goes out do you discover who's been swimming naked. US is in for a big surprise.
With things like tariffs on prescriptions, I guess get the population to riot then declare marshall law and just fully coup the US successfully this time.
If you look at the global trade balance, most economies are essentially relying on persistently heavy trade surpluses for growth. Their domestic consumption is too weak, so instead they focus on exporting to foreign markets. And right now, the only country that is both large enough and willing to do is the USA.
That's why it's actually alot worse if it's everyone doing it, because since the majority of them are exporters, someone or many will have to take on a massive trade deficit to balance the exports. Too many sellers, not enough buyers. No one is willing to do that, and so to that extent it's important to realise that the exceptionalism of Trumpian protectionism is something that these countries perform on a day to day basis!
Nor is this system paticularly stable, with the US running a persistent current account deficit and ballooning debt as a result of it, yet the glut of foreign capital inflows and the resulting overfinancialization of the economy means that the dollar remains strong as opposed to weak and is unable to naturally rebalance.
America has been prodding these countries to reform and transition to consumption based economies like them for decades, but they haven't been doing so, so unfortunately the gravy train is over and the beggar thy neighbor policies will commence.
They want to snap up assets, strip mine and privatize government services once theyre broken, and install the billionare oligarchcy as the permanent ring class.
Theyre speed running Russia's 1990s economic crash into oligarchy.
Except this time it’s the capitalists and not the communists.
The lesson of the fall of the Soviet Union was never that Communism doesn’t work, it’s that this top down insider-only rule by decree doesn’t work. They’re trying it again with this smug background of feeling like they’ve got it all figured out this time, but they’re just doing it all again but with iPhones and the internet. But it’ll turn out just the same.
Trump has an infantile view of the economy. He seems to think that a trade deficit means the US is losing money, as if it was a business. If he can manufacturer a trade surplus then then he can do away with taxes.
He also seems to believe that tariffs are paid by the foreign countries, not American consumers. It is unfathomable that people voted for this idiot.
Even among the folks who really do want to "run government like a business", the kinds of businesses they usually admire--large, publicly traded, with a CEO beholden to sharehodlers--are utterly different from the kind that Trump has inherited from his father.
Only kind of government Trump's business experience has prepared him for is running North Korea: A lifetime CEO on top who can't be removed, the ability to fire anybody on a whim, and sneaky power struggles between the kids for who will inherit when the old man finally strokes out.
... He's going to do a lot of damage to America trying to twist it into working that way.
I don't really understand what the end game is with Canada here.
For Mexico, it seems more like a prod for social policy on immigration and fentanyl.
I listened to Trudeau yesterday and he isn't even able to get a hold of Trump right now, something that seems just insane.
I am just not sure that is true though that this is a disaster for the US. How much can China afford to fight back here with the state of their economy? Canada retaliating is asymmetrically bad for Canada.
Dollar strength and an emerging market currency breaking is what worries me. Inside the US, I would expect much of the potential inflation will just be exported through dollar strength. I imagine that is the method to the madness.
US is losing big time to Chinese manufacturing and realpolitiks on the ground. They realize they can’t reverse it without taking very huge gambles, like tariffing everyone with the hopes of on-shoring.
I’m expecting for governments to cozy up with China again. Will be interesting, but unpredictable couple of years. I’m not sure what’s the best way to diversify one’s savings so you wouldn’t crash it out either.
The official statement from the White House calls out increased fentanyl production in Canada as the reason - but doesn't say that it's the majority of imports, you're right. The twitter summary says "There is growing production of fentanyl in Canada, and enough fentanyl was seized at the northern border last fiscal year to kill 9.8 million Americans.", though, and that seems like a lot.
This is an excuse, as an "emergency" is (effectively) the only way that such tariffs can be applied without input from Congress at all.
It's also likely a lie, given the number of lies told by Trump and his supporters. The two groups which should not be believed on this are the DEA (whose entire raison d’être is predicated on making things far scarier than they are so they can increase their power — I believe they are behind the proven lie that "touching fentanyl can kill you", which it can't) and the Trump administration (because the volume of lies spewed daily would overwhelm the New York City sewer system).
A "super lab" that used "cartel" processes was discovered in Canada a few months ago with almost 100 million[0] lethal doses of Fentanyl. It was only 11 miles from the border. The group was linked to a Khalistani transnational crime network; the same group of people (Punjabis) have also taken over our trucking industry[1]. Our border is the longest undefended border in the world and Canada is now taking in more than 1.5 million people per year[2], not including the 5 million on 'temporary permits'[3], mostly from India and China[4] and mostly un-vetted[5]. They get H2B visas with their Canadian passports and can travel across the border with ease. 1 billion doses worth of precursor chemicals were found in the port of Vancouver over a period of just 3 months last year[6], all coming from China. Halting immigration and shutting off the precursor chemical supply from China via the port Vancouver is all my clown show of government had to do to avoid this trade war. Stopping the flow of these brutal new drugs will do more to save both our economies than any amount of 'USA owned' tar sand ever could.
That is just insanely hyperbolic. I think this why the left lost. There is a 0% chance that Trump will invade Canada. I really think the left needs to just back away from fighting for their positions for a little while and get some perspective or they will continue losing.
While Trump may not invade Canada, he has already said that he wants to annex it and make it the 51st state. He "Truth'ed" it yesterday. His words, not mine.
Imagine if every country does what Canada has and target specific states? If every country Trump goes after targets goods from the same few states they could devastate that state. Sure the US is bigger, but absolutely devastating just a few states economies could get some attention.
1. Don't worry, even if Canada retaliates with their own tariffs, we'll just buy from Mexico, and Canada will be left out in the cold, jealous of our success.
2. Don't worry, even if Mexico retaliates with their own tariffs, we'll just buy from China, leaving Mexico and Canada out in the cold, jealous of our success.
3. Don't worry, even if China retaliates with their own tariffs, we'll just buy from the EU, leaving China and Mexico and Canada out in the cold, jealous of our success.
4. Don't worry, even if the EU retaliates with their own tariffs, we'll just buy from... Hold up, what happened to our four biggest trading partners and over half of all the trade we were doing? Well, their loss.
...
96. Okay, Azerbaijan, you'd better give us a really good deal right now, or else we'll take our business to Turkmenistan, and you'll have nobody to trade with except basically everyone else!
97. Well, I guess the US is one of the countries best able to implement Autarky today, so let's give it a try!
Trade makes things more efficient. Trade gives access to resources not available otherwise. Trade allows greater economies of scale, and production efficiencies via comparative advantage.
Trade is also not fundamentally necessary for the US in the way it is for essentially every other country on the planet, because the US is large enough, diverse enough, and resource rich enough to (with a fair bit of pain!) survive on our own.
I do not think it will come to that, but it is true.
Things make a lot more sense when you realize the benefits a recession has for the top 1% and will have for Trumps personal wealth. While yes, they will temporarily go through some pain in the form of a decrease in their net worth, a recession allows the rich to expand their businesses, consuming smaller businesses that are much harder hit by a recession and collecting their technology and markets for pennies. I don’t think there is a coincidence that all these billionaires are holding hands with Trump. It will also be a fantastic distraction as they convince people how this bill or that bill that quietly strips away your rights is going to be good for business and “bringing the economy back”.
The goal is pretty simple and obvious… Beat The People with the stick until they can barely move, then offer them a carrot and a shackle.
Say I manufacture a widget in [country]. At present, there is no manufacturer of that widget in the USA. We export to the USA, and now the US importer or distributor pays a ~25% tariff on the declared value to Fedgov. Then that US importer or distributor receives the widgets and sells them. Because its margin is down, it raises its price. Who paid first? The US business that imported the widgets. Who pays in the end? The US customer.
Now say I manufacture some specialty aluminum rods in [country]. We export to a heatsink manufacturer in the US. As they need our rods, they pay the tariffs. Their product is now considerably more expensive and there's more friction in their supply chain.
The only way this ends is with Americans paying more for goods. It could be a lot worse than routine inflation.
The right way to go about things would be to shore up US manufacturing capabilities first, and then utilize tariffs selectively. Right now, there's really no way around foreign inputs in manufacturing and/or wholly foreign-made goods, so there's going to be a lot of pain.
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