President Trump says he is opposed to war, but he has started an unwinnable trade war that will make losers of the American people, American companies and the American economy.
Trump has now instituted 25% across-the-board tariffs against Mexico and Canada, our biggest trading partners, which also happen to be our neighbors with completely integrated economies.
After some delays that many had taken as a sign that the punishing levies on imports would be in a forever limbo, they went into effect at midnight, along with an increase to 20% on tariffs against China, instantly provoking retaliatory duties from Canada and China, with Mexico expected to follow suit this weekend.
As Canadian Prime Minister Justin Trudeau emphasized in a sober address that included remarks directly to Americans, they don’t want to do this, and it will cause real economic pain and job loss on both sides of the border. No one wants this except Trump and his cronies, who are living in a fantasy world.
This world that they are envisioning, where tariffs both fund federal government operations and also spur a complete isolationist system of domestic self-reliance — goals that are, by the way, directly at odds with reality but even each other — is not real.
The era they intend to emulate, of some early 20th century pre-income tax paradise of tariffs, was at a time when the federal government was a tiny fraction of its size today, when there weren’t public agencies to make sure you were eating safe food or taking safe medicines or avoiding plane crashes.
Those who stayed awake in U.S. history class might also remember they were a precursor to the Great Depression, which the Smoot-Hawley tariffs are widely considered to have deeply worsened if not helped precipitate outright. Modern manufacturing doesn’t work like that; there is almost nothing that is sourced entirely within, produced and sold all in the United States.
Your T-shirt? Textiles sourced from Central America and perhaps assembled in Mexico. Steel, paper, fuel, produce, even lobsters are fished in Maine and taken across the border to Canada before being sold back in the U.S. Cars are built with components from all three North American economies.
Many products and their source materials will cross these borders multiple times, with the cost of the tariffs compounding each time until it all concentrates in the final product, which is to say it will concentrate on consumers’ wallets at the point of sale. These are not going to be minute differences; if you thought the gradual inflation of the past three years has been bad, wait until prices on many goods jump a quarter overnight.
The markets, would-be predictors of overall economic health, are tanking on the news. Consumer spending is already in the toilet. We’ve burned through decades of goodwill built up with our neighbors and violated a free trade agreement — that Trump’s own first administration negotiated — in a way that will make future U.S. trade agreements not worth the paper they’re printed on.
The legally stated rationale concerning fentanyl is an obvious pretext; negligible amounts of fentanyl are coming in from Canada, and what comes from Mexico is overwhelmingly being trafficked by U.S. citizens going through official ports of entry. Trump just loves tariffs and now three nations will suffer for it.
