by David Shuster
Cliff’s Note:
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—Cliff
There is something uniquely pathetic about the United States government, under Trump, declaring economic war on Canada. It’s like watching an elderly demented apartment dweller attack the neighbor upstairs with a flamethrower because the building stairwell has become a little squeaky.
The assault is remarkable. The intelligence and logic behind it are non-existent. But here we are. Donald Trump has once again reached for his favorite economic instrument: the tariff. Canada has apparently failed to appreciate the majesty of the Trump negotiating team threats. So Old Man Orange has answered with a 50 percent tariff on Canadian goods and the prospect of even higher duties on automobiles, trucks, parts, and steel.
Trump claims his economic warfare is in defense of American workers. Actually, it is yet another large tax imposed on American consumers and commerce.
The elementary fact, which continues to escape MAGA world and most republicans in Congress, is that a tariff is collected from the American importer. It is not an invoice mailed to Ottawa. When an American company imports a Canadian product subject to a 50 percent tariff, the American company pays the government. The company or business can then absorb the cost, reduce its margin, find another supplier or pass the increase on to customers. In other words, the administration’s grand crusade against Canadian products has the feature of making American products more expensive.
This becomes especially absurd in industries where the United States and Canada have spent decades constructing integrated supply chains. The automobile industry is the most obvious case. Parts and components cross the border repeatedly before a finished vehicle emerges. The arrangement exists because geography and economics occasionally manage to accomplish something that politicians cannot: they persuade people to cooperate.
Trump is now attacking that cooperation with a tariff sledge hammer. The dim-witted Trump theory is that if Canadian parts and product inputs become more expensive, American manufacturers will miraculously produce everything domestically, cheaply and immediately. This is the sort of economic reasoning of an imbecile.
Factories cannot be conjured into existence by presidential proclamation.
Supply chains cannot be rearranged by interviews on Fox News or Newsmax. Skilled workers do not materialize because the Trump White House has yet again discovered the word “tariff.” Building new domestic capacity requires years of investment, enormous sums of money and incredible patience – a key commodity absent from all things Trump.
And then there is Canada. Canada is not a hostile dictatorship plotting America’s downfall from some hidden hockey rink.
Canada is America’s polite neighbor and one of its oldest allies. Americans and Canadians share a border, an enormous commercial relationship, military alliances, families, businesses and an almost comically dense network of ordinary human connections.
Yet Trump treats Canada as though its leaders are backwards provincial warlords who are threatening to invade, rape, and pillage Buffalo.
The political consequences are easy to predict. Canadians, like Americans, possess a certain affection for national dignity. When Trump threatens economic punishment, Canadian are not going to respond by bowing down and singing the Star-Spangled Banner. Instead, Canadians will conclude, yet again, that dependence on the American market is a strategic liability and the best response is to go elbows up.
In other words, the great Trump tariff crusade will only encourage Canada to trade less with the United States.
