Why is the American government so hell bent on destroying its own economy?
The biggest things they import for Canada aren't even manufactured goods but raw materials.
The only way to avoid the T tarrif at that point is to import from a different country but there are tarrifs there as well.
What is even the end game here? Make China the new biggest game in town?
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.
Every article I’ve read on this contains some variation of the following:
>Tariffs will only hurt American consumers >Countries targeted by tariffs will retaliate
I think this speaks for itself…
What's the plan here ?
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.
Interesting times intensifies.
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.
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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!
...
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.