315 - One Neighbor Beats Two Other Neighbors Over the Head, Just to Show that He Can: A Foreign Policy Gambit

A Tale of Tariffs

Very Happy Thanksgiving to all of my subscribers

Three mostly friendly and congenial neighbors, long happy partners, walked together down a street. Suddenly, without the slightest provocation, the biggest of the neighbors grabbed a shovel and hit the others over the head, knocking them to the ground. The foul-mouthed bully said that he was beating them -- without prior warning, and without prior discussion -- because he suspected that they had permitted intruders to cross onto his property. So, he thought that they deserved a preemptive thunderous whack on their noggins.

That is what Trump's declaration two days ago that he would impose 25 percent ad valorem tariffs on all imports from Canada and Mexico, our long-time neighbors and trade treaty co-signers. If carried out (on "Day 1," as he trumpeted), imposing such large tariffs would surely scramble our and their supply chains and exact heavy costs on businesses from the Yucatan to the Yukon. Is this just throwing his weight around for publicity purposes or is there some sinister intent lurking behind Trump's irrationality?

On his Truth Social blog account Trump said that he would levy the tariff jumps on Mexico to try to stop migrants approaching the U. S. border. (Their numbers are already greatly diminished, thanks to President Biden's altered policies.) Trump also wants to stop the spread of narcotics, especially fentanyl, from the south.

Trump declared that Mexico and Canada could solve drug and migrancy problems, easily. Until they do, he continued blustering on Truth Social, "it is time for them to pay a very big price!" (But the price is more on consumers at home.) Trump also threatened to impose a further 10 percent tariff on China to stop it shipping illegal drugs into the U. S. The three countries are the U.S.' largest trading partners. Mexico is the foremost market for our agricultural exports. The Canadian and U.S. automobile manufacturing industries are intertwined and reliant on one another. Furthermore, Beijing and Washington have been working together very promisingly in the drug prevention area; Trump's slapping tariffs may hinder that existing cooperation.

As with all things Trump, total ignorance and misapplied zeal punctuated his premature announcement. Lumping Canada with Mexico makes no sense. Migrants do go both ways across our northern border, but their numbers crossing from Canada are tiny compared, pre-2024, to those hordes attempting to enter the U.S. from Mexico. At their peak, only 10 percent of the Mexican totals crossed from Canada into Vermont and New York; most are Indian nationals. Likewise, the volume of dangerous drugs coming from China and Mexico far surpasses anything illegal crossing the Canadian border. Why conflate them, and why impose a new punishment now on China, where our policies must be strategic and nuanced?

Trump should instead be celebrating good relations with our neighbors, and, if anything, promising to open negotiations with them to see what further could be done to halt migrants and drugs entering the U. S. But shooting from the hip or whacking your near neighbor over the head before talking to him/her, is marvelously counter-productive and conceivably illegal. All parties to the treaty (USMCA) that cemented North American trade relations deserve far better. Punching first and expecting a happy result makes little sense.

The border between Canada and the U.S. is the longest in the world between two countries. It is also famously undefended. No other neighbors enjoy such freedom from danger and insecurity. Trump may not realize the cordial relations that he is jeopardizing. Or, if he does, he may not care.

The Mexican situation is very different. Fentanyl, using precursor chemicals supplied from China, is manufactured in Mexico by the narcotics cartels who supply cocaine and heroin. So, the gangs and their shipments are appropriate targets. So is stopping unbridled movement of migrants northward. But talking is better than attacking. Why not hold off threats until Mexico has refused to help? Indeed, Mexico's track record in assisting the U.S. is very good. Cooperation is always more effective if it arises from mutual discussion, not from preemptive posturing and bullying. (Mexico has promised to impose equal tariffs on U.S. imports, which will not help Americans grow economically or gain higher incomes. And our midwestern farmers will suffer the most.)

Trump and his acolytes have long promised to use tariff impositions to protect American enterprises against Chinese state subsidies that favor its industries. President Biden's administration has already imposed tariffs on a range of Chinese industries in order to give American manufacturers a fighting chance. Solar arrays and silicon chip fabrications are but two areas to which the Biden administration has extended protection against subsidized Chinese imports. Europe has imposed tariffs on Chinese-built electric cars in order to protect European automobile manufacturers. Canada has imposed 100 percent tariffs on the same vehicles.

Trump can make a case for extending protection further, to shielding other kinds of American industry from Chinese competition, or even -- at a stretch -- to Chinese manufacturing in Mexico (or Peru or Brazil). But there is little of that in Canada, so why pick willfully on Canada and in a scattershot way? Our supposed North American partners will have every reason to retaliate, too, as the Mexicans have promised. Trade wars are never good. They plunged the world into the Great Depression.

We cannot expect Trump to think policies through, or to consider how fully his just announced intent (on day 1!) will shoot himself in the foot, harming American consumers and exporters as collateral damage. American farmers and food packagers would suffer. So, would parts manufacturers in, say, Michigan, who daily send their fabrications across the Huron River bridges into adjoining Ontario. “There is probably not a single assembly plant in Michigan, Ohio, Illinois and Texas that would not immediately be affected [adversely] by a 25 percent tariff,” said a Canadian auto executive.

Moreover, midwestern cities heat homes with oil imported from Alberta. Costs will go up. All U.S. car manufacturers have plants in Mexico. Their cars coming north in the U.S. would now become much more expensive.

A 25 percent tariff would add high costs to both U.S. consumers (a hidden sales tax) and our own industries. Prices could easily spike. Inflation will come back. Shortages will follow. None of that makes sense, or helps to realize objectives which, whatever happens, can only be realized by talking between presumed equals.

And, by the way, we need migrants to fill jobs that Americans will not do and to staff our AI and computer industries. We are a land of immigrants and can only prosper by being hospitable to new influxes.

This will not be the last or most dangerous foreign policy mishap to be perpetrated by a president who has no moral nor intellectual center, and who was elected precisely because he shoots from the hip, willy nilly, without suffering consequences. The better angels of our nature are nowhere to be seen. "The blood dimmed tide" has been loosed "and everywhere the blood of innocents" will be spilled. The center surely is not holding as "things fall apart" more and more.