Yesterday, on Canada day, our “good friends” to the North began their retaliatory tariffs against us. Tariffs went into place on $12.6 billion dollars worth of US goods.
Some US products, largely steel and iron, are being hit with 25% tariffs to match those Trump slapped on Canadian imports in May. Other US exports, like ketchup, or pizza, or lawnmowers, will be facing the same 10% tariff that Trump put on Canadian aluminum.
Canada is our second biggest trade partner in the world. They are also one of the most consistent geopolitical allies we have.
China is our first biggest trade partner, but they’re a major geopolitical rival.
It makes less than no sense to be engaged in a trade war on two fronts with our two largest trade partners. Our economy will buckle and collapse under the weight of these sanctions. We could maybe afford to be in a dustup with the Chinese; frankly they probably need us more than we need them.
But why in God’s name are we picking a fight with Canada? Donald Trump’s policies have been a refreshing change from business as usual in a lot of ways, but his trade policies are just a rehash of failed Reagan era plans that didn’t do any good then and won’t do any good now.
Trump has completely exceeded his Constitutional authority by declaring tariffs against our longstanding ally and neighbor, Canada. There is almost no scenario in which we could be at war and desperately in need of steel and aluminum and not be able to get it from Canada. (At least, there wasn’t until Trump went and pissed them off like this.)
In fact, getting steel and aluminum from Canada might actually be a strategic benefit. If we’re on a war footing and our own production facilities are damaged, we can always get resources from the Canucks.
And, unless they want to be at war with Canada too (although, if they’re at war with US they’re gonna be at war with Canada too in almost any scenario) our enemies can’t touch those Canadian production facilities.
This is just an obvious (and, again, un-Constitutional) move by Trump to bring back the manufacturing jobs he promise on the campaign.
But the truth is that tariffs always end up destroying more jobs than they produce. Sure, you might save or create 10,000 steel jobs.
But you’re gonna lose 10,000 ketchup, pizza, and lawnmower jobs in return. Not to mention the people who’ll be put out of work by automation in the industries that use things like steel and aluminum. (Newsflash, that’s a LOT of industries and a LOT of jobs.)
As materials prices rise, companies that use a lot of steel and aluminum will have to find savings somewhere. Some places may raise prices (which hurts you and me, gee thanks Don!), but it’s likely most will automate to save on labor costs.
Which means regular Joe-Schmoe the rotary brake maker is gonna be put out of work by Robby the Robot.
There’s lots of evidence to back this up, including the results of the Reagan steel tariffs in the 1980s, which were a colossal failure. And Reagan’s car tariffs, which were focused on defending America’s shitty automotive manufacturers from the Japanese auto sector, were also a critical failure that cost consumers a lot in the short term and did nothing to revitalize American car companies in the long term.
Does America have a strategic interest in not buying all its steel from foreign countries? Sure. But imported steel is only a small portion of total steel consumption, something like 17 percent. We make the vast majority of it here already!
So anybody who tells you we get “all our steel from China” is an idiot who doesn’t know what they’re talking about. Of that 17 percent we import, about 4 percent comes from the Chinese.
Most of the rest is Canadian.
And the Canadians are our friends.
Make no mistake. The real targets of these tariffs are not the Chinese. It’s small businesses, like construction companies, that use Canadian steel products in their buildings.
And with the Canadians retaliating against Trump’s pointless opening salvo, lots of other small businesses in the US are going to be hurting soon too.