People are saying that when Trump raises tariffs on various countries, they will likely retaliate by raising tariffs on American goods.
Why?
Trump’s tariffs are likely to hurt both sides. Wouldn’t other countries raising tariffs just make the problem worse?
What would Canada gain by doing this?
Why shouldn’t they?
It’s fighting back against a hostile enemy.
Not a helpful answer. But, people are saying that Trump’s tariffs will cause inflation in America. If Canada retaliates, won’t that cause inflation in Canada? That sounds like a good reason why they shouldn’t.
Why did Poland fight back in September 1939? Why didn’t they just accept it ?
Prices going up because of Trump’s tariffs should in no way be conflated with inflation.
There’s a lot of calculated bluffing going on IMHO. If Trump threatens tariffs, and they do nothing, they look weak at home (never good) and it leaves a de facto acceptance of the American bargaining position.
If they offer counter tariffs (remember, nothing has actually happened yet) they look strong for free, tell Trump that TANSTAAFL (There ain’t no such thing as a free lunch), and that their needs need to be taken into account as well.
If Trump goes ahead, they can do so, and then see if a workable agreement can be reached. No one says that any such tariffs are going to be perpetual, heck, I’d bet any such implemented tariffs would include language that indicates they are effective as long as the triggering American tariffs are in effect.
No surprises.
Meh, to me this seems more like I shot myself in the foot so Canada has to carry me. Should Canada shoot themselves in the foot in protest of my idiocy
Trump’s proposed tariffs could crash the Canadian economy. They could also be the precursor to the US attempting a forcible annexation of Canada. They cannot be dismissed as « idiocy ». The US now poses a threat to Canadian sovereignty. The US is a hostile nation.
While it is true retaliatory tariffs would cause more pain for Canadians, they are politically popular, and Canada has few options. The idea is to make loud counter threats to dissuade bullies from going as far as they might. Canadians buy $500 billion of US goods each year. The rationale, fentanyl and Northern immigration, is pretty weak. Canada already has a trade deal with the US, and Trump’s tariffs would be accomplished outside that by declaring emergencies that don’t really exist. There is already talk of Buy Canadian and (at long last) reducing interprovincial barriers to trade.
Well, I don’t actually need Kentucky bourbon. There are some very nice Canadian whiskies being produced lately.
“Prices going up” is the definition of inflation.
Though this is the Politics forum, I’ll largely try to give a FQ explanation of the general principles.
For purposes of illustration of some points, and since most readers are from the US, let’s consider actions that the US might take, first.
Let’s say that the US puts tariffs on products from Zimbabwe. They buy very little from Zimbabwe so this doesn’t really affect anything. There are tariffs. There isn’t any inflation.
Let’s say that the US puts tariffs on products from China. The average American buys a lot of things from China so a lot of products will start showing up at a higher price. Inflation. That said, if we imagined that Vietnam was also selling very similar products to the US as China was, at relatively similar prices, then that may move the market towards Vietnamese products. It won’t on the other hand, move Americans towards buying American-made products. The cost of labor in the US is so much larger (roughly 10x) than China and Vietnam that the products made in the US are largely completely different products from those produced by China for the US market. The average consumer doesn’t buy airplanes and rockets.
And then let’s say that the US puts tariffs on all products that are non-American. Well then this completely disrupts the ability for the people to find alternate cheaper options. They will continue to buy from China since Vietnam is no cheaper and US prices are way too high and largely only provides specialized, high end products.
Some points to note:
Now, I’m not too familiar with the average Canadian store shelf but I’d take it as likely that, just like the US, a large portion of consumer products are coming from China, Mexico, Vietnam, and other low-income nations. Putting tariffs on the US is probably not going to have much impact on any of that. Even American products like Coca-Cola are probably produced in Mexico and sent directly to Canada for distribution. Anti-US tariffs wouldn’t have much impact.
That said, an industry like Canadian airlines might be affected as the price of Boeing airplanes will go up. First, the US is likely to tariff foreign aluminum and other materials - making it more expensive for Boeing to build planes - so the planes will already have a markup on them before trying to sell them to Canada. Adding an anti-US tariff on those planes, as well, and Boeing is dead meat on Canadian soil. Airbus suddenly has a lot more interest. Additionally, excess aluminum that’s freed up because Boeing can’t sell planes will get snatched up by Airbus.
I’d expect that Canadian airlines have deals in place with Boeing and a history of working with equipment produced by Boeing. They have special tooling, special expertise, etc. for that line of products. Switching over to Airbus would be costly, in the short run, but eventually that will pass.
Like all businesses, those costs would get passed on to the consumer and so there would still be some amount of inflation - but largely limited to a few smaller sectors of the economy.
Given that the US is, in all sense, purely and only ice picking its own testicles the far greater burden goes to them. Boeing takes a hit, Ford takes a hit, GM takes a hit, Tesla takes a hit, and so on. Canada would prefer that the US stop and spare Canadians from having to shift supply lines and infrastructure over to European products but, in the long run, it’s not so great of an issue. Airbus is a perfectly good company, so are BMW, Jaguar, Range Rover, etc. Cheap products from China and Mexico - which comprise the majority of what consumers see at the shops - are unaffected.
I wouldn’t say that Canada is obligated to help the US self-flagellate but if the US suffers enough harm, quickly and obviously enough, it may provide a sufficient teaching lesson to the American voter.
Trump’s voters are morons. If and when Trump’s idiotic policies create economic harm, this will not cause Trump’s voters to reexamine the wisdom of his leadership or their support for same. They will simply be angry at Canada et al. and blame them for failing to respect Trump’s brilliance and refusing to surrender to his reaming of them. In their view, Trump can do no wrong. If hardship results from his actions, it’s the fault of those who interfered with or obstructed his plans.
Well, it depends on how it’s done. Much of our food comes from the U.S., because it’s cheaper to import lettuce in winter than to grow it in greenhouses. Our imports from Mexico and Central America travel mostly on U.S. roads, who knows what the bullies can do on the way.
But yes, retaliatory tariffs on U.S. goods would increase prices in Canada at a time when the economy would already be battered by a decrease in exports. It’s unlikely that Canada would emerge victorious. But the conservative party will probably be in charge by late May, and they’ll probably just accept Washington’s conditions.
Nearly all voters are “morons” who will easily accept any rationale that allows them to cheer for what they want to cheer for and that doesn’t require them to do extensive research on things that they’re unequipped to understand.
But those rationales come from sources of influence - the media, congressional leaders, church pastors, etc. These are people who may genuinely understand the situation but who, for purposes of self-enrichment, political influence, etc. are willing to use their intellect to come up with spin that protects bad ideas that they disagree with.
As soon as Trump says something dumb, there’s a swarm of apologists that flitter out and explain to everyone that they didn’t just see what their lying eyes are telling them. During his first term, this group (as I read it) largely viewed Trump as an easily influenced rube, no problem to manage, who was a natural for fundraising. He was great for everyone on both sides of the fence. The actual impacts of DJ Trump, during his first term, were almost nill. The guy wasn’t capable enough even to swing an FBI director that wouldn’t arrest nearly every friend and accomplice he’d ever had, let alone accomplish a meaningful real-world agenda that wasn’t 99% hot air and bluster.
Now if Trump manages to avoid Senate approved candidates, or they become unable (under charge of Deep Stateism) to reject Trump’s true appointees, then suddenly he’s able to start to really do dumb shit that harms the investment portfolio of congresspeople, newscasters, church pastors, and billionaire donors.
On that day, you’re suddenly going to start to see a lot of very convincing people, who’ve built up years of credibility, selling the sweet truth about Senor Dear Leader.
Good point.
I’d venture to guess that the Canadian government would skip tariffs on that one.
Agree 100%. Trumps supporters have shown that they will not/can’t learn. They will however blame anyone and everyone but Trump.
Don’t know for sure, but I think if a widgets price increases 50%, because of tariffs, the price will never come all the way back down to pre-tariff prices.
That’s right, because the tariffs will cause damage to the supply chain.
*The Canadian widget maker may have the best product, but leaves the US market permanently because of the market uncertainty.
*or the Canadian widget maker may go bankrupt, reducing competition for widgets.
*or small companies in the widget maker’s upstream supply chain may go bankrupt, increasing the widget maker’s costs for alternative suppliers
*US widget makers may grab a greater market share, at a higher retail price, and the Canadian widget maker may not be able to crack the market again
Markets are dynamic and tariffs are disruptive. Tariffs are designed to reduce competition and establish a new market setting.
Retaliatory tariffs hurt the US, which would be the main goal, I imagine. If the US slaps a 20% tariff on widget A that it imports from Canada, but Canada doesn’t slap a tariff on widget B that it imports from the US, Canadian manufacturers are harmed, but US remain unharmed. A retaliatory tariff is a way for Canada to get widget B makers to pressure this idiotic administration to find some sense.