I am baffled by people’s reaction to the Trump tariffs, which are representative of how he handles most issues. You would think that after his first administration, everyone would know that everything is a negotiation toward an end which only he and his closest advisors may know. And he will take actions to ensure that people take his demands seriously and negotiate quickly. Anyone who really thought that there would be an extended trade war with our two neighbors either doesn’t like Trump and will use any excuse to dump on him, or somehow has missed what is obvious about his executive style. Tariffs are an ideal wedge for forcing negotiation; they are highly visible, they could have a major economic impact and people tend to get emotional about them. So Trump is smart to focus on them and use trade actions as the club to move his goals along.
And people might want to take a look at Canada’s barriers to use of United States’ products, services and investment in the country. They have a lot of restrictions that we don’t apply reciprocally to Canadian products, services and investment in the US. I would actually hope that Trump insists that some of those be removed.
And yesterday I heard a Heritage Foundation economist explain that everyone loses in trade war, but some more than others. Advantage USA.
In particular, China loses with tariffs. China gets its price advantage because the government heavily subsidizes its industries. They’ll lose their pricing edge if they pass along the cost of tariffs, so they’ll more or less be forced to eat that cost. Advantage USA, but loss for China. Brilliant!
I wrote that long post on this a few months ago, I just think it is a lot more complex than people think, and our economy is really pretty flexible and I suspect it will be fine, even though if full tariffs were implemented there likely would be higher inflation
The anti-tariff argument is usually to claim that tariffs have negative economic consequences. Of course they do. A tariff is a tax and taxes have negative economic consequences. The proper question should be how tariffs compare to other taxes. They are quite likely less damaging than other taxes, at least for a country running a trade deficit.
And, as Kevin points out, Trump is showing how tariffs can be a great bargaining chip.