It is far from usual to question the sanity of a US
president but that is what is being done after the 25 percent tariffs he
imposed on Canada, a longtime and close ally. He did the same to
Mexico, the other neighbor, although these have been delayed a month.
Canada
has already announced equivalent retaliatory tariffs on US goods
commencing Feb. 4th. So something costing $4 will now be $5 for
buyers. To what end is the important question to which Trump has yet to
provide an answer. Is it all a whim he dreamed up to supplement the
chaos in the defense department where all the people working there have
been shut out of their computers.
As for the trade war, The Wall Street Journal in an op-ed on Saturday (Feb.1) titled "The Dumbest Trade War in History" slammed the president saying his justification made no sense and warned of disastrous consequences -- higher prices and loss of jobs are the easiest logical ones. Tighten your seat belts folks, we are in for a rough ride.
According to Trump, he is hitting Mexico for the illegal migration, the flow of drugs, and the trade deficit. But the illegal immigration is not mostly of Mexican origin but from Central & parts of South America (Venezuela, for example) and caused also by US support of dictatorships that crack down on opposition to the extent that many are afraid of losing their lives.
The worst part of the tariffs is the effect on business. The three countries (US and neighbors) are an interconnected economy with supply chains relying on tariff free movement of goods within. When will the backlash from business begin -- before or after the backlash from defense department suppliers and contractors!
The auto industry is most at risk as parts often cross the borders multiple times when a car is being built. Thus the price of an average car is estimated to increase by $3,000 at the very least.
At
the grocery store, fruits and vegetables in the US come from the biggest
source... Mexico. And Canada leads in livestock (meat) and sugar
products, while one cannot forget oil and energy, which is why the
Canadian energy tariff was lowered to 10 percent.
Tariff
driven prices are not immediate like a sales tax; instead the effect will
seep through drip by drip, one day at the grocery store, next at,
say, hardware or Home Depot but hurting consumers and businesses.
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