Trump's Tariffs

Donald Trump hasn't even been sworn in yet and he's already causing chaos and uncertainty in the world's economy with his ridiculous plan to impose tariffs on Canada, Mexico, and China. 

If implemented as he wants, it will almost certainly cause a recession in Canada and resume an inflationary cycle in the US. 

Here are a few articles about it that I found worth reading.

From The Big Picture, Trump's Tariffs Are Here:

Today’s piece is a bit of Tariffs 101, with a focus on how the proposed taxes would affect trade with our three largest trading partners. I’ll first cover what Trump announced and the reasons he gave for why, addressing his threats on our neighbors and also on China. We’ll pay some close attention to Trump’s specific language because that could shape the course of events to come. 

Second, I’ll address the question, “Can Trump really do that?” The short answer is “yes” but there is a longer discussion to be had around whether the tariffs would be reversed, particularly because they would violate the plain terms of the United States-Mexico-Canada Agreement (USMCA) that Trump himself negotiated and signed.

Third, I’ll discuss the broad impact such high tariffs would have upon our economy and which sectors might feel the immediate effect. Sadly, consumers wary of higher prices aren’t going to like the answers.

Lastly, I’ll peer inside the muddled mind of the president-elect and posit a few theories about what he’s up to and where this is headed, using past behavior and outcomes as a guide. I’ll show how Trump’s attempt to bludgeon his way into getting what he wants won’t necessarily work this time and will carry longer term consequences that will be difficult to shake.

And from Canada's The Globe and Mail, As Trump pledges tariffs, here are five things we know so far (gift link):

For Canada, which sends more than 77 per cent of its exports to the U.S., the tariffs would represent an economic blow and threaten a recession, with the oil and auto industries particularly affected. For U.S. consumers, who would pay the cost of the tariffs, they would mean punishing price increases.

For Mr. Trump, the tariffs combine two of his foundational political issues: building protectionist trade barriers around the U.S. economy and hardening the country’s borders against migrants.

And finally, from the CBC,  How Canada can hit the U.S. where it hurts in fight against Trump's tariffs. 

If Canada seeks to retaliate over U.S. president-elect Donald Trump's tariff threat, the government should hit the U.S. where it would hurt economically and politically, some trade experts suggest.

The challenge would be to "find some iconic U.S. item … that would resonate with Trump's supporters, or the constituencies he cares about, which if Canada put tariffs on them, it will get a lot of notice in the U.S," said Gary Hufbauer, a non-resident senior fellow at Peterson Institute for International Economics.

Trump has threatened to impose 25 per cent tariffs on Canadian and Mexican goods unless both governments tighten their borders to prevent the flow of drugs like fentanyl and illegal migrants into the U.S. But his threat has raised questions as to whether Canada has any kind of leverage to squeeze the U.S. and prevent such tariff action.

"It's unclear what Canada can do going forward," wrote Derek Holt, vice-president of Scotiabank Economics, in a note to clients.

Ultimately, he said, Canada may feel it doesn't have any choice left other than to retaliate, and "we need to be prepared for such a risk."

That last article reminds me of the classic 1950s satire, The Mouse That Roared. Hopefully things will turn out as well for Canada as they did for the Duchy of Grand Fenwick.