February 3, 2025

The New Tariff in Town

President Trump slapped tariffs on China, Mexico, and Canada over the weekend. Results are already happening.

Donald Trump sees a lot of black and white in the world, and that doesn’t mean race. In the case of trade and the economy, Trump concludes that either America is doing well (winning, you might say) or it’s being treated unfairly by other countries. To fix what he views as the latter, he’s wielding tariffs.

For decades, the Republican Party has advocated for free trade, intending to bolster the American economy and elevate our standard of living by expanding trade. Bill Clinton welcomed China into the World Trade Organization, but we now have 25 years of history to reflect on the outcomes of that decision. Earlier in his two terms, Clinton also negotiated NAFTA with Canada and Mexico, and there are compelling reasons to believe that it, too, did not yield the expected benefits for the U.S.

Trump prefers what he views as fair trade to free trade. The U.S., JD Vance announced, is “done being taken advantage of.”

Hence, the president imposed tariffs on Mexico and Canada over the weekend. It was no surprise to anyone, including him, that the two nations announced retaliatory measures. It was also unsurprising to see Mexico rush to the table to negotiate. More on that in a moment.

In a Truth Social post with his caps lock key stuck, Trump said, “WILL THERE BE SOME PAIN? YES, MAYBE (AND MAYBE NOT!).” However, he added, “IT WILL ALL BE WORTH THE PRICE THAT MUST BE PAID.”

Indeed, there will be a price. Like the corporate income tax, tariffs are paid by consumers. Kentucky Republican Senator Rand Paul noted, “Taxing trade will mean less trade and higher prices.” With Canada and Mexico, that will have huge effects on energy, produce, automotive parts (13% come from Canada, 42% from Mexico), and more.

Democrats will be more than happy to use this to blame Trump for inflation, but the opposition is bipartisan. Moreover, the editorial boards of National Review and The Wall Street Journal slammed the “folly” of the “dumbest trade war,” respectively.

Trump argues that we can provide for ourselves. “We pay hundreds of Billions of Dollars to SUBSIDIZE Canada,” he said in another Truth post. “Why? There is no reason. We don’t need anything they have. We have unlimited Energy, should make our own Cars, and have more Lumber than we can ever use. Without this massive subsidy, Canada ceases to exist as a viable Country. Harsh but true! Therefore, Canada should become our Cherished 51st State. Much lower taxes, and far better military protection for the people of Canada — AND NO TARIFFS!”

We in our humble shop still think he’s trolling Canada about becoming another state, and it’s pretty funny. On the other hand, it’s not so amusing that Trump is arguably violating his own trade agreement with Mexico and Canada — the NAFTA rewrite he so famously signed in his first term. Stock markets don’t find tariffs humorous either, with the Dow, S&P 500, and Nasdaq all down significantly this morning on the news.

Trump’s rationale has much to do with solving Joe Biden’s border crisis. “The extraordinary threat posed by illegal aliens and drugs, including deadly fentanyl, constitutes a national emergency under the International Emergency Economic Powers Act (IEEPA),” says the White House fact sheet on the tariffs.

  • Until the crisis is alleviated, President Donald J. Trump is implementing a 25% additional tariff on imports from Canada and Mexico and a 10% additional tariff on imports from China. Energy resources from Canada will have a lower 10% tariff.

  • President Trump is taking bold action to hold Mexico, Canada, and China accountable to their promises of halting illegal immigration and stopping poisonous fentanyl and other drugs from flowing into our country.

Tariffs, in this particular case, may be the tool Trump has chosen for a specific job. Fixing things costs money, and the border crisis must be ended.

Mexico might agree, as President Claudia Sheinbaum announced this morning that she’ll send 10,000 troops to the border to help address drug trafficking. The tariff fight has been delayed one month to allow for negotiations.

However, Trump also views tariffs as part of the ingredients for a new “Golden Age of America,” much like the end of the 19th century. He has mentioned using tariffs to offset lower or even eliminate income taxes. As he put it in his Inaugural Address, “Instead of taxing our citizens to enrich other countries, we will tariff and tax foreign countries to enrich our citizens.”

In other words, tariffs may be less about extracting concessions or cooperation from Mexico and Canada and more about reworking the economic order that Trump believes is tilted to our disadvantage.

Follow Nate Jackson on X/Twitter.

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