Cogito Ergo Non Serviam
Trump Threatens Tariffs on Mexican, Canadian Goods
Donald Trump likes tariffs. He believes that they can force other countries to bend to his will by harming their economies. He believes he can protect America with tariffs. Or put it differently, he believes a tax is the best form of defense. He showcased his plans with a threat to slap a 25% tariff on all goods coming into the US from Mexico and Canada. To avoid that, he has demanded they stop migrants from crossing into the US and to stop the spread of fentanyl that arrives daily in the US. The Mexican government has said that it wants to stop the flow of both but tariffs will not help. Canadian PM Trudeau flew to Mar-a-Lago to speak with President-Elect Trump about the matter. The trouble is that the US has less power in this situation than Mr. Trump thinks.
First and foremost, it is not the job of Ottawa or Mexico City to prevent things leaving their territory for the US. A simple matter of territoriality in international law proves it. The US government is responsible, as the monopolist of legitimate violence in the US, for defending its borders and people. Neither the Mexican nor the Canadian government has any responsibility to US citizens in the US. So. Mr. Trump is trying to outsource the solution.
Secondly, the tariffs proposed will not be paid by Mexican nor Canadian interests. Tariffs are always paid by the citizens of the nation imposing the tax. The idea, of course, is to get the consumer to switch to a different provider of the product. In other words, the tariffs will increase costs to US consumers, which is by definition inflationary.
Third, and closely related to the second point, is that the flow of goods from America's trading partners can also be interrupted on the other side of the border. The Arabs pulled off a very effective oil embargo in the 1970s that crippled the US economy. Oil is quite important to the US, and Canada has the oil of Alberta to withhold.
Mexico is in an even stronger position. Mexico provides as must as 50% of the fruit and vegetables the US consumes. An embargo on food exports from Mexico would slam the US consumer in a day or two of it being announced. It would create inflation at best, and genuine panic about food at worst. A US general said a few decades ago that the US was four meals away from civil strife. Mexico can make that happen with the stroke of a pen.
This journal does not believe either nation will respond negatively at first. Talking is always preferable to taking unilateral action. Moreover, the problems Mr. Trump wants addressed are legitimate issues that need resolution. That can only be done in cooperation with the nations now threatened. However, Mr. Trump seems to be over-estimating his position, and it may well come back to bite him on the backside.
The Guardian reported Claudia Sheinbaum has said her "very kind" phone conversation with Donald Trump, in which they discussed immigration and fentanyl, means "there will not be a potential tariff war" between the US and Mexico.
In the end, the tariffs may simply be a threat to increase the interest the other sides have in solving the problems at hand. However, threatening allies is not an effective way to generate the kind of cooperation needed. Indeed, it comes faster and cleaner if the interest is increased through finding common ground in the solution.
As a businessman, Mr. Trump should understand some of this. Then again, he has declared bankruptcy six times, so one must wonder whether he is a businessman at all.
© Copyright 2024 by The Kensington Review, Jeff Myhre, PhD, Editor. No part of this publication may be reproduced without written consent. Produced using Ubuntu Linux.
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