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Trump slaps tariffs on Mexico, Canada and China

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Re: Trump slaps tariffs on Mexico, Canada and China

#51

Post by aborsy »

A_D_E_P_T wrote: post #7

As I recently wrote on Cowen's blog, a lot of the electorate doesn't know how tariffs work. Say I manufacture a widget in [country]. At present, there is no manufacturer of that widget in the USA. We export to the USA, and now the US importer or distributor pays a ~25% tariff on the declared value to Fedgov. Then that US importer or distributor receives the widgets and sells them. Because its margin is down, it raise…

[country] may have no other place to sell to, at least immediately, and at the same transportation cost. Moreover, unlike US, [country] may not have diversified its trade. The US may be able to control inflation like last time, by buying some of these goods from elsewhere and through interest rates etc.

Re: Trump slaps tariffs on Mexico, Canada and China

#52

Post by seszett »

nullhole wrote: post #43
ConspiracyFact wrote: post #39

Earlier quoted context omitted.

What?

There are two possible reactions to tariffs that you think will put political pressure on you. One is to retaliate. You only do this if you think you might win the trade war. Canada retaliated, and Canada thinks it might win the trade war. The other is to roll over. You only do this if you don't think you'll win the trade war. That's what Columbia did. Retaliation is a sign that the attack was strong, yes, but it's a…

> The other is to roll over. You only do this if you don't think you'll win the trade war. That's what Columbia did.

The situation is a bit different IMO, Colombia had a clear reason for getting tariffs and it was possible for them to roll over.

Canada though, it's not even clear why the tariffs are there or what Canada could do not to have tariffs. There isn't really anything for Canada to do except retaliate.

Re: Trump slaps tariffs on Mexico, Canada and China

#53

Post by watwut »

ConspiracyFact wrote: post #27
smnrchrds wrote: post #25

Earlier quoted context omitted.

I have never seen any article saying tariffs will "only" hurt American consumers. They hurt both sides and every article I have seen acknowledges this. However, American news sites tend to focus on the effects in the US, while Canadian news sites focus on the effects in Canada.

I may have worded that wrong. Articles say that they will hurt American consumers and don’t address the actual purpose of the tariffs, which is to put political pressure on their targets. If the tariffs didn’t have at least some chance of succeeding at this, the targets wouldn’t be talking about retaliation.

You mean ... supposed pressure for Canada over the fentanyl? What exactly is to be gained there? It is political pressure for the sake of political pressure and looking like a macho man.

In that setup, Canada has no choice but retaliating. Trump is a bully and so is Musk. If you do what they want, they will bully you further. So, you have to retaliate if you can.

Re: Trump slaps tariffs on Mexico, Canada and China

#54

Post by watwut »

ConspiracyFact wrote: post #42
Marsymars wrote: post #41

Earlier quoted context omitted.

Political pressure to what end? Trump said “jump” on border measures and Canada jumped even before the tariffs. The retaliation is posturing for the other party and for the electorate. If you’re driving in a car and your passenger pulls the pin on a grenade, you can “retaliate” by pulling the pin on your own grenade.

But if the tariffs don’t actually cost the target anything, why retaliate?

They do cost the target, the claim is not they cost nothing. But, if they costed the target nothing, you would safely retaliate, because that is rational response to someone trying to target you.

Re: Trump slaps tariffs on Mexico, Canada and China

#55

Post by locallost »

llm_nerd wrote: post #3

Canada was specifically warned not to retaliate in any manner, which is basically an acknowledgement that Canada has some powerful levers. This is farcical and of course Canada is going to retaliate. The $450B of American goods sold to Canada is going to collapse. The F35 purchase will be cancelled. Various other projects with the US will be abandoned. Oil will be export tariffed. Every American service -- Netflix, D…

He's financed by billionaires. And he's adding tariffs that will make everything expensive for normal people, while at the same time cutting corporate taxes of those same billionaires that fund him. Basically it's just a continuation of ever increasing inequality, where in the end the top few % will own everything and the rest will fight over scraps.

Of course Canada was warned - the last thing a bully wants is retaliation. Others might get the same idea.

Re: Trump slaps tariffs on Mexico, Canada and China

#56

Post by rsynnott »

smnrchrds wrote: post #25
ConspiracyFact wrote: post #14

Every article I’ve read on this contains some variation of the following: >Tariffs will only hurt American consumers >Countries targeted by tariffs will retaliate I think this speaks for itself…

I have never seen any article saying tariffs will "only" hurt American consumers. They hurt both sides and every article I have seen acknowledges this. However, American news sites tend to focus on the effects in the US, while Canadian news sites focus on the effects in Canada.

Yeah, this is far from a zero sum game and will be hugely disruptive globally.

Re: Trump slaps tariffs on Mexico, Canada and China

#57

Post by 3vidence »

stevenwoo wrote: post #35
3vidence wrote: post #20

Why is the American government so hell bent on destroying its own economy? The biggest things they import for Canada aren't even manufactured goods but raw materials. The only way to avoid the T tarrif at that point is to import from a different country but there are tarrifs there as well. What is even the end game here? Make China the new biggest game in town?

https://www.nytimes.com/2024/10/29/us/politics/elon-musk-tru... They state they think the temporary pain to consumers and the loss of good will with Canada and Mexico is worth some other goal that will be achieved like they think this will cause American manufacturers to decide to expand in America, also they always talk about tax cuts and tariffs are a way to increase federal revenue without a change in the tax code…

How do you spin up factories for crude oil and potash?

America is just an unserious country right now.

Re: Trump slaps tariffs on Mexico, Canada and China

#58

Post by rsynnott »

ConspiracyFact wrote: post #27
smnrchrds wrote: post #25

Earlier quoted context omitted.

I have never seen any article saying tariffs will "only" hurt American consumers. They hurt both sides and every article I have seen acknowledges this. However, American news sites tend to focus on the effects in the US, while Canadian news sites focus on the effects in Canada.

I may have worded that wrong. Articles say that they will hurt American consumers and don’t address the actual purpose of the tariffs, which is to put political pressure on their targets. If the tariffs didn’t have at least some chance of succeeding at this, the targets wouldn’t be talking about retaliation.

> If the tariffs didn’t have at least some chance of succeeding at this, the targets wouldn’t be talking about retaliation.

… Eh? Retaliation is an absolutely standard part of a trade war; it virtually always happens, and, unfortunately, it can’t really be foregone. Like, people are talking about retaliatory tariffs because that is _how it works_; that is what always happens and really must happen.

Re: Trump slaps tariffs on Mexico, Canada and China

#59

Post by rsynnott »

ConspiracyFact wrote: post #42
Marsymars wrote: post #41

Earlier quoted context omitted.

Political pressure to what end? Trump said “jump” on border measures and Canada jumped even before the tariffs. The retaliation is posturing for the other party and for the electorate. If you’re driving in a car and your passenger pulls the pin on a grenade, you can “retaliate” by pulling the pin on your own grenade.

But if the tariffs don’t actually cost the target anything, why retaliate?

… Eh?

Tariffs do of course cost the target; they reduce the market for its goods, because consumers and businesses in the country applying tariffs can no longer afford to buy them. Now, how much they hurt will depend to some extent on whether there are other markets, etc.

Imagine there are two countries, A, B. A exports $1bn in raw materials annually to B. B exports $1.1bn in finished goods to A. B imposes a 25% tariff on A. Businesses buying the raw materials will generally not be able to afford a 25% increase in input price (very few manufacturing businesses have margins anything like that high) so will fold. A no longer has B buying its stuff, so the raw material production will halt, leading to losses there. A will no longer be able to afford to buy B’s finished goods (even if A does not impose retaliatory tariffs, which it almost certainly will), so even if some of B’s industry can survive the input cost hike, it has a smaller market.

Obviously this is _extremely_ simplified (for a start, other countries exist, and you might see more of a _rerouting_ around A, a little like what has happened to post-Brexit UK. But it’s a serious mistake to think of this as a zero-sum game. In general high broad tariffs hurt everyone.

Re: Trump slaps tariffs on Mexico, Canada and China

#60

Post by dismalaf »

A_D_E_P_T wrote: post #50
dismalaf wrote: post #23

Earlier quoted context omitted.

There's basically nothing that's manufactured only in Canada... The vast majority of our exports are raw materials, and of our manufactured goods most are foreign multinationals that set up shop to take advantage of our cheap(er) labour versus the US... They can and will move to the US because of these tariffs. This will decimate our economy and it really feels like Trudeau simply wants someone to blame our shit econ…

I've got one word for you: Potash. Hugely important for agriculture, barely produced in the US at all, mostly imported from Canada. If Canada retaliates by barring or limiting potash exports, it would be so harmful to the American agriculture sector that Trump would go ballistic. > They can and will move to the US because of these tariffs. That's a lot easier said than done, and as US policies might change at any tim…

Potash is important yes. Canada also imports a majority of our fruit and vegetables from the US. Over 90% of our leafy greens come from the US. We already have a massive cost of living crisis. And I'm not sure if American commentators have been paying attention to our economy or not but Canada's GDP per capita has gone down for 6 straight quarters.

And here's the analysis from the Bank of Canada: https://www.bankofcanada.ca/publications/mpr/mpr-2025-01-29/...

I know commentators want to stick it to Trump but Canada's economy has been in a bad place for years and this isn't good for us at all...

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