Opinion | Trump’s Tariff Plan Makes Little Sense

Opinion

Trump’s Tariff Plan Makes Little Sense

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By Peter Coy

Opinion Writer

It seems perverse that Donald Trump would single out Canada and Mexico, two of the United States’ closest allies, for higher tariffs. But on Monday, he said that on his first day in office he would impose 25 percent tariffs on imports from the two countries that would remain in place until illegal drugs and migrants stopped coming over the borders.

Canada and Mexico are critical trading partners, whose economies are interconnected with America’s nearly as closely as Ohio’s is with Pennsylvania’s. The world is moving toward “nearshoring” (importing from close-by countries) and “friendshoring” (importing from friendly countries), to avoid supply disruptions caused by distance or political conflict. It makes little sense to set off a tariff tit-for-tat with two countries that are both near and friends.

Trump also vowed higher tariffs on China, citing its production of precursor chemicals for fentanyl. China is neither near nor very friendly, so it’s a more complicated story.

The United States gets 60 percent of its imported oil from Canada, along with cars, machinery and wood products. Mexico supplies manufactured goods, including cars, along with agricultural products. Prices of those items would go up for U.S. companies and consumers, even if the exporting nations swallowed part of the cost of the tariffs to preserve market share in the United States. And the United States would lose exports if those nations retaliated with tariffs of their own.

The inflow of illegal drugs that Trump cited to justify the tariffs are a huge problem, but it’s far from clear that imposing tariffs on the United States’ three most important trading partners is an effective way of fighting it. Yet however perverse it may be, Trump’s move is fairly predictable for a man who said while campaigning that “tariff” was the most beautiful word in the English language.