Yesterday Trump announced that he plans to impose a 25% tariff on all goods from Mexico and Canada, and increase the tariff on goods from China 10%. Most of the coverage (including the article I just linked) assumes that it would raise prices here. That may indeed be a valid assumption. Most of the articles don’t emphasize the other part of the equation – which is that he says he will do it until the border countries do something to curtail the importation of fentanyl, and to stem the tide of illegal aliens crossing their respective borders.
Trump claimed:
This Tariff will remain in effect until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country! …
I have had many talks with China about the massive amounts of drugs, in particular Fentanyl, being sent into the United States — But to no avail. Until such time as they stop, we will be charging China an additional 10% Tariff, above any additional Tariffs, on all of their many products coming into the United States of America.
So the way I see it is that this is Trump’s opening bid in a complex negotiation – let’s make a deal. Whether Trump will get what he wants from those countries, or whether this will be economically disastrous or at least difficult for US consumers, remains to be seen.
Will the costs be passed on to US buyers and cause inflation? Will companies absorb them? Will the costs be offset by other de-inflationary policies such as lowered energy costs or tax cuts? If we become more energy independent, will we not need to import much oil from Canada? And will Mexico and/or Canada and/or China blink and actually do something about fentanyl and/or about the border traffic?
The assumption by the left is that of course this will be inflationary and that Trump is a stupid dodohead Nazi whatever. But at this point I would’t underestimate Trump.
Why doesn’t Trump explain his strategy better, so that the American people can understand all the thinking behind this?
(1) Maybe he really is a stupid dodohead.
(2) Maybe he doesn’t want to tip his hand and reveal too much to the other sides in the negotiations.
(3) Maybe he will explain better later.
(4) Maybe he wants to make all his enemies and opponents predict something dire that doesn’t happen, and be wrong again.
