Tariffs - The View from the Northern Border
Border towns may struggle.
The view from the northern border is bleak. I took the photo while walking my dogs tonight. I live about half a mile from the Canadian border. The border is not in disrepair. The tall grass is the railroad easement. There aren’t many cars crossing.
The new tariffs on Canada and Mexico are in effect. We flew into Vancouver, B.C. from Hawaii this morning. We crossed the border with hardly any wait. We live in Blaine, WA. Many businesses thrive on Canadian customers.
My brother-in-law went to Costco in Bellingham today. He didn’t see any Canadian cars in the parking lot. Canadians are usually waiting in lines to get gasoline. I did walk through town to take the picture. I counted six Canadian license plates.
Will that continue? We’ll see. There are interesting dynamics at play.
As I said in a previous post, economists say that tariffs are a bad idea and hurt the countries that impose them. The tariff on Canadian and Mexican goods will make Americans pay more for them. So, what will Canada do? Impose tariffs on American goods and punish Canadians too. Yeah, that will show us.
But wait. The idea that liberals are pushing is that Trump is trying to stop Americans from buying Canadian and Mexican goods. They want their supporters to believe Trump is a bully and trying to force Canada to be the 51st state. Marco Rubio said that the 51st state idea came from a meeting with Justin Trudeau. Trudeau stated that if trade was evened out, Canada would cease to exist as a country. Trump jumped to the conclusion that if Canada can’t exist as a country without cheating on trade, it should be a state.
Trump’s goals for tariffs are unclear. Does he want to do away with income tax and use tariffs to support the U.S. economy? If that is the case, then the tariffs can’t be so high that Americans don’t buy the goods. That was my point in the earlier post.
Does Trump want to use tariffs as an inducement to get help to stop drugs from crossing the border? That is another of his claims. Is fentanyl a problem? My wife and I were walking through a park a few years ago and she met someone she hadn’t seen for a while. The person was walking with her family after the funeral for her daughter who was killed by a fentanyl overdose. That is close to home. How much is coming across the borders? I don’t know. I know you don’t find things by refusing to look.
Does Trump want to force companies to make more goods in America? That is another of his claims. That claim is one that probably bothers Canada and Mexico the most. The Ford Maverick truck is made in Mexico. It has a starting retail price of about $24,000. The tariff is probably on the wholesale price and not on the retail price. Worst case, if it was on the retail price, the price would go up to $30,000. Over 60 months, that is $100 per month. How much will sales be hurt if the payment goes from $500 to $600 per month? I don’t know. I doubt if it makes a lot of difference. I doubt that the difference is enough to make the trucks in the U.S.A.
Does Trump want other nations to reduce their tariffs on American goods? That has been another claim. He will apply tariffs to other countries’ goods similar to how they apply tariffs to ours. In that case, he is doing to Americans what Canada is doing to Canadians by increasing tariffs in retaliation - making goods more expensive.
So, I think a lot is unknown. One thing I’ve learned over the last four administrations is that I cannot trust what is in the news. “Reporters” are making the news not reporting it. I try to think it through. Politicians often do things that don’t work out. I hope negotiations are happening that will improve the lives of Canadians, Americans, and Mexicans.