The tariff threats will return. That’s not a threat or promise, just recognition that huge tariff bamboozles are among President Trump’s favorite extortion gambits. We have seen three laughably brief trade wars in two weeks (with Colombia, Mexico and Canada, lest anyone forget). Each has ended with the Tariff Man boasting victory after the other country agrees to do things they have already done or planned. With Dudley Do-right and Sgt. Preston guarding the border, it must be a victory for the President, right?
But the tariff gambit is getting old. The American people and the U.S. press have caught on. On the same day Trump caved to Mexico and then Canada (February 3), a YouGov survey revealed that 67% of the American people think that increased U.S. tariffs will raise the prices of goods they typically purchase.
Take a look at almost any publication, and media type, and you’ll see that journalists have grokked that Trump’s tariffs would cripple America’s economy and the fortunes of individual, mostly poorer, Americans. Several articles appear each day detailing how Trump’s tariffs would increase grocery or appliance prices, cripple the North American car industry, make drugs and pharmaceuticals more expensive, or make it impossible to reasonably build or repair your home. Yes, tariffs hurt other countries’ exporters, but they are also immensely self-destructive. This is why bi-partisan U.S. policy has been to try to reduce tariffs during the entire post-war period.
Americans are learning about retaliation, too. Part of Trump’s extortion gambit is to threaten even higher tariffs should another country dare to retaliate. He forgets that they have domestic politics, too, so they must respond to his silliness. Besides, coming up with appropriate retaliation is a fun intellectual exercise for foreign trade policy experts. I know, I’ve done it myself as an old trade negotiator. Just because Trump threatens his blunderbuss across-the-board approach, nothing says that other countries have to respond in the same unthinking way. Not every country sources the same things from the United States, so why put a useless tariff on stuff you don’t buy? Instead, they focus on the major things they do buy from us, but can plausibly get from other suppliers.
They can also target their response against the products of particular parts of the United States. I have reason to believe that the retaliation packages prepared by both Canada and Mexico would have targeted exporters based in the districts of Republican members of Congress to create schism and discontent among Trump’s backers. They could also target the products of companies that made big time contributions to Trump.
Retaliation doesn’t have to be in kind either. It wouldn’t have to be tariffs, or even be acknowledged as retaliation. I have seen countries slow walk customs clearance of perishable goods roasting on a sunny dock. Product standards testing and certification can be stretched out for weeks or months. Companies might be pressed to reveal intellectual property secrets before their goods are allowed in. Minor mistakes in documentation or, say, origin labels that would normally be overlooked, suddenly become show-stopping issues. The possibilities are endless for creative experts. So don’t rile them as Trump has done.
The entire world now knows the extortion game Trump is playing with his tariff threats. He blusters, he threatens, he creates problems that don’t need to be there, he asks for the impossible. And he displays an ignorance of how economics, trade and borders work. At nearly every international border, there are officials from both countries, each there to watch what is coming in from the other country. They are not there to watch what is leaving their own country.
Donald Trump speaking at CPAC.
Trump has it backwards when he demands that Mexico crack down on people coming into the United States, or that Canada stop the minuscule volume of fentanyl that leaves Canada. Both are the responsibility of the United States and we refuse to make the tough domestic decisions to accomplish either.
But, as long as Trump understands borders that way, perhaps Mexico and Canada should threaten him with massive tariffs until Trump cracks down on the flood of illicit firearms and other weapons that pour from the United States to drug lords around the world. That might help us defeat harmful drugs and reduce human trafficking.
Does President Trump understand his gambit can work both ways?
About the Author: Stephen Craven
Stephen Craven negotiated international agreements for the United States on export subsidies, product standards and more, and conducted trade talks in Asia, Europe and the Americas as a former US commercial diplomat and trade negotiator for the US Department of Commerce.
