Aside from the general issues about Trump‘s tariff and his economic nationalism strategy, today’s actions against Canada and Mexico are inexplicable and dangerous. 1/8
First, the tariffs will raise prices on automobiles, gasoline, and all kinds of things that people buy. 2/8
Second, as the tariffs are passed on to consumers and then other firms raise prices to match their competitors higher prices, this will hurt American job creation by making American firms less competitive. Much of what we export, involves imported inputs. Cars move back-and-forth across the border between five and ten times during assembly. This makes the whole of North America much less competitive, relative to Europe and Japan. 3/8
Third, this will force our allies to retaliate, and I presume they will retaliate in ways that are designed to maximize our economic pain. 4/8
Fourth, it is hard to imagine a better way to increase migration on our southern border than by destabilizing the Mexican economy, as these tariffs set out to do. 5/8
Fifth, as the opening foreign policy move of a new Administration this punishes our closest allies and rewards our adversaries. The idea of diplomacy is to unite your allies and divide your adversaries. Why are we doing the opposite? 6/8
If the United States shows that it is willing to arbitrarily impose tariffs as a form of hostage taking for leverage, then other countries will find us a bad partner. This will undermine our economy, our power and our national security. 7/8
These actions are an important test for the American business community. They know this is not a pro-business strategy to promote economic growth. I hope business leaders have the courage to say so. 8/8
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