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The tariff game -- Trump's imagination

 The first thing to understand about Donald Trump is that he likes a free ride, it has been his life story.   So tariff presents the ultimate free ride, it's usually a tax on consumption (aka the poor) and it is "paid by foreigners" who don't vote for you.

The backdown against Mexico and Canada is just the first step in the battle, the 10% tariff against China is nothing, the suspension of USPS from carrying goods from China is the real thing, that's a real trade war because it affects ordinary Chinese citizens and not big Chinese corporation (except TEMU).  

On March 1st, tariffs will be imposed on Canada and Mexico.   Thankfully for Canada and Mexico, it presents an opportunity, a small one, but Canada can import orange juice from Mexico and all its fruits from Mexico too, instead of the United States.   

The most immediate impact will be to kill the small car business of US manufacturers, and to increase the price of all US automobiles by 2% to 3%, in the long run.   However, US car manufacturers have long-term contracts with Canadian parts manufacturers. They will have to pay up one way or the other -- maybe the White House will allow for the cancellation of contracts affected by tariffs...

Anyway, Trump understands tariffs, it's a hidden tax that he can "claim" is paid by the exporters, and not by Americans.   One thing is for sure, Canada will not need a "buy Canadian" campaign...

As for Great Britain, the problem is the opposite, the UK had a trade deficit with the Americans, largely because of the oil sector post-Brexit.   It will be interesting to see what Trump does there.    The real problem for Trump is all the services that American companies sell via the UK... interesting times


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