Summary
Trump announced that 25% tariffs on imports from Canada and Mexico will take effect on February 1, though a decision on including oil remains pending.
He justified the move by citing undocumented migration, fentanyl trafficking, and trade deficits.
Trump also hinted at new tariffs on China.
Canada and Mexico plan retaliatory measures while seeking to address U.S. concerns.
If oil imports are taxed, it could raise costs for businesses and consumers, potentially contradicting Trump’s pledge to reduce living expenses.
I’m glad you started your dissertation with “the way you x is via y” because it immediately informed me that I was reading the work of an expert genius and as a smooth brain, when a genius writes, I read.
One question, wouldn’t higher prices on imported cements sort of make local cements automatically cheaper, giving them an advantage without asking them to cut corners? In a free market you will often see a “race to the bottom” on goods, whereby manufactures and producers will cut costs so low that they lose money, so long as there is some other incentives that would lead to profit. Video game consoles are a common example. The console is sold at a loss with the expectation that they will make up the difference on the consumables, games and related services.
If local competitors can produce for lower cost than competitors it may drive more people, who generally just want to save money, to local businesses, creating demand, driving growth.
Tariffs only makes thing more expensive for everyone.
Let’s say you import steel at X$/ton and it cost Y$ locally where X < Y. You add a tariff T to make the imported steel on par with local steel.
Local steel still is as expensive and any production that uses imported steel now cost more.
Nothing went down in price, only up.
Now, there is a discussion to be had about buying local, but the immediate effect is that things will cost more even if manufacturers switch to local steel because they pay more for the same quantity no matter what.
This is a simplified version of the situation, but it explains the issue.
This assumes the local product wasn’t already cost competitive. If they are close and you slap a tariff on the import that adds further incentive to pick local. Assuming local would capitalize on the added revenue via reinvestment/expansion, it would create jobs and more demand, may even make the product or services even more affordable.
Picking local versus imported has no effect whatsoever on the price of the transformed product.
Business will find the source of primary resources that is the cheapest for their needs. Best case scenario, local is what’s used already and prices won’t change.
Otherwise, the transformed product will cost more because either the businesses pay the new inflated price for imported resources or they switch to a local resources which is more expensive. Prices will raise no matter what.
Guess which one we’ll see happening?
Video game consoles are sold at a loss on occasion because the marginal cost of game sales is extremely high. There’s no associated product to pair with cement that would drive you to sell it at a loss.
My point was that yes, it will drive people to local businesses, because they will be cheaper. Local businesses have no reason to keep their prices the same if the competition just got more expensive however.
I’m glad you found my comment informative. I’d hate to think I was talking to someone who wanted to say their opinion and then got defensive if someone disagreed with them. It’s a sign of someone with at least a wrinkle or two that they’re open to discussing their thoughts.
For more insight from people even more knowledgeable than me:
https://www.businessinsider.com/what-are-tariffs
https://www.businessinsider.com/krugman-trump-tariffs-immigration-deportation-grocery-prices-wealth-taxes-policy-2025-1
https://paulkrugman.substack.com/p/the-end-of-north-america
https://taxfoundation.org/research/all/federal/trump-tariffs-trade-war/
Well the console example demonstrates long term payout strategies. Another example is in free to play games with microtransactions. You develop a game at a cost, you give it away for free, and you hope that it’s good enough to hook people and get them to spend on “hats”. It’s a lot of money up front to make more later.
So do either of those strategies apply to the manufacturing of physical goods as are being tarifed?
Do you think that Ford is going to sell cars at a loss to make money on service contracts now that their costs are rising because some parts are fabricated in Detroit, assembled in Windsor, and then shipped back for installation in Flint? If it didn’t make sense to sell at a loss before, why would it make sense to do so now?
Do you think that there’s money to be made on getting people hooked on buying wheat perks?
We’re not talking videogame DLC, we’re talking about food, manufacturing materials, electrical power, and physical goods. The price of these things are going up, just like they went up with previous tariffs. This is a super easy case, because he did it to a lesser extent before, and it didn’t do what he’s saying it will. There’s no reason to believe that making the bad choice more vigorously will make it suddenly have a different outcome.
Google “byd china car sell at a loss” and “chicken tax”.
You will see price wars or the race to the bottom in the auto industry and you will see how tariffs on imported cars are one way we have protected domestic manufacturing.
Dude, go reread my first comment. I specifically mention tarrif as a counter to restore market balance after manipulation. These aren’t being used to counteract an anticompetitive subsidy. Raising prices to restore equilibrium and raising prices to disrupt it are very different things.
I know you want this to be something that works, but there’s a reason why reputable economists think this is just the worst idea.
I’m having a hard time connecting what you’re saying and my point. I also don’t really care what economists are saying, I don’t automatically assume economists are correct because they are economists. I understand tariffs are not good, which is why I said “ultimately”, and nothing that you have said yet has changed that opinion, but I am open. I didn’t even disagree with many of your statements I just didn’t see how they connect.
Can you see how maybe it would be easy for a person to think that you thought tariffs would be good for the US? If that wasn’t your point, then I have no idea what you’re talking about.
Why don’t you care what economists say? They’re people who have actually spent time looking at and thinking about these things. They have numbers to back up their claims and, while fallible, they’re likely the most qualified people to make assessments about the economic impact of policy changes.
It’s like saying you don’t care what engineers say when what you’re doing is building a bridge. At the very least it should raise a red flag when nearly all of them say something is a bad idea.
You’re saying “there’s a reason reputable economists say”, as if there aren’t reputable economists also saying something else, like “tariffs are a tool and predicting impact is difficult if not impossible due to complexity”. So, whats the point in mentioning that “reputable economists say” unless you’re pandering to an appeal to authority. Economists are just people and can make mistakes, entire groups of people like “reputable economists” can have the wrong ideas at the same time, or collectively jump to conclusions. I don’t care what economists say, I care about why they say it and if it makes sense. Your point is “there’s a reason why” and you load this with “reputable”. How do you qualify reputable and what is the reason they say? Could they be wrong and if not, why is there an economy at all?
Engineers make mistakes all the time too. The idea that an engineer can’t be wrong about engineering and a layman can’t comprehend even intuitively understand engineering concepts is exactly what an appeal to authority is about.