Trump says he will unilaterally scrap his own allegedly “Best in History” trade deal with huge tariff hikes on our top two trading partners. Is this constitutional?
Trump claimed USMCA, a NAFTA replacement deal he personally negotiated was the best trade deal in history.
Congress signed off on the deal. Now Trump threatens to scrap it, bypassing the Senate.
There is zero chance that 25 percent tariffs would get through Congress. But Trump says he will do this day one via executive action.
Would that Be Constitutional?
Please consider ArtII.S2.C2.1.10 Breach and Termination of Treaties
Article II, Section 2, Clause 2:
He shall have Power, by and with the Advice and Consent of the Senate, to make Treaties, provided two thirds of the Senators present concur; and he shall nominate, and by and with the Advice and Consent of the Senate, shall appoint Ambassadors, other public Ministers and Consuls, Judges of the supreme Court, and all other Officers of the United States, whose Appointments are not herein otherwise provided for, and which shall be established by Law: but the Congress may by Law vest the Appointment of such inferior Officers, as they think proper, in the President alone, in the Courts of Law, or in the Heads of Departments.
The Constitution sets forth a definite procedure by which the President has the power to make treaties with the advice and consent of the Senate, but it is silent on who has the power to terminate them and how this power should be exercised.1
The United States terminated a treaty under the Constitution for the first time in 1798. On the eve of possible hostilities with France, Congress passed, and President John Adams signed, legislation stating that four U.S. treaties with France
shall not henceforth be regarded as legally obligatory on the government or citizens of the United States.2 When he was Vice-President, Thomas Jefferson referred to the episode as support for the notion that only anact of the legislaturecan terminate a treaty.3 But commentators have since come to view the 1798 statute as a historical anomaly because it is the only instance in which Congress purported to terminate a treaty directly through legislation without relying on the President to provide a notice of termination to the foreign government.4 Moreover, because the 1798 statute was part of a series of congressional measures authorizing limited hostilities against the French Republic, some view the statute as an exercise of Congress’s war powers rather than precedent for a permanent congressional power to terminate treaties.5During the nineteenth century, government practice treated the power to terminate treaties as shared between the Legislative and Executive Branches.6 Congress often authorized7 or instructed8 the President to provide notice of treaty termination to foreign governments during this time. On rare occasions, the Senate alone passed a resolution authorizing the President to terminate a treaty.9 Presidents often complied with the Legislative Branch’s authorization or direction,10 although they sometimes resisted attempts to compel termination of specific articles in treaties when the treaties did not authorize partial termination.
When Congress has passed legislation implementing a treaty into domestic law of the United States, the President likely lacks the authority to terminate the domestic effect of that legislation without going through the full legislative process for repeal of the statute.35
A party’s breach of treaty obligations also can affect termination and withdrawal. Under international law, a party may suspend or terminate a treaty if another party materially breaches its obligations.36 The Supreme Court has appeared to recognize that, at least in the absence of direction from Congress, the President has the power to deem a treaty that has been breached by a foreign nation void and therefore no longer binding.37 The Court also has stated that Congress possesses the power to breach and abrogate a treaty by passing later-in-time legislation that conflicts with U.S. treaty obligations.38
Inflationary Madness
Constitutional or not, and I suggest the action clearly would be unconstitutional, Trump-supporting hypocrites don’t give a damn. Regardless, the action would be economically foolish.
Mexico is the largest trade partner of the US and Canada is number two. It’s highly likely both countries would retaliate with their own 25 percent tariffs.
Assuming so, all goods going to and from the US, Canada, and Mexico would immediately cost 25 percent more.
If you want to take a sledge hammer to the economy on day one and simultaneously create a constitutional mess , this is a perfect way to go about it.
February 1, 2024: Help for the Heartland? Trump Tariffs Failed the Mission
Analysis by the NBER, the official arbiter of US recessions, shows Trump’s tariffs achieved nothing, economically speaking. Retaliations cost US jobs. But politically, tariffs are popular.
September 25. 2024: Trump Threatens John Deere With 200 Percent Tariffs, Farmers Would Be Hurt
Trump has gone mad with threats. Tariffs on John Deere would cost farmers plenty.
September 26, 2024: Trump Claims Tariffs Will Reduce the Trade Deficit. Let’s Fact Check.
Trump proposes 60 percent tariffs on China. Would that reduce the trade deficit? Where? How?
October 1: 2024: Trump vs Frederic Bastiat: Who Is Right About Tariffs?
Previously, I discussed tariffs and the trade deficit. This post is about Trump’s proposal to use tariffs to fund projects.
November 22, 2024: Trump’s Proposed Tariffs Are a Tax on Consumers, Primarily the Poor
If Trump is serious, and he sounds serious, he will wreck the economy on day one unless it is quickly reversed in court.
The tariffs are about illegal border crossings of people and drugs.
look at the number of posts for Mish’s article.
now think about how many “posts” the Mexican government is getting from affected businesses on both sides of the border.
tariffs will never have to be implemented
“The tariffs are about illegal border crossings of people and drugs.”
No, they’re not.
They’re about trying to sound like some simpleton’s idea of what “tough” sounds like.
And about economic illiteracy.
And about plain and simple stupidity.
Any attempt at backpopulating any form of underlying justification for something this silly and crazy, is simply a pure loss from the getgo.
Dude’s dumb. As are his audience. Analogous to Hanlon, there’s no need to torture oneself attempting to dream up any further explanation than that.
well, ok then. I guess you know trump’s mind better than his official press release.
not having to dream up an explanation. it is in trumps official press release.
and yes, it is about sounding tough. apparently mexico and canada got the message loud and clear given their official comments just hours later.
it is also about how the policies of the past 4 years have not worked with regards to border crossings of drugs and people.
it is about economics. when it comes to money, mexico and canada will listen
Neither “Mexico” nor “Canada” are equipped with ears. They’re plots of land.
Who do have ears, are people. To the extent any of this silliness hurts Mexican, and Canadian INDIVIDUAL employers; you’ll simultaneously incentivize even more INDIVIDUAL workers to cross the border; AND also incentivize INDIVIDUAL employers in the US to hire them, since they can no longer buy the stuff they need from Mexico/Canada and need it made here (and/or Asia..) instead.
In practice, the only people benefiting from anything like this, are leeching lawyers, lobbyists and other despicable, useless, negative-value-add parasites. US businesses and people will still need the stuff produced. The demand won’t go away. Hence, Trump’s favored dimbulbs will invariably “have to” make “exceptions.” Which is just Newspeak for: Instead of anything even resembling market mechanisms determining who succeeds; it now becomes who is best connected to the zerobrain gallery of putrid garbage that Trump’s various exercises if practical imbecility are empowering.
As for fentanyl, they make it all over Philly. And Chicago. And everywhere in the US. It’s really, really easy. It can be made, and distributed, easier by Mexican operators, by piggybacking on their Cocaine distribution networks, as well as their economies of scale. But any reduced supply from there, can very quickly be made up for domestically. Bringing the violence and corruption with it.
It all makes sense in a fascist dictatorship.
The “I told you so’s” are just starting.
So they started early on to abrogate & breach treaties and have kept it up ever since.
The first foreign entanglement started with Haiti (George Washington was afraid it would set a bad example for the slaves state side.)
The flow of fentanyl into the U.S. is a significant issue. From Mexico, fentanyl is primarily trafficked by transnational criminal organizations. In 2024, authorities seized approximately 16,565 pounds of fentanyl at U.S. borders. Most of this fentanyl is intercepted at official entry points.
From Canada, the situation is a bit different. Organized crime groups have shifted from importing fentanyl to producing it domestically. This means that while there are still seizures at the border, the focus has shifted to tackling domestic production.
So Canada is not exporting fentanyl to the US.
The number of illegal immigrants entering the U.S. from Mexico is significantly higher than from Canada. In 2023, there were over 2 million encounters at the U.S.-Mexico border. This includes people attempting to cross the border without authorization and those apprehended by U.S. Border Patrol.
In contrast, the U.S.-Canada border sees far fewer illegal crossings. In 2024, there were nearly 199,000 encounters at the northern border. And 20,000 encounters from the US into Canada.
“Retaliations cost US jobs. But politically, tariffs are popular.”
A lot of American jobs have been lost to China, in particular. Carly Fiorina dumped some 30,000 Hewlett Packard jobs. Came back to haunt when she ran for governor. China becoming producer to the world, was an overwhelming event and overwhelming events cause much resentment by the substantial number of people that are negatively affected by it. The pendulum effect.
I think a good approach is to say what I am actually doing, rather than hand-waving about more remote abstractions. I am stockpiling needful consumer stuff ahead of expected price rises. Yes, fewer workers here, and tariffs, mean inflation, at least for a good long while. Until when? When America re-shores manufacturing? Good luck and patience waiting for that. If that happens, the jobs will be given to robots. U.S. (non-immigrant) workers are too expensive, to have anything like current prices. Either cheap labor is offshore, or it is onshored. Take your pick.
The Stupocalypse begins….
After WWII Detroit was the capital of the automania. In 1945 car sales were 70K. In 1946 : 2.1 millions. In 1949 : 5.1 millions. In 1955 7.9 millions, on the cusp of the 1956/57 recession. in the 50’s the average household had more than one car : one for the husband and one for the wife/ or kids. Young teenagares cruised in them, raced in streets : who chick first. The winner got the chick in the back seat. Kids drove drunk with no airbags or seat belts. Accident fatalities were 23/25 death per 100,000 of population. Detroit didn’t care. Detroit was 1/6 of the US GDP. What’s good for GM is good for America. Until the Japs import came. In the Plaza Accord
James Baker kicked them out for flirting with China. The Japs parked the money in Tokyo real Estate and the Nikk225.
Thank God for the Japanese imports. Those American rust buckets were gas sucking junk.
Trump clearly stated that these “threatened” tariffs are about curbing drugs and illegal immigration. There will not be 25% tariffs. There will not be a constitutional crises. There will be no additional inflation. But there will be fewer illegal immigrants, lower crime and less drug activity.
Trump is negotiating. If you haven’t figured that out yet you have not been paying attention for the past ten years.
Sure he is. And we all get a pony.
rule 1 of negotiating is don’t make stupid threats you don’t intend on carrying out.
If it’s so obvious to you it’s an empty threat it’ll be obvious to Mexico and Canada.
i suspect this will result in some BS commitments from Can Mex, Trump will declare a win and MAGA will celebrate another non-victory.
Just today the president of Mexico is saying that they have recently done a lot to reduce illegal immigration and are working on the problem.
so, the 25% tariffs are working and they are not even implemented nor is trump the president
There is no fentanyl coming in from Canada. In fact, historically its been the other way around.
And there are not many illegals coming from Canada either.
There is no good reason to threaten Canada with tariffs. Threatening them has already caused the Canadian dollar to drop by one cent. This will make Canadian exports to the US even cheaper.
The better question is WILL our “trading partners” call him out on the Tariff bluffs?
I think the markets will do that, if he actually carries through with it, or appears serious. And that is something he pays attention to.
Trade wars generate new supply chains.
Had been thinking Tariff threat was going to be used as Trade negotiation to get Canada to do something about its’ weak currency.
Still somewhat early it seems.
Doubtful Trump is going to shut down trade with Canada, but he might.
Border security does have a higher priority.
I think Trump is going to reinstate some form of Truman doctrine upon North America.
Undo a lot of Damage done by Biden Regime in South America.
Politically, Canada is overdue in dumping Trudeau.
Opposition is growing and a conservative led government would work things out with Trump administration.
Oh looky looky USD/JPY fell overnite 🙂
MR. T in Canada cannot outdo MR. T in America.
Special K would have kept the implosion going.
MR. T here in America CAN TRY but does anyone here believe that ANYONE could right the American FINANCIAL SHIP?
I am skeptical. ALL THIS TALK and nothing CAN WORK! Other than: 1) Stop ALL MIC spending. 2) Fire the dead weight. 3) Cut off Soc Sec and Medicare. 4) Cut off ALL SPENDING.
NOTHING CAN WORK. TAKE IT TO THE EXTREME. if ALL SPENDING were cut, and money printing stopped, we DEFAULT. THAT WILL NEVER HAPPEN.
Better get used to idea that things can get worked out. American people are feeling a whole lot better that Commander in Chief Trump has a functioning Brain.
The vegetable is soon to depart and hopefully before a nuclear exchange occurs in Europe.
Unleashing America to do great things is the mandate by voters.
Does Canada have a serious inflation problemo? Why yes it does.
Does Japan have an inflation problem? Why yes it does and it is causing political problems for incumbents in Japan recent past.
Would Canada and Japan benefit from a stronger currency?
Canada certainly.
Japan somewhat more tentatively as China is not very healthy and Japan products have some headwind. But Japan likes stability and inflation is unstabling.
I will add, a stronger currency will soothe Trade frictions without strongly impacting Trade flows, and is in their interests to both Canada and Japan.
Canada’s currency floats freely. They have little to no “control” over it’s value relative to the US.
Currency rates are primarily determined by supply and demand based on trade. The US and Canada have a fairly balanced trade. The most important trade component is oil and gas. When prices for oil/gas are high, the C$ tends to go up a bit in the short run.
The Bank of Canada sets rates based on its single mandate: keeping inflation at 2%. They don’t care much about how interest rates affect currency. And they are not going to deliberately raise rates to try to shore up the C$ to please you.
All the Central Banks are faced with similar problems that being some form of stagflationary environment.
To believe that Bk of Canada has no impact upon currency valuations is quite incorrect. USD/CAD if a person looked at a monthly chart will see it is at levels only seen twice in past twelve years. Currency markets are driven by interest rate differentials to a large degree.
USD/JPY also impacted by BOJ policy.
BOC and BOJ Monetary policy is divergent from US Federal Reserve and that in turn affects trade balances.
Today there will be Fed Minutes which market is waiting upon release. Policy perceptions will be affected by what comes out in 30 minutes.
Trumps intent is to boost US exports and bring jobs with wages back to some sort of balance.
Officially Central Bankers will not admit they influence currency markets or that has an effect upon trade. That is like Mayorkas claiming he has control of the Border or Biden being presented as sharp as a tack.
Policy extremes are the norm for CB’s who base decision upon Keynesian economics. All very academic except for where it counts that being the real world of markets.
As if Powell who claims Fed does not target Labor to take the heat out of inflation, does not do precisely that via monetary policy.
You stick with your view however that CB’s have no impact and are just a bunch of boy scouts doing good deeds every day.
Lol! You didn’t understand a thing that I said. Or you simply misinterpret it to suit your narrative.
One way that Canada can increase the value of their currency is to increase the demand for it. Demand for the C$ increases when Canada sells more to the US. So more exports to the US will result in a higher C$. Not exactly what you want, is it?
Alternatively, the BOC can artificially jack interest rates up until the C$ goes up in response. This is temporary because a high C$ will result in fewer exports to the US, a weakening economy and a subsequent drop in the C$.
A free floating currency adjusts to market conditions. You can’t control it. Nor should you try.
Are you aware that Central Banks move monetary policy to either contraction, stimulus or neutral? That interest rates are set to accommodate that policy determination.
Interest rates to a large degree set currency valuations and are greater in impact to trade balances.
If trade flows had impact to degree you present the USD would have collapsed a long time ago.
These are currency basics 101.
Yep. The US dollar is always the exception due to its reserve currency status. There is always demand for it for global trade.The C$, which we are discussing here, is only necessary for bilateral trade. And the C$ is dropping short term this week thanks to Trump’s tariff threats. If he keeps threatening Canada with economic harm, the C$ will keep dropping. Kind of counter productive, don’t you think? Same with the Mexican peso.
If you are not trying to be a comedian:
Good luck to you trading Trade flows as the determinate in currency strength or lack there of.
Thanks! Though I don’t trade currencies. I trade stocks.
Now, how about you explain to me how Canada will increase the value of its currency? Because I want to learn from your obvious expertise.
Would it help if I say please?
Take a look at Poilievre response to Trump and compare with asleep at wheel Trudeau.
Canada is poised to change direction. There has been much shorting of Canadian Dollar for quite a while.
It has already started to strengthen against Euro and broken daily support substantially this month. May well be flight risk coming out of Europe or some form of carry trade. Interest rate arbitrage being a big part of currency markets.
Best moves in currency come from position reversals or closing open positions by Banks and other financial market participants.
Recent example being unwind of USD/JPY carry. Then going into election a reversal of that and now again weakness showing signs in USD/JPY. This in recognizing Trump taking a stand on Trade via Tariff.
These moves are based upon interest differentials between CB’s and changes in perception about what is coming in near future.
Currency strength or weakness does influence Trade as it affects relative price levels between Nations. The reverse that Trade flows resulting from commerce are the major factor in currency markets just does not hold water.
Lol! That’s a lot of words to tell me you have no answer. Got it.
Keep covering your Ass to seem like you have a handle on currency markets.
USD/JPY broke solid support overnight, must be your trade flows.
yeh I got it.
Canada. About 1.4% of GDP on defense spending. The Canucks are sucking on Uncle Sam’s teats. As soon as Baby Castro is sent packing and a conservative government is in place, those tariffs will fall or come off. Mexico? Time for the cartels to take it good and hard. Mexico manufacturing was a labor offset against CCP China.
As I posted earlier: Trudeau was elected in 2015. The Conservative government before him had allowed defense spending to drop to 1% of GDP. It’s taken him 9 years to raise it to 1.4% and his goal was 2% by 2030. Perhaps Trumps election will help speed that up.
Problem is, Trudeau will be gone within a year and the Conservatives will be back in. And their goal is to cut government spending, including defense.
Trade wars and tariffs are a reaction to the onset of economic depression conditions. That is capitalism in a period of crisis.
After WWII the US became the most powerful nation on earth. In the fifties American were infatuated with powerful monster engine cars.That haven’t change. American are addicted to horsepower. Transactions are down, but dealers don’t care : a dealer selling only 100 pickup trucks and suv per month x $50,000/ average cost x 12 months = $60,000,000/ year.
If Trump impose 25% tariffs on cars and pickup trucks from Canada and Mexico it might boost Xmas sales of pickup trucks and suv..That enough fat to burn during the winter hibernation.
Big chunks of American pickups and SUVs are made in Mexico.
If angry car buyers ignore Trump’s threats, stay on the sideline, pickup trucks will rot in the parking lots. In the first half of 2025 dealers will have to liquidate at steep discounts, a 2020/2021 inverse. Ford and GM will have to substitute with something else. Mexico and Canada will be in recession.
I think the US public are already captives in a captured car market. Nobody will make (or will be allowed to sell) an affordable car. These comically overbuilt things also add to our insurance costs. This domestic cartel disgusts me. It starts to look glaring when Chinese models stack up on piers with $12,000 price tags.
Correction: the TRUE Muscle cars were produced in the Mid-to-Late 70’s. I bought one, used. It was a pile of shit.
On a side note, the Bank of Canada has been cutting rates so aggressively that Trump wouldn’t be wrong to view it as mercantilist policy. It would be ironic if Trump imposed a monetary discipline in Canada, on top of immigration sanity.
Trump should run for prime minister of Canada in their next election. Then he could straighten out Canada as well.
A lot of speculation and little thought/analysis on what is reasoning and desired outcome from increasing tariffs. One can argue for hours why tariffs are bad. That is not the issue. The use of tariffs is to -…………….. no one seems to be able to detail the context and strategy to announcing the reported increase in tariiffs.
Are unfair trade involved, are the existing tariffs on US goods to high, are there policy disputes involved, are there ………
Time to stop bitching about tariffs and put them in context
The goal is to rebuild our manufacturing capacity at a time where much of our strategic manufacturing takes place in countries inimical to US. A secondary goal is to use access to our huge market as a carrot or a stick to obtain cooperation in stopping immigration and the drug trade the second of which is also a form of warfare against us. All these measure go against the liberalization of trade agreements much in vogue during the 1980’s, 1990’s and the 2000’s. Those agreement promised much but produced negative consequences. Time to try another something else. The drastic cutting of regulations and red tape along with budget discipline could well be the better way to prosperity than the failed Free Trade experiment. We will see.
Larry, to be honest US society does not have a capacity to ‘re-industrialize’. I have family in the US and the state of STEM education is so abysmal in the average high school student that its not even funny.
And before people start jumping up & down here, I have family in 6 US States and STEM education is the same pretty much at the same level in all the 6 States. My relatives children are in a mixture of Public & Private schools.
Yes. Let’s try something else. Forget Capitalism. Let Trump dictate what happens. I am looking forward to his Golden Age.
You benefit from the status quo so anything that changes it is a threat to you personally so I am not surprised that you are against it. However the elections show that for most Americans the status quo is not working for them and they want a change so suck it up and adapt to the changes.
Doug, turn your entire argument on its head: STOP ALL SPENDING. STOP INTEREST PAYMENTS ON OUR BONDS.
OR, do not do anything at all BUT TALK. PROMISE EVERYTHING and do a little and nothing CAN change.
America is SOOO BROKE that the SHAM MUST CONTINUE with talking points and bluster. WILL the CENSORED FINANCIAL NEWS suddenly stop THEIR BULLSHIT?
WE ARE SUNK. ONLY A DEBT JUBILEE could plug the BIG SHIP’S HOLES, but the leaking then will continue. NOTHING CAN WORK!
trollish behavior
Lol! What exactly do you think I am against? There is no status quo. Everything in the world is always in a state of flux. I benefit from understanding that state of flux and profiting from it.
Well when I say let’s try tariffs and see if they work you respond by accusing me of wanting to abolish capitalism so I assumed that given the extremist answer you gave that you felt menaced by the tariff argument and preferred the status quo. Now you say that you will adjust so what is the problem?
Lol! Read it again. I was agreeing with you! I have repeatedly said, let Trump have his tariffs. It will be a great experiment to see how well they work. Forget Capitalism. Let Trump dictate everything.
AND, if TARIFFS WERE IMPOSED AT AN ACROSS THE BOARD 20%: would that RIGHT OUR SHIP if spending continues? OF COURSE NOT!
Trump stated what the goal of the tariffs are. end illegal border crossings and illegal drugs from crossing the border
For years it was the US exporting fentanyl to Canada. Now they make their own. But they don’t export it to the US.
And illegals coming from Canada are a drop in the bucket compared to Mexico.
The only reason to put tariffs on Canada is because he wants to push them around. He likes to be the tough guy.
Apparently, the 25% tariff will apply to Canadian oil and gas exports to the US. Though I suspect this will never actually be implemented.
In the US midwestern PADD2 zone there are 25 refineries. They operate solely on Canadian heavy crude. The pipelines from Canada are their ONLY source of feedstock.
PADD2 includes Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Missouri, Nebraska, N Dakota, S Dakota, Ohio, Oklahoma, Tennessee and Wisconsin.
Add in other refineries throughout the US and Canadian crude is 25% of all US refining input.
I cannot imagine Trump raising everyone’s energy prices by 25% in those states.
Trump has also stated that he will use tariff revenue to reduce other taxes and pay off the national debt. He WANTS tariffs. Illegals and drugs from Canada is an excuse to impose tariffs because we get very little of those things coming from Canada.
I say: go ahead and tariff the crap out of imports. It’s an experiment. Let’s see if it brings the results Trump wants.
Though I have trouble believing that he will put 25% tariffs on 4-5 mbpd of Canadian heavy oil that we import to feed all our midwestern refineries in the states that voted so strongly for Trump.
my understanding is that this is about illegal immigration and drugs. stop the flow and trump will end the tariffs
Tariffs end after damage from 20 million invaders is paid.
shoot 8/12 the rest wouldn’t come.
Taxing your own citizenry is going to solve that how exactly?
they will never be implemented. Mexico is already saying they are working on the problem and are going to do more
Why does he want to punish Canada?
I don’t follow.
I heard he wants the tariffs as a way to motivate Canada and Mexico to crack down on illegal immigration and drugs across our shared borders.
Understood – it just feels un-neighborly.
Big freight trains from Canada roll through my town a couple times a day. They feel like a neighbor.
The Canadian border is a favored way for illegals to enter the US. It’s more expensive but the border is longer and much less protected.
I suspect Canada already has plans to tighten their border to prevent Trump from sending them back. Particularly since he wants to focus on the “criminals”.
COME ON PAPA: PUT ALL of us to work and we could spend 10 years tracking down and sorting out the WORKERS from the CRIMINALS and nothing can stop the mess already created.
You give US a plan that COULD WORK. I do not see it.
I am not the President. I have no say in this. I have no plan to fix any problems. Trump is the President elect and he tells me it will be easy for him to fix everything.
My plan is to watch Trump’s plans play out. And to figure out the best way to profit from them. Just like I have always done, regardless of who is President.
Too many talented Americans are trying to emigrate to Canada.
Name one, but not Too Many.
The cost of living there STINKS and it is COLD. NO, American ex-pats are flocking to places like Portugal (I live there part time)…and Spain, and Italy and GREECE.
Yes. Europe is a popular destination. Though it seems that record rainfall and floods are dominating the news in the countries you mentioned.
If I have to be in a flood I prefer it to be in a country where it is warm. A flood in Canada means you end up encased in a giant ice cube.
That’s why over 36% of Canadians live in Southern Ontario. Windsor (across from Detroit) is on the same parallel as Sacramento, CA.
Price rises are not inflation.
Inflation is where money supply is increased via credit expansion at a faster rate than the rate of growth of an economy, implying growth rather than recession.
Tariffs are more likely to stymie growth and reduce trade, reduce profits, reduce salary growth, reduce hiring or increase unemployment, which is all deflationary.
Policies that raise real-terms prices (nominal prices adjusted for inflation, which is currency debasement) are by definition not inflationary.
That is not a debasement of currency by the creation of excess currency units through credit expansion by commercial banks, which is what inflation actually is.
Obviously if the real-terms prices of imports from Mexico and Canada rise, quantity of sales is likely to fall, as sales are either substituted or deferred. That suggests a fall in revenue for companies are a reduction in wage growth and a reduction in jobs or increase in layoffs, none of which are inflationary, but are in fact deflationary, because a fall in trade and employment implies a reduction of consumer spending.
yes and no! Sales are either substituted or deferred. When our national industries will be ready, protected by tariffs, demand for highly skilled workers will be high. Wages will rise…
..and price inflation will continue its ramp which is what people SEE, not the CPI BULLSHIT.
You have to break crap to rebuild better. The Status Quo doesn’t work clearly. I mean what does Canada and Mexico buy from us??
We get oil and gas from Canada
Manufacturing was exported to Mexico.
So Canada has to pay a little more for Outlook Express. Give me a break
The USA is the second largest manufacturer and exporter of manufactured goods on the planet. The USA is a massive exporter of autos and auto parts, industrial machinery, chemicals and chemical products, petroleum and petroleum products, agriculture and a myriad of other things. What the US doesn’t produce much of is lower end consumer products, which is why the average American doesn’t realize just how big US manufacturing really is.
The manufacturing supply chain is highly integrated in North America. It is not USA only. Parts of an automobile can cross borders more than a dozen times during the manufacturing process.
Yes. We import oil from Canada. We then refine it and sell the refined products back to them.
We also get lots of auto parts from Canada and then sell them the finished cars and trucks.
United States-Canada Trade: In 2022, United States exported $308B to Canada. The main products that United States exported to Canada were Cars ($16.9B), Refined Petroleum ($15.7B), and Delivery Trucks ($14.2B).
Mexico was never an ally, except for those neo-liberals who wanted to maximize corporate profits at the expense of the US, so guess what? The US can absorb anything Mexico wants to throw our way. They openly push illegals to the US, openly cooperate with the drug cartels, and yes, if the US goes around the world to bomb “enemies”, they certainly should go after the cartels and the Mexican government as enemies of the US to, well, to use “The Defense Department” to , again, defend the US.
Why start with the madness, other than to see how many news channels pick up on the BS. Canada and Mexico are good neighbors. What good can come of causing havoc with their economy’s? Just mentioning this can cause major damage to the economies dragging them both into recessions. Things are so fragile globally this will have spill over effects, and eventually dragging USA into a depression. This is mad and he will not happy until he is center stage of another disaster indirectly caused by his nonsense.
Mexico is in no way a “good neighbor”
It will likely cause recession in Canada which should be enough to give the Canadian right a landslide and a mandate to reform the mess that Trudeau and the NDP has created.
Baby Castro is a globalist shill, all while Canada drags its feet on defense spending. Take, take, take.
Trudeau was elected in 2015. The Conservative government before him had allowed defense spending to drop to 1% of GDP. It’s taken him 9 years to raise it to 1.4% and his goal was 2% by 2030. Perhaps Trumps election will help speed that up.
Problem is, Trudeau will be gone within a year and the Conservatives will be back in. And their goal is to cut government spending, including defense.
It will cause the Mexican economy to deteriorate causing mass immigration to the US.
Mr. Shedlock, none of what Trump does surprises me because he’s been an unstable deal-breaker for most of his life. That is why the State Department is having group therapy sessions because they don’t know if the country can handle another 4 years of this maniac. He’s a bomb thrower and loves attention. And according to Mitch McConnell, he’s “stupid” and “despicable”. Those are strong words about Trump from a Republican. I wasn’t crazy about Harris but she never got indicted, she never got convicted, nobody complained about her tax evasion or fraud, and she never grabbed anybody by the “youknowwhat”. Mish, did you vote for Trump?
Mitch McConnell calling anyone stupid and despicable is the pot calling the kettle black.
Tucker Carlson called him worse, as did basically anyone that worked for him who he appointed.
but i’m sure you know him better.
U.S. Imports from and also American Exports to Europe dropped by 66% between 1929 and 1932 after the American Government started using large tariffs in that era.
Maybe there be no true winners from either side again– after these new penalties?.
It will help spread recession to EU economies, which should help hand landslides and mandates to “far right” centrist parties, ousting the “centre-left” extremist Marxist regimes that are busy destroying European civilization, and hopefully destroy the EU and restore sanity.
lmao this is what you voted for enjoy it
Roughly 32% of eligible voters picked him – more than 2/3rds of the electorate did not.
One never knows what is liable to come out of the “king’s” mouth and if he is bluffing. He definitely needs a handler, and not sure Musk is a positive for him.
Every day appears to be a new day in the life of the “king.”
Yes, unfortunately Ivanka is not here this time around, to serve as his handler.
The less she and that husband of hers are around, the better.
‘Trump claimed USMCA, a NAFTA replacement deal he personally negotiated was the best trade deal in history… now Trump threatens to scrap it, bypassing the Senate.’
I don’t think that the USMCA agreement allows either Canada or Mexico to send criminals to the US. Imposing a penalty on trading partners gone rogue is a brilliant idea. Yet another effective use of tariffs.
No more Mr. Nice Guy.
Exactly, Trump can claim it is THEY who breached the contract first, and if it was wordy enough, which it probably was, then the lawyers may find something in there to support that stance.
Bring it on. 25% tariffs on everything from Canada and Mexico if they don’t stop the fentanyl. And 10% tariffs on China for the same thing.
Strange that its only 10% on China, since they are the main source of fentanyl in the US.
People cross illegally into the United States not because anyone sent them, it is because the United States lets them in. The United States lost manufacturing jobs to China not because China kidnapped the companies and stole the factory equipment, it is because companies willingly and purposely left the United States to go elsewhere to be more profitable. If you blame others for your own mistakes you will never be able to correct your mistakes.
Our mistakes are basic.
When it comes to key industries and manufacturing ability and knowledge, if companies won;t build it here they won’t be able to sell it HERE.
That’s how you build an economy for your people, not just for random capital.
Free trade is a lie. Sure there can be limited comparative advantage, but in the end you either have certain key economic, technological and knowledge based industries and skills, OR you are dependent on someone else who is NOT YOU for that. Which leaves your nation vulnerable. Its a poor way to invest in YOUR nation. But remember–globalists hate nations, its just about ONLY money for them.
“ That’s how you build an economy for your people, not just for random capital.”
So forget Capitalism and instead let governments control everything?
Good plan.
It is always either pure black or pure white. There can never be anything in-between!
Everything is in between. What counts is how hard we lean right towards Capitalism, or left towards Government Control. What is your preference?
OK, let’s get real then. Mexico allows migrants from all over the world into its country for the express purpose of passing illegally into the US at the bidding of the corrupt and illegitimate Biden administration. This makes Mexico complicit in the crime. It is not “we” that invite or let them in as was evidenced by this month’s historical landslide election victory. Is that real enough for you?
President Trump has two years to make it happen. Shock and awe is the only way to force corporations around the world to break ground and build factories in USA beginning on day one. They are warned. They should be purchasing the land and hiring construction workers today.
Do you know of any factories that don’t use electricity? The lead time for standard oil filled padmount transformers is between 1 to 2 years. The lead time for generator step up (GSU) transformers is between 2 to 4 years. So assuming that the BOD and the CEO of the company approve a capital expenditure for a new factory in the United States on Day 1 of Trump 2.0, the capital gets appropriated, the engineering design occurs quickly, the equipment to make the products are ordered and can be delivered promptly, that there is no labor shortage due to mass deportations in the construction industry, even with all of that going more than perfectly, it won’t start for at least two years because there will be no transformer to supply power from the utility service. That of course assumes that there is power available to manufacture instead of to do AI and ChatGPT and Bitcoin mining. I spent 35 years as an engineer designing, constructing, and starting up manufacturing, processing, and oilfield facilities. It doesn’t happen overnight. Many of my projects stretched four or five years. 99.9% of people don’t know anything about what it takes to actually make something let alone how to make a factory that makes something.
https://www.power-grid.com/td/the-u-s-has-a-critical-shortage-of-power-transformers-can-it-bounce-back/
Creative aggressive management can get the job done or forgo two years of revenue. Plus President Trump warned them one year ago. Proper prior planning prevents panic.
Lol! You didn’t understand anything PreCambrian just said.
He said it couldn’t be done. That’s why you hire men like me.
Yep. Let me guess. The most recent nuclear plant in the US took 15 years to build. And you are the kind of guy who will pull a nuclear power plant out of your ass. Got it.
Government regulations and the Department of Energy bureaucrats are the problem there. Trump has something for that.
Lol! So he is going to pull new nuclear plants out of his ass as well? I would love to see him squeeze those out!
China has nothing to prevent them from building nuclear plants quickly and they are currently building over 20 of them. It still takes them 7 years to build each one. How many did Trump get built in his first term? Zero. How many did he even attempt to build? Zero.
Instead he promoted clean beautiful coal. How many coal fired plants disappeared during his first term? 50.
And how many additional coal fired plants announced they would close? 51.
A lot of references to ass. Hmmm. Permitting labyrinths, not building itself.
Yeah. I was going to say they piss them out of their tiny dicks. But I didn’t want to be rude.
This mentality reminds of the wreckers in the USSR.
Stalin and his gang had no conception of how things are actually produced with effort and skill–as opposed to dictates– and so couldn’t grasp why their glorious 5 year plans (which were physically impossible) didn’t happen in 3.
It had to be ‘wreckers’ and subversives. So they fired all the engineers, before realizing they were the only ones who knew how to do anything– so they brought them back– this times as gulag slaves of course— gulag engineer slaves.
‘Aggressive management’ is code word for someone else’s problem.
Well said.
No one said it was going to be easy but the longer-term direction has to be set.
Lol! Trump says everything will be easy when he is president. And I’m looking forward to seeing how easy it will all be.
During his first term he “set the direction” and promoted clean beautiful coal. How many coal fired plants disappeared during his first term? 50.
And how many additional coal fired plants announced they would close? 51.
Easy.
Longer term direction has to be set by consensus in Congress and congressional funding. Otherwise, the next administration can just reverse it all.
KGB, to be honest US society does not have a capacity to ‘re-industrialize’. I have family in the US and the state of STEM education is so abysmal in the average high school student that its not even funny.
And before people start jumping up & downy, I have family in 6 US States and STEM education is the same pretty much at the same level in all the 6 States. My relatives children are in a mixture of Public & Private schools.
Bring back Trump University. That will fix everything. Easy.
In spring 2025:
With or without globalization, recession is coming.
With or without tarrifs, recession is coming.
QE beyond imagination is coming.
No way out.
Recessions always happen, eventually. No one knows when ours will hit, the massive debt the foolish corporate and business campaign donors and the Republican and Democrat politicians put on our country will make it a lot worse than it wouldve been if we’d been fiscally responsible. More QE (money printing) would be incredibly dumb as that is the main root of the problem.
It’s already arrived in most places.
“If Trump is serious, and he sounds serious, he will wreck the economy on day one….”
Or perhaps sooner, on Biden’s watch, if he can talk enough crazy shit between now and then.
And that should be easy for King Chaos the Shit Talker.
Was a great economy with low inflation during his 1st term. Now you just run around screaming.
Lol! You’re joking; right?
https://abcnews.go.com/amp/Business/trumps-economic-legacy/story?id=74760051
https://www.investopedia.com/donald-trump-presidency-economic-impact-8666666
Trump inherited a good economy and then f*cked it all up the first time. But hey, there was a pandemic. So let’s give him another chance. Let him do what he wants. Let’s see if he can bring us to our new Golden Age. I look forward to seeing him do everything he promised. Then we will be able to judge his performance.
Just don’t tell me he did a great job the first time. That’s f*cking moronic.
Obama did not create a good economy.
Growth has been anaemic since the GFC. It was Dubya who inherited a good economy after debt reduction under Clinton. Obama is just as guilty as Trump of increasing debt and wasting time achieving nothing despite pretty speeches.
Lol! You need to go look at the economic stats: GDP, unemployment etc. Obama inherited a shit show called the Great Recession from Dubya (or the Great Financial Crisis). It took him 8 years to turn it around and he handed over a good economy to Trump.
Trump was unlucky to have a pandemic, which caused a recession. He left office as the first president to have fewer jobs at the end of his term compared to when he started.
Biden inherited Trump’s shit show with high unemployment. He now gives Trump an economy with the lowest unemployment rate ever.
Now, Trump has a second chance to show he can bring us to the Golden Age. I wish him well and hope he succeeds. I keep saying; let him do whatever he wants. It will be a great experiment to see how it all turns out.
I am a Trump supporter, but we all know he got “lucky”. His second term would have been plagued by inflation, maybe just a bit less than Biden.
He was lucky to inherit a good economy. But then he was unlucky. He had a pandemic that left us with a sharp short recession, massive unemployment and massive debt increases. First president to leave office with fewer people working that when he came in.
Inflation isn’t that bad right now. It was horrible a couple of years ago. Trump will amp it up in a big way. But Fox News will blame Biden and its tribal watchers will believe them.
The delta (rate of change) is less than it has been, but the net effect of the past 2+ years is quite a substantial burden to most of the population. Excuse-makers will claim things are ok now because conditions are getting worse more slowly.
I’m loving it. Let Trump do whatever he wants. Make him King for life if need be so his policies have time to fully take effect. I will wait to see the results of his policies. Golden Age, here we come!
Then we can all stop arguing about what policy will work and what won’t. It’s a real world experiment.
I wonder if the 25% tariff on all “goods” will include oil and gas?
Yeah kinda like the covid jabs, 😂
You expect that Trump is going to put tariffs on the covid vaccines he personally created and took credit for? Perhaps you aren’t aware that they were produced in America. Thank you President Trump for your Operation Warp Speed!
I was referring to your comment about experimentation….on our health….It was not a good idea.
Sour grapes. Everything Trump takes credit for is the best the world has ever seen. Thank you DJT for those wonderful vaccines! Please ignore goldguy.
We don’t import much oil or gas – we do export LNG
Or do I mean “did” when countries respond to Trump Tariffs by getting LNG from Australia or wherever
Nope. Not even close. We import a LOT of oil: 8.5 mbpd. The majority of it comes from Canada: 4.4 mbpd. We also export a lot of oil. 10.1 mbpd.
https://www.eia.gov/tools/faqs/faq.php?id=727&t=6
Why both? Infrastructure bottlenecks and refineries.
Our refineries are largely set up to refine heavier oil. They can’t handle the light oil from shale fracking. A lot of that oil gets exported. And we import a lot of heavy oil from Canada. They supply us with 25% of the oil we are set up to refine.
This is not something that will change anytime soon unless we build a bunch of new refineries that can process light oil. And that would take over a decade if we started now.
Apparently, the 25% tariff will apply to Canadian oil and gas exports to the US. Though I suspect this will never actually be implemented.
In the US midwestern PADD2 zone there are 25 refineries. They operate solely on Canadian heavy crude. The pipelines from Canada are their ONLY source of feedstock.
PADD2 includes Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Missouri, Nebraska, N Dakota, S Dakota, Ohio, Oklahoma, Tennessee and Wisconsin.
Add in other refineries throughout the US and Canadian crude is 25% of all US refining input.
I cannot imagine Trump raising everyone’s energy prices by 25% in those states.
https://www.eia.gov/todayinenergy/detail.php?id=62664
We are in a post-Constitution era. Why would Trump care about the Constitution? He said it loud and clear he wouldn’t bother to respect it. Get used to it.
1st, 2nd, 4th, 6th … etc. etc. etc. Joey B. and Co. Like toilet paper. Get a life pal. And see a shrink.
Wrong. This is something he can do. Unlike the weaponization of DOJ by Biden which was illegal.
Forgiving Student Loans unilaterally was also wildly illegal and Biden did it anyway.
And unconstitutional
No he didn’t. The Supreme Court shut it down.
It’s not illegal to prosecute Trump for trying to steal and election and for stealing secret government documents.
It’s an opening gambit in a bargaining position. Remember he wrote the Art of The Deal. If you want to buy something you start off with a lowball offer. If you want to sell something you start off with a high offer. Didn’t you ever buy or sell a house or a car?
The Art of the Deal was ghost-written. The person who wrote it calls Trump a buffoon.
USMCA was no better than NAFTA and arguably worse because it lets the Mexican courts, not US courts decide compliance.
Trump cancelled Obama’s deal with Iran, and that is despite the fact Trump’s own military advisors said the deal was working, as did all of our allies. Now Iran is on the verge of a nuclear weapon.
Finally, please note that Schumer offered Trump $25 billion for the wall in return for amnesty for dreamers who had been here for 5 years. Trump stupidly turned that down.
Trump has a proven track record of being one of the worst deal makers in history.
I’m willing to give up avocados mish. Sacrifice.
And car parts? And what happens when Mexico decides to buy soybeans from Brazil instead.
Are you really as clueless as you sound?
Don’t forget Trump negotiated with the Taliban for the US to withdraw from Afghanistan and freed 5,000 captured Taliban soldiers
I think if we judge Trump by his first term he was a better deal maker than Biden. Example A is the Remain in Mexico protocol vs what Biden did. I don’t agree on Iran and I trust Netanyahu’s view on that deal far more than certain military advisors who were Obama boot lickers. Trump reduced Iran’s oil revenue, Obama gave them pallets of cash and his deal was so bad he would not submit it to the US Senate as a treaty because it would have failed. Schumer’s deal was terrible because the wall was only a minor component of the immigration crisis. Amnesty has never worked, it just begets more illegal immigration. Never trust Schumer. And perhaps Trump’s ghost writer was disgruntled. The immigration crisis calls for very bold action, time to put Mexico in her place.
“…one of the worst deal makers in history”
Damn, so is that his secret to success?
Depends on whether you think those deals are worth making. You obviously do.
I hope Iran gets nukes – and soon. Maybe then Israel will stop trying to get us to attack Iran.
I don’t do that and I’ve bought and sold a lot of houses and cars. I don’t waste my time trying to buy things that are overpriced and when I want to sell something I price it appropriately, but then again I’m not a flipper or a scammer.
The Art of the Deal was ghost-written by Tony Schwartz. Trump can’t write a book. That’s a fact.
He also claims that the ideas in the book were his yet he not known for having made any successful deals of his own to gain enough wealth to stop ghost-writing.
Mexico + Canada GDP about 8% of US GDP. They depend on selling into the US. They don’t have much leverage. Mexico sells into the US via US corporations. That’s the pressure point. Empire and labor arb or the US economy and jobs. Yes, very complex. I don’t think that economics can capture it.
Canada has a near-even deficit-surplus with the US.
And do you really think Trudeau won’t respond with equal stupidity?
Every Kanook comes across the border for medical, dental, and groceries.
What? There are millions of Canadians that live throughout the country nowhere near easy driving distance to the US. I have family in Canada that is lucky to make it anywhere within the US once a year just to visit family.
More explanatory, but false hubris
Not millions, a few thousands only.
What’s the population of Nunavut again?
I wonder who came up with that name.
The Inuit, who lived there before Europeans invaded.
I think you misinterpreted what he wrote.
You interpreted it as ‘every Canadian comes to the US for those items’ and rightfully you noted that most Canadians never visit the US in a given year.
What he meant was that all those who DO visit, are coming for those things (ie cross border goods or services). Maybe they visit family or vacation but they definitely load up before returning.
We’ll know when TayTay moves up there.
Trudeau will have trouble getting re-elected. As for Trump, he learned long ago that the way to get attention is to misbehave. And it’s amplified on FOX and similar stations. Smart people never wanted this guy to be president again. It’s not like Trump’s bullsh*t’s surprising. We watched it for 4 years, and the crescendo was an attack don’t the Capital by the ignoranti he controls, just like a shepherd controls his sheep sheep.
How big is Canada’s economy again?
A tariff as a tax on the poor? OK by me. They already have food stamps (SNAP), Section 8 housing, welfare (which NEVER is on the verge of running out of money, as Social Security is said to be), EITC earned income tax credit, providing up to $7.4K as a gift from the IRS for low income. Should I be sorry for the poor? Yeah, maybe 20 years ago, but I’m way past that now.
Well then you are a fool. But that’s OK. You are entitled.
You talk as if people have no choice but to buy imported goods, yet elsewhere you talk about how tariffs reduce trade volume. Make your mind up!
What did the poor ever do to you?
And if you’re an old man (and this post makes you sound like one), the working poor (who receive the EITC) are the ones that are currently paying for your Social Security checks. So you might want to give them a break and just say thanks for the reciprocal support
They stole my car twice!
Probably not the working poor OLD man, just saying 🙂
Mexicans work full time stealing cars.
Lol, this is the dumbest thing I’ve heard in a long time. It’s f-ing classic.
How big was that national debt again?
Where’s all this magical money supply coming from to rain mana on “the poor ‘?
Well we’ve all been waiting for a recession and the GOP are experts at creating them, it’s a foregone conclusion.
“It’s turtles all the way down and inflation all the way up!”
That quote has been to prepare all of you on what’s coming, especially the fixed income clan. You are gonna hurt and hurt bad. To be fair to Trump though, it would have happened no matter which clown took office but it’ll be fun to watch him take the hit for it.
The recession already started under the Democrats, as they usually do, because leftists always cause recessions.
Nope. The record shows the opposite. The last 10 Republican presidents all had a recession begin on their watch. Two of them had two recessions. One of them had 3 recessions. Ten Republican presidents since 1920 and 14 recessions began on their watch.
In the same time frame 8 Democrat presidents had 4 recessions. The last was Carter in 1980. So it’s been 44 years since a Democrat president had a recession begin on their watch.
There was an old saying from the generation of my parents that says Republicans get us into recessions and Democrats get us into wars.
Step 1, Step 2.
This 100%. ☝️ I fear we are rapidly heading in direction.
Could be. Mish will be right in his recession call eventually. Odds are it will happen during Trump’s next term. But past performance is never a guarantee of future performance.
I’m down with it!
Stop the illegals. Stop the drugs. Simple as.
Excuse me for asking but did we have a drug problem before we had a wave of illegal immigrants?
Yes and it wasn’t dealt with. Mexico and China both said they would stop the flow of fentanyl and they didn’t.
If you think anyone can stop this, then you are doubly crazy.
You’re kidding right. You think Mexico has done all it can to stop illegal immigration? Of course not. That was proven by how much more they did when Trump was President the first time. Time to step it up. They have a few months. Or else.
The Mexican government earns a percentage from the drug cartels.
Wouldn’t surprise me at all
I thought we were talking about drugs not immigration?
China had a massive opium problem for generations, after the Judeo-Christians from the UK forced drugs onto the Chinese literally at gunpoint in the 19th century with the Opium Wars, etc. For all of Mao’s failures as a leader, he did largely resolve China’s drug problem. Even today, you don’t really see drugs in China anywhere near to the extent that they’re readily available in the USA. It takes a brave man to be a dope dealer in China, because you ultimately become an organ donor long before your time. Your eyes, your kidneys, your liver, they’re all going into other people’s bodies if you deal drugs in China.
I’ve had vasectomy, appendectomy, and hernia surgeries in Korea and opioids were never prescribed. They never are in any of the East Asian countries, but an American doctor once prescribed me Percocet, which I didn’t take of course. The US healthcare system is designed to turn the American population into junkies, an Opium War pushed against its own population by the corporatocracy.
Yes, we sure did Mish. I’m old enough to remember the crack epidemic under Reagan and Bush #1. It’s only gotten worse since then.
And just like then, capitalism means that if there’s a demand for something (fentanyl, crack, squishmallows) people will supply it.
Honestly, IMO the only option for opioids is probably to put most of the vulnerable population on Ozempic, which seems to prevent a lot of addictive behaviors in addition to overeating.