Trump pulled the trigger on tariffs, especially Mexico and Canada, but some details are missing. We find out later today.
Spotlight Canada and Mexico, Not China
Trump is lashing out at Mexico and Canada in the Dumbest Trade War in History.
President Trump will fire his first tariff salvo on Saturday against those notorious American adversaries . . . Mexico and Canada. They’ll get hit with a 25% border tax, while China, a real adversary, will endure 10%. This reminds us of the old Bernard Lewis joke that it’s risky to be America’s enemy but it can be fatal to be its friend.
Drugs may be an excuse since Mr. Trump has made clear he likes tariffs for their own sake. “We don’t need the products that they have,” Mr. Trump said on Thursday. “We have all the oil you need. We have all the trees you need, meaning the lumber.”
Actually, we don’t have all the oil we need, at least in a form we can use. I will do a separate post on this idea and what we should do about it.
Mr. Trump sometimes sounds as if the U.S. shouldn’t import anything at all, that America can be a perfectly closed economy making everything at home. This is called autarky, and it isn’t the world we live in, or one that we should want to live in, as Mr. Trump may soon find out.
Take the U.S. auto industry, which is really a North American industry because supply chains in the three countries are highly integrated. In 2024 Canada supplied almost 13% of U.S. imports of auto parts and Mexico nearly 42%. Industry experts say a vehicle made on the continent goes back and forth across borders a half dozen times or more, as companies source components and add value in the most cost-effective ways.
And everyone benefits. The office of the U.S. Trade Representative says that in 2023 the industry added more than $809 billion to the U.S. economy, or about 11.2% of total U.S. manufacturing output, supporting “9.7 million direct and indirect U.S. jobs.” In 2022 the U.S. exported $75.4 billion in vehicles and parts to Canada and Mexico. That number jumped 14% in 2023 to $86.2 billion, according to the American Automotive Policy Council.
Tariffs will also cause mayhem in the cross-border trade in farm goods. In fiscal 2024, Mexican food exports made up about 23% of total U.S. agricultural imports while Canada supplied some 20%. Many top U.S. growers have moved to Mexico because limits on legal immigration have made it hard to find workers in the U.S. Mexico now supplies 90% of avocados sold in the U.S. Is Mr. Trump now an avocado nationalist?
Tariffs Loom Saturday, Some Details Missing
The Tariffs Loom Saturday but there are still some details missing.
The U.S. will impose tariffs on computer chips, pharmaceuticals, steel, aluminum, copper, oil and gas imports as soon as mid-February, President Trump said Friday, opening a new front in his looming second-term trade wars.
“That’ll happen fairly soon,” Trump told reporters in the Oval Office, adding that he also wants to hike tariffs on the European Union, which has “treated us so horribly,” though he didn’t specify when or how high the duties would be. A representative for the European Union didn’t immediately respond to a request for comment.
The announcement for those sector-based and EU tariffs appeared separate from the 25% tariffs on Canada and Mexico, and 10% tariffs on China, which he had said would be implemented Saturday.
The duties previewed by Trump would come on top of existing tariffs on those products, he said, waving away any concern about the levies increasing inflation or snarling global supply chains.
“I think there could be some temporary, short term disruption and people will understand that,” Trump said. “The tariffs are going to make us very rich and very strong.”
Very Rich and Very Strong
If tariffs made countries very rich and very strong then every country would respond in kind.
Since tariffs are a tax on consumers, the logical assumption is taxes (at least some kinds of taxes) make us rich and strong.
The ultimate result of everyone being rich and strong would be no one importing or exporting anything they could conceivably make or grow themselves.
Some Exemptions
White House press secretary Karoline Leavitt on Friday said the Mexico, Canada and China tariffs were coming but declined to speak on exemptions for certain products or what, if anything, the trading partners could do to avoid the duties. Trump’s team has also been considering a grace period between the announcement of the tariffs on Saturday and when they would actually be imposed. Leavitt seemed to play down that possibility on Friday, telling reporters Trump “will implement his tariffs tomorrow.”
Trump told reporters in the Oval Office that there was nothing Canada, Mexico and China could do to avoid the tariffs before Saturday. But he did say he was considering a lower tariff on Canadian crude oil—10% instead of 25%.
For weeks, large U.S. industries such as the oil and automotive sectors have lobbied him for exemptions from the tariffs, warning of higher prices and continental-wide supply-chain issues, while Canada and Mexico have prepared a list of retaliatory measures to hit U.S. products with tariffs in kind.
The China tariff threat, meanwhile, has flown under the radar compared with the North American tariff pledges. While Trump said earlier this week that he was still considering duties on the world’s second-largest economy, he has rhetorically targeted Canada and Mexico much more often, and his team had appeared to have less contact with Chinese diplomats than officials from the U.S.’s continental neighbors.
Stopping the Drug Trade
U.S. Customs and Border Protection reported that last fiscal year 21,148 pounds of fentanyl was seized at the southwest border, the most from U.S. citizens coming through legal ports of entry. On the northern border, CBP reported seizing 43 pounds of the drug.
Throughout the process, Mexican and Canadian officials have expressed frustration that they don’t know what actions would satisfy Trump’s demands, despite weeks of meetings between senior officials. Indeed, the looming tariff announcement Saturday would follow the White House saying publicly this week that negotiations were progressing well with both nations.
Mexican President Claudia Sheinbaum, meanwhile, said her government is ready for Trump’s tariffs and would respond in kind.
“We have Plan A, Plan B, Plan C for whatever the U.S. government decides,” Sheinbaum said. “It’s important to remember the implications that imposing tariffs could have for the U.S. economy.”
Of the 21,191 pounds of fentanyl crossing the border, 43 pounds are from Canada.
Damn, we need a wall with Canada too.
National Security Nonsense
The president hasn’t said which legal authorities would be used to impose the tariffs. Trump advisers had considered using emergency economic authority to impose the sanctions, but The Wall Street Journal earlier reported that aides have second-guessed that strategy after a federal judge temporarily blocked a Trump administration memo seeking to freeze federal assistance grants and loans.
While the U.S., Canada and Mexico have a standing free-trade agreement, it isn’t clear that the expected tariff action would immediately violate that pact. The U.S.-Mexico-Canada Agreement, like most trade pacts, includes a provision that allows for the imposition of tariffs on national-security grounds.
How Much Will This Cost You?
The Wall Street Journal discussed cost in its post Tariff Threat Prompts Automakers to Find New Suppliers, Consider Higher Prices
U.S. car buyers on average would face price increases of roughly $3,000, according to estimates from analysts at Wolfe Research. Buyers of new cars paid about $46,200 on average in December, according to J.D. Power.
Already, an affordability crunch in the U.S. car market has relegated many shoppers to the used-vehicle lot. Car prices in the U.S. soared earlier this decade because of vehicle shortages, and they remain roughly one-third higher than they were before the pandemic.
There have been down-to-the-wire negotiations between the U.S. and Mexico and Canada over the tariffs. Auto-company lobbyists have been pressing for exemptions or a narrower scope should the tariffs go into effect. For now, many companies are planning for the worst-case scenario.
Tariffs would upend the past three decades of the auto industry using free-trade rules and knitting together a vast factory web across the U.S., Mexico and Canada.
Now, some are rushing orders to beat this weekend’s potential deadline. GM, for example, is expediting vehicle imports from Canada and Mexico and has factory space to shift some work to the U.S., if needed. But the company says it won’t spend significant capital until it has more clarity.
Others are drawing up plans to source supplies from trade-friendly countries such as Thailand in case Mexico or Canada retaliates with their own tariffs.
When President Trump first floated the idea in November of placing tariffs on imports from the U.S.’s two top trade partners—despite a free-trade pact that has been in place for decades—many auto executives dismissed it as a negotiating tactic.
Jerome Dorlack, CEO of Dublin, Ireland-based seat maker Adient, told analysts on Tuesday that conversations with the automakers have begun. The company has 18 sites in Mexico and 30 in the U.S., according to regulatory filings.
“We’ve made it clear to them that this is not, at a 25% level or even at a 10% level, a burden that Adient is prepared to take on,” he said.
Mikael Bratt, CEO of Swedish airbag-maker Autoliv, which has factories in Canada and Mexico, put it bluntly during an earnings call Friday: “Of course, that’s a pass on to our customer,” he said of the prospective tariffs.
More than a quarter of GM’s U.S.-sold cars come from Mexico or Canada, including some of its most lucrative product lines. Last year, about half of the one million Chevrolet Silverado and GMC Sierra pickup trucks that GM made were built either in Canada or Mexico. A large majority of those trucks—the automaker’s top-selling models and biggest moneymakers—were shipped to the U.S. for sale.
Don’t worry according to Trump, Mexico will pay it.
Trump’s Word Is Worthless
Trump bragged that the USMCA trade deal he negotiated with Canada and Mexico was the best trade deal in history.
There is no reason to believe Trump will honor any deal that he makes. That’s something I have pointed out for weeks, and it’s the key reason I was skeptical he would act as foolish as he is.
The one thing we don’t know, is how the markets and the economy will react to the certainty that no deal Trump negotiates is worth a damn.
Trump’s treatment of allies will make us neither strong, nor rich, but it does prove Trump is untrustworthy.
Seven Charts Show Tariffs Would Harm the US Auto Industry
Yesterday, I noted Seven Charts Show Tariffs Would Harm the US Auto Industry
The CATO institute does a great job explaining why tariffs on Canada and Mexico would be a very bad idea.
New Tariffs on Computer Chips and Semiconductors
Also note Trump Announces New Tariffs on Computer Chips and Semiconductors
It’s not like we can get advanced chips anywhere else. Thus, US customers will pay more than anyone else in the world for chips, and computers too.
How exactly is that supposed to help the US?
Welcome to the dumbest trade war in history.
But that’s OK because Trump “Will Demand Interest Rates Drop Immediately”
Nothing can possibly go wrong.
“The ultimate result of everyone being rich and strong would be no one importing or exporting anything they could conceivably make or grow themselves.”
Yes that sounds great.
If that was sarcasm you are correct, if not, highly inflationary and stupid
How long before we see Trump “I did that” stickers on gas pumps in the U.S.?
The Father of the Covid Vaccines… is now The Father of the Trade Wars….
Very Hard Landing Ahead
Final ACWI daily fractal growth from 5 August 2024:
24/53/59 of 49-52 days :: x/2-2.5x/2-2.5x
and final ACWI weekly fractal growth from October 2023
13/30/26 of 26-27 weeks :: x/2-2.5x/2-2.5x …
The tariffs will place multiple monkey wrenches in the gears of the interdependent supply chain global economy. http://www.economicfractalist.com/blog/
More like an implosion ahead
Enjoy your articles Mish. That being said, the new tariffs on China are in addition to the tariffs already in place, which are significant. While liberal Canada is generally considered our “friend”, marxist Mexico is most assuredly not our ally. Their policies towards the US are based on exploiting their northern neighbor to the fullest, and they are very adept at it!
Here’s a thought. Canada drops all tariffs on American products, America drops all tariffs on Canadian products.
Work together to control the border, with a joint task force to eliminate the cartels bringing in drugs into both countries.
Sounds good!
Cartels Bringing in Drugs = CIA/MOSSAD
Tariffs just seem to be the logical step. We’ve offshored our manufacturing, but our currency is the world reserve currency. This allows us inexpensively to consume the manufacturing that we’ve offshored, so long as (1) our outgoing currency is recycled back to us in the form purchases of our debt and (2) the world predominately uses our currency in trade.
The system is breaking down. The cycle has swung too far. We have become weak. We can’t produce weapons that we need for our own defense without the significant involvement of our chief geopolitical rival. We need to become stronger — reinvigorate our manufacturing, so that we’re not relying on foreign companies to make products, especially vital products, for us. We need to foster and protect industry in the U.S. Tariffs are a tool for accomplishing this.
Also, recipients of our dollars are not buying our debt. Increasingly, they are buying gold and other assets with our currency and using their own currencies in trade. The value of the dollar is largely being maintained by strong demand due to offshore credit arrangements denominated in dollars. This strength will erode. We are still a huge consumer market, so companies from other countries are eager to sell their products to us. Tariffs will be the price of access to our markets.
Finally, the influx of fentanyl from Mexico and, increasingly, Canada needs to be stopped. Hopefully, these tariffs will focus the minds of the Mexican and Canadian government to put in place barriers to stop this flood of drugs.
When there are no more countries and the world is kumba-united, there will be no need for tariffs. We aren’t close to that place. The US is far from being without fault. We have a fentanyl crisis because we take too much fentanyl. It matters that other countries aren’t buying our debt, because we owe too much debt. We have to fix ourselves. We are wounded, and other countries are taking advantage of our condition.
Yes. Tariffs are the next step in Trump’s mind.
When he negotiated the USMCA with Mexico and Canada he claimed it was the “greatest trade deal in history” which would put the US at an advantage over its trading partners.
But nothing really changed in the trade between the three countries. The “greatest trade deal in history” turned out to be a dud.
So Trump wants to strike a new trade deal, without admitting that his previous deal was a dud. He also needs an excuse to break the deal, because he can’t legally do so on his own. So he needs to declare an emergency in order to break the deal. He has to say that fentanyl and illegal immigrants are crossing “both” borders, even though it’s not true for Canada.
And if that isn’t enough of an excuse, he also tries to convince us that tariffs are the correct next step by saying crazy stuff like “tariffs are paid by foreign countries”, “tariffs will make us rich”, “tariffs will pay down the debt”, and “tariff is the most beautiful word ever”.
Trump wants a trade war. He also tries to convince us that “trade wars are good and easy to win.”
And we are about to find out. Welcome to the show! And what a show it is!
Lets just hope that our friends around the world can distinguish between Donald Trump and his ardent supporters and the rest of America. Our friends around the world have given the U.S. the mantle of the leader of the free world since the end of WWII. Trump risks what good will is left around the world that has enabled the U.S. to be build a world order where the U.S. is at the center.
Fortunately for America, the rest of the world is forgiving. Trump, however is not.
I expect that this could escalate quickly as Mexico and Canada retaliate. Trump already said that if they retaliate, he will increase the tariffs from 25%. My guess is 50% is next. Or perhaps 100%. But unlike Columbia, Canada and Mexico will not put up with this. They will retaliate further. And then all three economies will shut down, just like during the pandemic.
That would be pretty impressive of Trump to shut the US economy down both times he is in the White House.
What a show!
Bring Back Biden!!! BBB hahaha
Or better still Hunter for POTUS!
If the US wants other countries to buy its debt, the US needs to quit debasing the dollar and quit price fixing interest rates, and quit threatening innocent countries like Panama and Greenland, because who wants to lose money to inflation by buying US debt, or who wants to support a deranged warmongering regime?
ABCD you missed on your post.
Here’s reality:
Nations hold US dollars and Treasuries because of US deficits. It’s a function of math.
They buy $ precisely because we run deficits.
Ok, I understand we have to sell debt to pay ourexpenses, I was just thinking some countries might be buying less if they have doubts the interest rate will compensate for inflation. Like I dont think whoever was/is holding zirp bonds when we went on the covid trillions printing spree did or will keep pace with inflation. But I think Wolf showed that Europe and Canada and Japan maybe too are still buying plenty of our debt.
The US is completely unable to maintain an attritional war today. Quite frankly, we could not do as we did in WWII with our withered industrial capacity. Our country would have to resort to a nuclear war strategy. Such a strategy could result in mutual annihilation or, at the least, horrific national destruction. Our purported leaders fear this and have decided to abandon the system of world trade that has developed over the past several decades in order to reindustrialize the nation. China is nearly capable. at this time, to pursue a war of attrition which the US cannot match. What path shall we pursue- reindustrialization to support possible attritional war or the expansion of free trade to nullify the motive for war altogether? Will paranoia prevail?
When you legitimize yourself entirely by inventing enemies,the truth ceases to matter, normal restraints of civilization and decency cease to matter, the check and balances of normal politics cease to matter. The dangers of fascist politics come from the particular way in which it dehumanizes segments of the population. It limits the capacity for empathy among other citizens leading to justification of inhumane treatment,from repression of freedom, mass imprisonment, and expulsion to,in extreme cases,mass extermination. Jason Stanley ,how fascism works.
You think China is an “invented enemy”. They are systematically attacking us in every possible manner except militarily, for now. They are the most dangerous enemy we’ve ever faced. Trump will make mistakes, but he understands this most important truth and he has the gumption to act on it. Closing the border is imperative from a security standpoint, and Trump is trying to do it. That’s infinitely better than Biden.
Tell that to president Musk
Pain with offshoring. Pain in reshoring. There are no free rides. No pain, no gain.
Canada will get Trump’s attention when they shut down their electricity exports to the US, concentrated in the northeast. Then pull about 4 million barrels of oil per day and he will find another promise he can’t keep, re-filling SPO. Just a couple items a little more important than avocados. Personally, I think Canada in particular, would get to a beneficial conclusion much faster with export restrictions than with counter tariffs. The irony would be Trump sending another envoy to Venezuela for oil
If I was Canada I would try put a tariff on the electricity that Quebec exports to the US… hahaha… double the price 🙂
What about this Mish? Some praise for Trump?
https://www.whitehouse.gov/fact-sheets/2025/01/fact-sheet-president-donald-j-trump-launches-massive-10-to-1-deregulation-initiative/
I already praised Trump for DEI and other things.
I agree with the above.
The Green New Deal Is Dead, Even in Europe. Thank Trump
https://mishtalk.com/economics/the-green-new-deal-is-dead-even-in-europe-thank-trump/
Praise Trump for Ending DEI. But Unrooting Infestation Will Take Time
https://mishtalk.com/economics/the-green-new-deal-is-dead-even-in-europe-thank-trump/
I don’t care if it’s the dumbest trade war in history.
I am a single issue voter.
I hired DJT to take a blowtorch to the whole diseased system, burn it to the ground, and piss on the ashes.
And that’s what he’s doing!
Some readers do not give about the law, treaties or anything else. TDS Type II
These same readers will be bitching about increased prices at the pumps … and on everything else… in the coming weeks.
Clueless
Congratulations! You are getting your wish!
This copypasta. You’re a bot.
Yup, just look at how he drained the swamp and crucified the Clinton’s in his last term.
Just like he said he would
Drain the Swamp 2.0… this time he’s really do it!!!! 100% Guaranteed.
How about that MRNA Cancer Vax that Trumpty Dumpty is funding.
Anyone on board for MORE MRNA shots?????
You voted for him, but you got me, at no extra charge!
Could end up being a pyrrhic victory …. look that up.
Just shows how untethered Trump is. A nutjob, along with his supporters.
And RFK and Patel? PATHETIC LOYALIST JOKES.
That’s it, stay focused on the decoys…
Well… to be fair… all politicians are clowns
It is moved to Tuesday.
Mexico requires that auto manufactures that want to sell their vehicles in Mexico HAVE TO HAVE AN AUTOMOTIVE MANUFACTURING facility in Mexico. So do many other companies….That’s why Mercedese, Ford, Nissan, Mazda, VW, etc. etc. have factories in Mexico just to be able to sell their vehicles in Mexico… This trade agreement has been in effect at least 20+ years….and not going away…or will be enforced by Mexico with import taxes.
The US has some of these same trade agreement with auto makers. Honda’s were made in Ohio, BMW Suv S. Carolina, VW made in Mexico. Porsche 944 in Finland., etc. MiniCooper had an engine building plant in Brazil, just so they could sell cars in S. America.
VW bugs were built for many yrs in Mexico long after leaving the US market…being sold to South American countries. Auto mfgers make a low margin, (Tesla-11.7%, Porsche 11.x %, Ford Maverick is probably 5-7%…if costs like emission changes, safety requirement, tariffs etc..take away the margins people like Maverick’s sales drop, and eventually drop the product line if it’s not PROFITABLE at the profit margin%. Auto mfgrs always look at their profit margins for product offerings. Maverick is doing very well in popularity, but it tariffs lowered the price to low it changes the picture. There is no way Ford or any car maker will EAT the tariffs, they have to pass it on to the consumer.
Couple of points 1. Tariffs are consumption taxes. 2. Progressive income taxes are punitive to most productive. 3. Trade imbalances should be cured with currency fluctuations. 4. We are in a spending debt spirally out of control. 5. We are the only economy that is functioning. EU Asia are in depression. The summation of these points is the rest of the world tips the scales with capital controls and currency manipulation to have access to the US market to sell unfairly. Other economies are debt ridden bloated systems are less efficient than the US. Tariffs will increase investment in the US and ward off the threat of deflation from exporters. Change in taxation will shift to encourage productivity gains and real wage increases to inflation. Government debt is taking money away from the private sector that needs investment. Foreign capital will flood to US because we are the best option. The only way to cure our problems is not increased taxes but increased revenue and limit spending. Tariffs are the best way to move forward.
Seems to me we have luxuriated in disinflation due to cheap imports for the last 40 years. I suppose that is indeed the crux of the problem. The amount of inflation the people are willing to endure will dictate the longevity of any novel way forward, however. Tough to compete with hungry 3rd world countries. At least we used to separated by oceans from the 3rd world, but now they have been invited and have funneled up thru Latin America.
Suggested reading for Trump:
I’ll be really surprised if Trump makes it through all 4 years of his 2nd term.
Is that because of an assasination attempt? # 3 that is?
So how will he be removed?
That book just says to smile at everybody and you can sell them anything.
Not true. Read it again.
—-
I have read it a couple of times. It is a book for salesmen and teaches you how to get people to like you so you can sell them something. It’s great if you are a salesman but honestly many of his methods date from the 1930’s and if you use them now you come off as fake and sucking up to someone. Nevertheless, it worked well at the time and generations of salesmen used it as their bible.
Well, Trump is a salesman, no?
And everyone sells in one way or another.
Nah… he prefers to bang porn stars and grab women by the cooch…
This is not a war. Globalization and trade have ended. The comparative advantage benefits of trade is a fiction taught by ignorant ivory tower university professors who have never created wealth for society, and have no practical experience in life.
Free trade is impossible unless you have a free exchange of labor across the trade borders. One nation will always end with a surplus of labor and the other with a surplus of wealth.
USA can be economically self sufficient. USNavy made global trade possible after WWII by insuring freedom of navigation. Piracy ended. A brief never before period of globalization and trade ensued. USA cannot afford to protect the sea lanes. USA can protect fortress America and let the savages in Europe or Asia fend for themselves.
“Globalization and trade have ended.” Really?
Global trade exceeded $32 Trillion in 2024, up from $31 Trillion in 2023. It has not ended.
I think at least twenty years ahead.
Apparently. If there will be no trade in 20 years, when will it stop growing and start declining. Care to give a year?
It’ll be when Jesus returns.
Try getting tomorrow right. Let me know how it goes.
Yay! We can be like North Korea!
They know how to treat dear leader!
Obviously you do not understand the meaning of “comparative advantage”. I benefit from my “comparative advantages” every day. Note the plural.
The article quoted above is bit annoying to read due the following paragraph
“Take the U.S. auto industry, which is really a North American industry because supply chains in the three countries are highly integrated. In 2024 Canada supplied almost 13% of U.S. imports of auto parts and Mexico nearly 42%. Industry experts say a vehicle made on the continent goes back and forth across borders a half dozen times or more, as companies source components and add value in the most cost-effective ways.
And everyone benefits. The office of the U.S. Trade Representative says that in 2023 the industry added more than $809 billion to the U.S. economy, or about 11.2% of total U.S. manufacturing output, supporting “9.7 million direct and indirect U.S. jobs.” In 2022 the U.S. exported $75.4 billion in vehicles and parts to Canada and Mexico. That number jumped 14% in 2023 to $86.2 billion, according to the American Automotive Policy Council.”
This is completely ignoring the fact that the only reason the industry exists in Mexico is due to NAFTA.All of those companies moved the factories down there to take advantage of cheap labor, hollowing out all those towns in the Midwest over a decade or so. It also ignores all the layoffs that followed and wholesale destruction of jobs and careers at that time.
Free trade should have only been setup with countries that have a similar level of wages and labor protections so that this would have never happened in the first place. Either that or you tax any company that outsources or offshore jobs the difference in wages and taxes that they would have paid for a similar worker in the US, thus negating the competitive ability to play the wage arbitration game with cheaper labor countries. This should be policy for every single industry – including software
Nonsense
Apparently you love inflation
Agree. Globalization of labor has been a losing proposition for developed countries but it has been made worse by easy immigration policies that allow free movement of workers globally as well. The Biden administration approved 15M B visas which do allow individuals to stay in the US for business purposes. This has been fraudulently used by Indian companies to send upwards of 3M “visitors” here in the last 4 years. I’m told that companies have been using this visa to let workers stay here and work while being employed in India. I think only those in the working class would understand all this. If you have been removed from that for decades (like Mish), then you don’t actually know what is going on.
Does the energy consumed to transport all this stuff count as a benefit or a cost to the end consumer ? Energy was much cheaper relative to incomes when offshoring of labor started in earnest in the 1980s and 1990s. Gas was under $1.30 per gallon. Now the cost of all this energy gets imputed into the end product. I bet the US could make stuff here and sell it for cheaper.
In other news, $Melania continues its losing streak. Now at $1.65. Stock up before it falls further.
The US always betray their allies and break their treaties. In this case, Canada and the USMCA. Having taken the imperial mantle from the UK, the also US inherited the Perfidious Albion.
Only Finland repaid their WWI debt.
The UK repaid also.
Only if you think of the economy in terms of trading trillions in housing assets and medical bills. In terms of tangible products (steel, cars, concrete, trains, boats), the Chinese economy is much much bigger.
Bwah bwah. The whole world is taking advantage of me.
And I’ve been such a blessing to them all, showering the whole globe with free bombs.
Bwah bwah.
I don’t want to be a victim anymore.
I just won’t use any of the free stuff I’m getting now in exchange for paper IOUs.
The free gravy train is coming to an end.
Have the details been published yet? Just guessing but they might all still be at the table. I’m hopeful they can make a deal and get it over with. To our detriment, Trudeau is still acting Prime Minister when he could have vacated so as not to be the front man with Trump. Our rep Trudeau is likely amoung Trump’s least liked people. If Canada dropped the ball in an arrangement, that can be fixed pronto with the right people at the table.
That’s right, get on your knees, Canada!
It wouldn’t matter who Canada’s leader is.
Venezuela capitulated. Agreed to receive all their illegal aliens including Tren De Aragua. But never mind, tariffs are bad and tariffs wars cannot be won.
Trump’s Word Is Worthless
Who could have foreseen this?
I noticed recently that most Americans think that the last major conflict with Canada, the war of 1812, was not started by the US. The storyline is muddled and non-specific.
The memes are in place for the trade war to be blamed on something Canada or Mexico did. When you attack your best friends, where are always serious consequences.
The cause of the war of 1812 was illusions of grandeur. One consequence is worth remembering. Troops came to Washington DC and burned it to the ground.
Today we treat things metaphorically but this one will be an exception. Today is Tariff Day. Canadians are smart and inventive. Let’s borrow a famous warning: Don’t tread on me. We bite.
It’s a good idea if your plan is to crush Canada economically so that you can walk in and pick up the pieces.
Which state will collapse in the 21st century: the US, the EU, China or India ??
Monaco, Dubai and Singapore.
City States throughout history are the most fragile entities because they depend on a class of wealthy traders who disappear and migrate away at the first hint of real trouble.
UK
The US will lose some states, I believe.
I was in Vermont over Christmas and the border there is as open as was the border with Mexico before Trump took office. The Canadian government being more woke than woke believes it is their right to send whomever and whatever over the border because they are “Canadians” and the people up in Vermont are sick of it. They definitely feel more in danger from their neighbor to the north. They never felt that way before but they do now. Why is that? Because of the Canadian government’s actions affect them directly in an inimical way. It wasn’t like that five years ago but Canada has changed since then.
Kaplan: the US fragility is growing. It might not survive in the 21st century.
Between the 50’s and the 80’s India imitated the USSR. The frontier nations herd together, creating a bubble. After the Soviet empire collapse in Dec 1991 India became more liberal and Deng Xiaoping inversed Tiananmen rigidity adopting capitalism. The globalist sucked the air out of the US, but the didn’t care. Clinton sign NAFTA, transferred wealth to China, the EU, Canada and Mexico. The EU was born two weeks before the Soviet empire collapse. The threat of a invasion diminished. The EU and NATO expanded east ruling 450 millions. Victor Orban : the EU became authoritarian like the old Soviet Union and China under Xi.
I agree with all that, but can you blame Victor Orban? I don’t . And I don’t blame Poland either. Not polictically correct to say and gets liberal globalists panties in an uproar, but of those countries, especially Poland know how to deal with islamic invaders and they do not want them and have a verrrry tight border. I have seen videos of their border patrol being attacked by islamic migrants and both countries border patrol shoots to warn and looks like shoot to injure.
Are we not allowed to protect our own borders? I didnt say close them, I said protect them.
I like Victor Orban.
me too.
Trade Policy Dynamics: Evidence from 60 Years of US-China TradeWe study China’s export growth to the United States from 1950–2008, using a structural model to disentangle the effects of past tariff changes from the effects of changes in expectations of future tariffs. https://www.journals.uchicago.edu/doi/abs/10.1086/733420
Canada is a dump anyways. If I never visit there again, it’ll be soon enough. Police state wankers
I won’t visit ANY woke/liberal state or country again.
Not to worry… in a couple years, that won’t even be an option.
There are about 74 US based, but foreign owned, automobile manufacturing plants. These collectively create hundreds of thousands of jobs and enrich the communities where they operate by generating massive property, local and state tax revenue. Not one would have been built in the absence of tariffs. If a foreign company wants access to the largest. most lucrative market in the world, they should either build here, or pay a tariff for the privilege. It is only fair that these foreign companies contribute to the cost of making our country a great market.
I sold 90 percent of my portfolio on Friday morning. I am waiting for the recession to hit, and trust me, it will come.
Trump said what he was going to do, and yet you guys voted for him. I don’t want to hear people complaining.
I am not complaining. Lots of people are not complaining but like what Trump is doing. Of course some people complain no matter who is in office and no matter what they do. There is a complaining personality.
And some of us won’t be surprised if the end result is a success.
Mish keeps pontificating about how bad tariffs are, yet for all of his words, there’s no real guarantee he’s going to be shown to be true.
Like you, I’m just happy we’re doing something different. Personally, I hadn’t thought about how strategic Greenland is, and I hadn’t heard that a Chinese company is running 2 of the 5 ports that sit at opposite ends of the Panma Canal.
I’m gleeful that we’re about to tax everything that comes from China by 10%. Nobody should be surprised if in the coming days the dollar strengthens which will reduce the cost of the 10% tariff. And I would bet that at least 50% of the products will see the importer & exporter adjust their prices, further reducing the potential increase in cost.
And finally, it’s not going to be a bad thing if over time, Americans just buy less crap they don’t need anyway, because that describes a lot of the non-critical things we import from China.
Bravo, President Trump. You might start a global trade war or you might not. But sitting here on day zero harping about tariffs for the 5th time since Trump was inaugurated 11 days ago is a joke.
Mish is no oracle, but neither am I.
“Who? Me?”
We pay more until companies start producing products back in the US.
Let me know when we move lettuce production to Minnesota.
Greta’s timeline was 3 years ago, based upon her predicted growing zone map changes.
Buy spinach. Lettuce has no nutritional value.
Funny!
And if they don’t? Then what? How much pain are you willing and able to bear?
And then, if they do move production back, we will pay even more.
There are some pros to tariffs. I would lay them out but the general consensus here is tariffs are overall horrible and everyone will be miserable and in total financial ruin or something to that effect. I guess we will find out together.
I suppose that I’m in the minority but believe that the 25% Mexico tariff is a minimum and should be 50%. Yeah, it’s a dumb trade war but they haven’t shown the desire to solve their drug and people trafficking problem into the US.
It’s time to make a stand. If it results in increased costs in groceries and products for a while then so be it.
The “drug problem” is Americans taking drugs.
Fix that and you fixed fentanyl
That’s a reasonable position, but there’s ZERO reason to make the drug so easy to buy either.
The major source of fentanyl in the US is China sending fentanyl ingredients/precursors to British Columbia, Mexico and via the Panama Canal where they are manufactured into pills and then sent into the US.
The fact that this is ignored in those countries and well as not controlling well enough in the US is unspeakable.
Keep in mind that companies based within the EU use Mexico as a backdoor entry point to the US market without paying any tariff. But if any US based company wants to sell to an EU country; the EU will charge them a tariff. The EU is a tariff union,and would not exist if tariffs did not work.
Tarrifs really are not about that per se, they are essentially a handout or some sort of protection for a preferred industry. Same reason we tariff steel or something is the same reason France tariffs agriculture, powerful interest within each group lobby for it.
David Lambert wrote “It’s time to make a stand. If it results in increased costs in groceries and products for a while then so be it.”
Uh huh. But then YOU don’t have to wait for food handouts.
Many of you will suffer and die, but that’s a sacrifice I am willing to make.
I am aware.
Why are tariffs good for China and the EU but not ok for America?
We will find out.
short term pain, long term gain
Well, ah, because, you know, it’s obvious. 51 leftist economists, and various undisclosed sources confirm, that ah, well Trump is racist.
LOL, exactly. And those 51 economist, and even on the right, are taking money to say things that are not in the best interests of America
How about that female reverend from that church lecturing Trump about migrants. meanwhile here church is participating in bringing those migrants here and getting paid for it!!!!!!
Oh the joy of a ‘strong’ executive branch!
Decades of presidents war-making, issuing unilateral economic actions, and driving foreign policy. What’s Congress for in this glorious new age?
Sorry, was channeling the Musk account for a moment. 😳
I like the way you think.
Looks like a 10% tariff on Canadian oil starts 2/18. If a recession kicks off after these tariffs go into effect Trump will take the blame whether the tariffs caused the recession or not.
https://www.reuters.com/world/us/trump-vows-tariff-chips-oil-gas-2025-01-31/
Canadian currency is down 5% in last 6 months. As markets discount news 6 months ahead (of trump election), half of that oil tariff revenge is already being paid by Canadians. Yes oil is price in dollars, but I’m pretty sure in a competitive market, their export price would have dropped given all their costs are in Canadian dollars. So huge benefit in Canadians paying down our deficit…
I don’t know what the point of your reply was aside from perhaps downplaying the effects of the tariffs.
My point was and still is that if a recession drops after all of these tariffs take effect Trump will shoulder the blame whether the tariffs caused the recession or not.
Hillary will be in a great position to win against him in 2028.
Your logic is flawed. If WCS is down in price because of tariff threats, it benefits both US and Canadian consumers, because refineries on both sides of the border pay the same price for WCS. So Canadian consumers benefit from lower prices as well.
However, if Trump puts a tariff on WCS, American refineries will be paying more for it, while Canadian refineries will not. So Canadian consumers will benefit from lower WCS prices, while American consumers will be paying the Trump tariff.
Let me tell you, folks, the U.S. used to be the manufacturing king of the world. And you know why? Tariffs. Before we had the Federal Reserve and the IRS taking over everything, the government didn’t run on income taxes—we didn’t need them. We ran on tariffs. And guess what? It worked. Manufacturing boomed, industries thrived, and we built the greatest economy in the world, right here on American soil.
Back then, we weren’t relying on cheap imports from countries that undercut our workers. We made things ourselves. Steel, textiles, machinery—you name it, we produced it. Tariffs weren’t just about raising revenue for the government. They were a shield, protecting American factories, American workers, and American families.
The Tariff of 1789—that was the first one. It wasn’t just about money. It was about telling the world: “If you want to sell here, you pay a price.”
Later on, the Tariff of 1816 and others were put in place to protect our industries from cheap British goods flooding the market. And we didn’t back down. The North boomed with industry, and we built the infrastructure of this country on that success.
Even after the Civil War, we kept tariffs high. That’s how we grew into an industrial superpower.
But here’s the problem: We stopped protecting ourselves. We let other countries take advantage of us. China, Mexico, Vietnam—you name it—they undercut us and stole our jobs because past leaders didn’t care about American workers.
Now, I say enough is enough. We need to bring back those smart tariff policies and make them work for us again. We need to rebuild our factories, strengthen American manufacturing, and get back to being self-sufficient.
Energy, steel, autos, tech—we can do it all here.
If you want to sell in America, you’re going to pay a tariff, plain and simple.
We’ll make it better for companies to produce here, not overseas.
When we’re self-sufficient, we don’t rely on foreign supply chains that can be shut down overnight. We don’t get pushed around by countries that don’t play fair. We’ll have American workers producing American goods, right here at home—just like we did before the Federal Reserve and income taxes took over.
The world knows it, and deep down, America knows it too. The manufacturing revival starts with smart tariffs and a government that puts America First again. Simple as that.
An amazing historical analysis to prove a point except it leaves a few major key points out.
The old world doesn’t exist anymore and nothing that Trump does will bring it back.
Just goes to show you know very little about most things and try to show smart you are, but constantly fall on your face.
The industrial north were free states and the mainly agricultural south were slave states.
Slavery was not the magic miracle, but you just can stop yourself posting absolute left wing crapola.
Obviously you can’t read, I had 6 points and you respond with nonsensical garbage. I suggest you read through the link below.
https://www.nps.gov/articles/industry-and-economy-during-the-civil-war.htm
I guess it wasn’t Biden that wants to force everyone to ride the bus!
I take it back Mish, I’m going to have to agree on the imminent recession now.
Ride the bus??? Everyone needs to get a horse.
So, the avocados I get at Aldi for 75 cents (when they’re not on sale) will go up to 90 cents. Fucking Trump!
Unless Mexico decides not to send them at all. You can try growing your own, if ya live in the Southwest.
Mexico has no choice but to send them because people will still buy them. Why would they stop? But growing your own avocadoes mean you get to eat avocados during the avocado season only. Hahahah. Just about one month out of the year.
How is paying an extra 15 cents an avocado not inflationary?
The government doesn’t count food or energy prices in their “core” inflation.
I think Florida also grows avocados.
But the ones from Mexico are better!
But that’s where you’re wrong and outing yourself as a one dimensional thinker. The tariffs impact oil (fuel) so the trucker driving those avocados from the farm to the distribution center will need to charge more. The warehouse distribution owner will have to pay more to get those avocados to the grocery stores. The person driving to the grocery store will pay more for fuel to drive there to buy those avocados.
I used fuel as the example here but the tariff tax is pervasive throughout the supply chain in many different forms. Expect the price of avocados to double but we don’t even know what Mexico will do so double the cost again somewhere in the supply chain.
It’s because I think like this that I’m rich and you’re not. Already positioned for profit in this whole new paradigm? I know I am.
But wont the higher prices create more avocado producers, then more producers prices come down?
Higher prices only drive production higher if producers benefit from those higher prices. An avocado producer doesn’t make more money when walmart pays a tariff.
Thank you for the feedback
This ☝️ ☝️ ☝️ ☝️
There was a better country before Walmart came along.
below is a list of countries and all the tariffs. you can sort from high to low. Look at the list and tell me that the countries with the highest tariffs are somehow the richest or have the highest standard of living.
https://en.wikipedia.org/wiki/List_of_countries_by_tariff_rate
No, but once illegal immigration stops, and it will, and the tariffs end, you’ll be able to have your avocados and eat them too.
Jimmy Carter’s grave should have ethanol corn planted around it.
LOL!!!
It take 3-4 years for a grafted tree to begin producing avocados. Trump will be gone by then, possibly dead.
If avocado prices double people will eat less of them and more of something else. We could import avocados from Israel who is a true ally. They produce a lot already and could easily produce more.
thank you Doug. And that was where I was going on my original post.
And what’s the cost difference of shipping an avocado from 6000 miles away vs 600? Spoilage? Refrigeration?
And how do we know those avocados won’t be loaded with explosive payloads?
I better not hear you screaming for higher COLA Doug, you deserve what’s coming because even the EU is going to get tariffed soon enough.
https://www.fxstreet.com/news/us-president-donald-trump-i-will-impose-tariffs-on-the-eu-202501312116
We get avocados here from Israel and South Africa and the prices are reasonable.
Avocados are 10 for $1 in Ecuador.
Napoleon Hill?
If Canada gets serious about cutting off the flow of illegals and drugs over the border then the problem is solved. If they believe they have the right to send those south as they always have done then they haven’t understood that the environment has changed.
Canada’s faults are microscopic compared to the impact of these self-inflicted moves on our economy. Such judgment calls are what leadership is about, and this one shows an awful deficit in skills and awareness already, on the most simple and obvious ones. Wait until we get to real challenges, which I suspect our real enemies are teeing up as we speak, in view of this sad joke.
You should move back to the States – you’re gonna miss the Golden Age here 🙂
How did it become Canada’s responsibility to do U.S. immigration bidding? What exactly is Canada supposed to do, prevent the movement of people? Does Canada need to deploy troops to their border and check every single person crossing over? The same for Mexico? That would be far more expensive than any tariff.
The same for drugs, perhaps the U.S. should curtail the demand and the problem wouldn’t exist to begin with as no one is forcing fentanyl down people’s throats.
It’s Canada’s responsibility now. If they don’t like it they can go fuck themselves.
In the case of Mexico its pretty reasonable to stop a caravan of 2000 people on foot from reaching the US border. It seems to me there is some compromise between allowing thousands of people to hike to the border over a period of weeks, and doing a body cavity search on every trucker hauling avocados.
So if 200 people wanted to leave the U.S. to Canada or Mexico in caravan form, the united states should stop them? For what purpose? Under what legal authority?
Given the flexibility in finding legal authority for almost anything the federal government wants to do eg wickard v filburn I’m pretty sure thats not much of a barrier.
Assuming the problem was similar to what we face I think the purpose would be to mitigate a nuisance.
Or do you believe the caravans are somehow a net positive?
keep going, because its even worse than that in that this has no longer been mexicans, south americans etc at the border, its nigerians, venelzuelans, Chinese, various muslim ethnic countries. How many countries allowed them to cross their own border to get there? And how does a Nigerian get to the mexican border? Because NGOs were paying and even flying them to get there. And then after the democrat lie that its those racist white republicans saying there is a border problem, they said no border problem, problem was there were so many the border got backed up! They could not hide the live bodies. So what does the biden admin do? They fly them directly to various cities in the U.S.. If you think I am making that up, go research it. Its true. The biden admin signed agreements with NGOs and other countries to allow this without it going through congress. I have had enough of this treason and dont really care what liberals call me. Look in mirror for once democrats and see all the destruction and waste and rapes and child trafficking you have caused.
How about Mexico police its own borders so people from 100 countries all over the world don’t come to America?
Apparently that is asking too much so I really dont care who is offended by this rounding up of illegal migrants from 100 countries; starting with the convicted criminals and the ones that are accused should either be in an American jail or their own countries jail
Do we have your permission to arrest the mexican man that was convicted of rape and has entered the country 4 different times now in NY and finally now arrested. Do we have your permission to ship this criminal back? Asking for a friend
Policing borders costs money, you going to pay for it? If Mexico didn’t pay for a wall they aren’t going to pay for what you’re asking.
And stop accusing me of endorsing bad things that happen, I am merely pointing out the obvious nonsense that Trump’s doing and the little impact it will have long term.
I give you a 100% guarantee that neither drugs nor people will stop crossing the border. The best Trump and you can hope for is that it slows down. That’s it ,and you’re going to be paying through the roof for the privilege of slowing things down.
Everyone seems to have forgotten that Trump was already president and didn’t fix the border but somehow this time it’s different.
I have no problem paying for it. We are already paying 100,000 times the cost of building the _ucking border fence in the form of free housing free food free cellphones, free rape, free plane rides around the country. And LOL someone said well it costs too much to ship them back? Really? No it doesnt because every day there here your still paying for free lodging free food free cell phones and raping and pillaging.
But hey, I’m called a racist. Who cares.
And I think we all had no idea how bad this was. The Biden administration circumvented congresss in signing contracts with other countries, NGOs and the U.N. Trump wasnt president then. The first day he was no longer president the Biden Admin started implementing all this…….Don’t blame Trump.
And this isnt over. Did NY State and NYcity have in their budget billions to pay for all this?
NYS will asking the federal govt for $50billion minimum to bail them out. Liberals walk around like hey no harm no foul like its over and the damage has been done.. Far from it………Step 1, ship any illegal convicted of a crime out of here.
People are so naive thinking Trump and or the Republicans are going to deport many people. The percentage of them that are criminals is miniscule. Trump and the Republicans want the vast majority of them here because the corps, businesses and other political donors want them here for cheap labor. It’s a way for the Uniparty to distract and divide the people along fake party lines so they hold power and continue leeching money from the people and indebting them. The main reason the migrants come here is to work to get paid more than where theyre from so if its such an invasion, why isnt Trump using his mandate to get congress to pass a law making e-verify mandatory? Because Trump and tptb dont really want them out. The routine is, have it appear the left is letting them all in then satisfy the right with someone who talks tough but in reality the vast majority stay.
It IS different. I’m in charge now, and I am the smartest man in the world!
Please tell us what the net numbers are for the flow of illegals and drugs north and south across the border? Don’t be surprised if the US allows the greater flow [!]
It was about 500k last year and that is a big jump from the year before. Taking the plane to Canada and then running across the border is the new way of getting into the US or at least it was. Of course it is organized by the usual people. On top of it Canada has about 3 million people whose temporary visas run out soon and guess where most of them wanted to go?
There are lots of psychological theories around why some people shoot themselves in the foot, literally or metaphorically. In the case of Trump there seems to be an unquenchable urge for high-risk, reckless behavior that started with him bankrupting his casinos in the 1990s and now attempting to bankrupt the US.
You have TDS. There is, currently, no known cure except kill your ego.
The predictability of a communication shows its information content. Yours is so trite and predictable that it contains essentially zero info.
The dumb ones can only be trained with this retort, and repeating “ woke woke woke”. They tend to be older so we hope they’ll die out soon.
I wonder why the Democrats keep shooting their feet off by supporting policies that nobody wants. It’s a mystery explained only by their sheer stupidity.
Maybe someone who is supporting this tariff insanity can explain why any country in the future entering into a trade agreement or for that matter any other treaty with the U.S. will be able to trust that we will abide by the terms of the treaty? Correct me if I am wrong, but did Donald Trump not renegotiate NAFTA basically at gun point in his first term? I highly doubt that that renegotiated “free trade agreement” with Canada and Mexico stipulated that the U.S. could slap tariffs on Mexico and Canada whenever it wants to if the terms of the renegotiated treaty were being met by those two countries. So, if I am right, what Donald Trump is telling the world is that our agreements and treaties are not worth the paper that they are written on.
Like most laws the trade treaty has vague wording and exceptions, in this case for national security. Regulatory agencies use this in domestic lawmaking to stretch vague wording to seize as much power as they can get away with. It is probably legal in the same way decades of unconstitutional regulatory overreach is “legal”.
The regulatory agency analogy is not a good one. First of all, it would be impossible for Congress to specify in legislation how a regulatory agency like the SEC or the EPA writes regulation that responds an ever changing landscape of potential and actual real world situations to which those agencies are to regulate to protect the public. These agencies were given a Congressionally mandated mission that was both broad and flexible to allow the agencies to adapt to an ever changing set of circumstances. Without that flexibility these agencies would be forever waiting for Congress to pass new legislation and/or amend prior legislation to allow the agencies to achieve their mission. Congress cannot act quickly on anything except in a time of crisis and when it comes to many things that are regulated, by the time a crisis ensues, it is too late to prevent the damage that the regulatory agency created to prevent.
One could make the same argument about treaties which take even longer. In any case passing vague guidelines and letting unelected bureaucrats make laws sure isn’t democracy. If you can’t lay out laws with precision because it takes too long or is too complicated then you are making too many laws.
On the “vague” wording in trade agreements, you are probably correct and that language is written that way to allow for reacting to unforeseen circumstance that present either an emergency or a flagrant violation of the originally agreement. Beyond that the parties to these agreements TRUST each other not to abuse this vague language.
At least factor in thats because the other side is not abiding by their agreements as well
Perfidious Albion.
When you can’t trust the signer of a contract to perform, you should demand collateral as back up.
The explanation is woke! Gotcha!
This is all insane, but expected. Our historical position as the champion of free trade has led to the U.S. being the largest, most technologically innovative, and most prolific job creating economy in the world. Other countries have opened up their economies increasing more than ever before over the last several decades to try to capture some of the magic that makes the American economy the envy of the world. But for purely populist political pandering reasons this President and the people that he hand picked are whining that the world takes advantage of the U.S. and we must fight back. Nothing could be further from the truth and the evidence is all around us.
Attempts at self-walled autarky have failed countless times, notably in the 20th century. Many “developing” countries have tried it and fallen flat on their faces. The consequences are huge. But some leaders are breathing their own exhaust, not paying any mind to history whatsoever.
The cost of drilling a New oil field is $100M/$300M. The failure rate is 50%/60%. The oil co cut their loses fast and keep the winners for 20Y/30Y. It’s an expensive casino, but in the long run the oil co can make a lot of money. Tariffs on Canada is an incentive to invest more in the US, build pipeline and possibly new refineries. The tariffs will protect our liberties, industries, high paying jobs and dynamism. Without energy independence we are buttheads like China.
You can poke a straw anywhere along the American Gulf coast and strike natural gas.
The American Gulf is deep. After reaching the bottom the AI seeker have
to drill vertically first, before horizontally. The failure rate is high, but the gamblers are encouraged by Trump’s dynamism. The cost of a rig is $600K/$800K per day. RIG: $3.92.