Thursday, June 7, 2018

Short Sighted

   The president's plan to impose tariffs on imports from Canada in the name of "national security" and the idea that America suffers from a trade imbalance is not only mistaken, it is ignorant.
   The balance of trade with America's northern neighbor shows that Canadians buy more stuff from the U.S., so there is a trade surplus in favor of the U.S.
   According to official U.S. government figures, exports to Canada rose to a total value of $341,7 billion in 2017, up 6.4 percent from the year before. And the total value of goods and services imported from Canada amounted to $338.9 billion, an 8.1 percent increase.
   That comes down to a net surplus benefiting American companies of $2.8 billion. That amounts to roughly a balance of trade, a pattern that has been true for years.
   So why the fuss about imposing a tax on stuff coming from Canada, unless it's a bid to benefit American companies that contributed campaign funding to the presidential election campaign?
   The reality is that the result will be higher prices to be paid by American consumers. There are many things that can be produced in Canada at far lower cost than in the U.S., so both nations benefit. The proposed tariffs (import taxes) will be imposed primarily on steel and aluminum, and the result, among other things, will be higher prices for automobiles, building construction and bridges.
   Also potential targets for higher tariffs are lumber and newsprint. And that will mean higher prices for houses and for newspapers. Canada has far more space available for growing trees than the U.S., and that's not likely to change for a very long time.
   So why stick it to America's good neighbor to the north unless it's a short sighted bid to reward political supporters on this side of the border?
   The real losers will be consumers on both sides.
   Moreover, if relations deteriorate really badly, could there be a wall going up to prevent travel? Imagine people in Detroit unable to commute to their jobs in Windsor, Ontario, just across the river. Or honeymooners being stuck on the U.S. side of Niagara Falls.
   And how would authorities stop people from boating across any of the five Great Lakes, either for business or pleasure?
   If it ain't broke, don't fix it.

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