Timothy Birdnow

Yes, the threats of tariffs is working.

Canada Concedes to U.S. Tariff Threats, Trudeau Announces Major Border Security Moves [WATCH]

Reader Mike pointed out that much of what happened, at least with Mexico, was a result of events already in motion. Perhaps so but why did they happen only after Trump threatened the big stick? The key to winning such policy disputes is leverage. Trump understands leverage in a big way (he literally wrote the book on it) and while there were negotiations behind the scenes Canada and Mexxico were both far more willing to cut a deal that favored us when facing punitive action.

Had Trump negotiated the way Republicans or Democrats generally do nothing would have happened. He was willing to go to the mat if he had to do so.

"MY STYLE of deal-making is quite simple and straightforward. I aim very high, and then I just keep pushing and pushing and pushing to get what I'm after."

Donald J. Trump

BTW Canada has been as lax as Mexico when it comes to stopping illegal aliens from crossing into the U.S. and that number rose to all time highs in 2024. The only reason we see so many more coming across the southern border is they can start from anywhere in the Americas and hoof it in. There aren't the vast throngs of people waiting in Canada, and the Canadians have to let them in in the first place then tacitly encourage them to migrate into the U.S.

And if we close the southern border the traffic will just move into Canada and come in from there. BOTH borders need to be secured.

This is not the act of a friend. Canada is far better positioned to stop this than is Mexico yet seemed to actually encourage it.

Also,I would add the Reagan Administration slapped a tariff on Canadian lumber (which is still in place today) because Canada was purposely undercutting U.S. lumber prices. The Canadians harvested from public lands and the U.S. limits such production. So it was the Free Trader, Ronald Reagan, who imposed a tariff on Canada in 1982.


And Reagan imposed a 100% tariff on Japanese cars, which is why we still have an auto industry in the u.S.; Japan was cleaning up in the auto business during the late seventies and through much of the eighties as Detroit languished.

When Tokyo reneged on a 1986 semiconductor deal Reagan retaliated with this tariff. Guess what? Jaan is still a player but never became the dominant economic powerhouse everyone thought she would be.

Our trade deficit with Japan was $5.5 billion in 1986. By 1991 it was down to $43bn.

Bill Clinton too. He is known as a fre trader but in fact he imposed a 100% tariff on many European products in retaliation for them imposing tariffs on bananas from Latin American nations that were not aligned with European powers. American corporations operated in many companies in Central America and the Carribean and were losing their shirts over this so Clinton imposed a series of tariffs, notably on products like French cheeses and Scottish Cashmere.

George W. Bush imposed steel tariffs on European and other steel.

So folks it isn't just Trump who has done this and we are none the worse for wear over it. Claims this will cause massive inflation is not supported by history.

And what can we do, if we are being gouged by our trading partners? Ask them nicely? We did that in the Banana War, getting multiple judgments from the World Trade organization, judgments the Europeans simply ignored. At some point you have to put your foot down.

The key is too target the tariffs and make them conditional on improved behavior, and do so where you can win. You don't embargo oil on the Russians or Saudis. You embargo electronics and in the case of the Saudis aircraft and the like. This is a tool to use in negotiations, and it brings money INTO the country. Our go-to is to send foreign aid to modify behavior, which costs us.

I am of the opinion Trump knows what he is doing here.

Oh, and I would add that tariffs were the ONLY taxes the United States government was authorized to impose by the Constitution. It's an indirect tax. People aren't taxed - foreign imports are. Graned, people pay for it via higher prices, but it is not directly imposed on anyone.

Abraham Lincoln and the Republicans briefly imposed an income tax during the Civil War and rescinded it before it could face a court challenge. The Revenue Act of 1861 was signed into law by Honest Abe, and was repealed by 1862 because it was blatantly unconsitituional. It remained so until 1913 with the 16th Despicable Amendment. The income tax empowered the growth of big government and has been the bane of modern America ever since. Tariffs kept the government in it's proper place.

We did just fine under the tariffs. But Smoot-Hawley is all anyone remembers. Well, it was a horribly timed tax increase (they should have been cutting taxes then) and it is usually blamed for the Great Depression but it was just the cherry on the sundae; the Depression was primarily caused by monetary manipulations by the Federal Reserve (created at the same time as the Income Tax) which pumped up the economy through the '20's by inflating the currency then shocking it with a major contraction. And Herbert Hoover started the policies that we saw in the New Deal. In fact Hoover (an engineer by training, sort of like Jimmy Carter) was constantly tinkering with the economy, and it couldn't heal. Roosevelt actually ran to the right of Hoover, calling him a spendthrift overregulator. So we were blowing gobs of money and doing these big public works programs before Roosevelt and Congress went on an austerity kick, imposing tariffs just as we needed liquidity. It was the timing of Smoot Hawley that was the problem. But it was monetary policy that caused it all - and an unwillingness to just let the economy heal, as Harding and Coolidge did during the depression of 1921, which was just as bad as the Great Depression. (Coolidge used to mock Hoover, calling him "the wonder boy".) It ended because of sound fiscal and monetary policy by Harding and especially Coolidge. Coolidge got three major tax cuts through and it ignited the Roaring Twenties, a time of unparalelled prosperity.

Coolidge said of tariffs:

""For over a generation each protective tariff has changed the basis but enlarged the market for imports."

And in fact Coolidge kept tariffs high during his tenure of office.

Coolidge was a tax cutter but believed in the tariff when appropriate.

So too did Abraham Lincoln.

The modern animus against tariffs stems from an internationalist point of view. The one world types want no tariffs, or borders, or any other signs of the old nation-states. They want a world imperium, with themselves in charge, of course.

Boundaries between countries, be they borders or tariffs or any such restrictions, is the enemy to them. So all they ever do is shout "Smoot-Hawley" whenever anyone (especially anyone they do not like) proposes a tariff to level the playing field. Americans are supposed to be chumps, being taken and underwriting other countries like a bunch of saps.

Trump is right in what he is doing and I believe he knows where he stands.

Posted by: Timothy Birdnow at 10:58 AM | No Comments | Add Comment
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