Last week I shared my frustration and shame at President Trump’s brutish and uncaring treatment of Canada, a treasured friend of the United States. My letter was to the Republican National Committee.
The gist of it was that under the pretense of stopping drugs and illegal immigration, Canada was forced into increasing secure borders, or risk tariffs. After complying to the President’s demand, the subject pivoted. It wasn’t about drugs and borders, it was about a $60 billion trade deficit between our two countries, favoring Canada. I called the pivot a “bait and switch”.
But I have finally settled on the ultimate truth of this pivot, and it’s not what we thought at all.
First, to confirm, a trade deficit exists when two bodies don’t equal each other’s bank accounts. To wit, Canada’s tills received $413B from Americans, and America’s tills received $349B. from Canadians. Canadians would be right in saying, “We need a bigger cash register!”
To put this in perspective, the trade deficit has not been $63B in recent history. In fact, from 2017 to 2020, the deficit has averaged $20B per year. So the latest is a jump.
This deficit phenomenon is not unique.
If I was mayor of a small town, and noticed with some gloom that my local residents all went to the neighboring town to buy groceries, because they were cheaper, or more varied, I would expect the grocer in my town to come banging on my desk, with a grievance. “Nobody shops here. I’m going out of business at this rate!” I would apologize, and hoist signs on every lamp standard, “SHOP LOCAL”. I would also tell the grocer to get smart: “Bring in better stuff, and lower your prices.”
This is logical enough, but it doesn’t necessarily work if the out-of-town grocer has better suppliers.
So placing this on an international scale, the USA is taxing imports, with punishing tariffs paid by American importers.
But here’s the real twist. I finally glommed onto this as I ate my last Dad’s Cookie which was baked in Toronto Canada. While the President has charged that “Canada is ripping us off,” what he was really afraid to admit is, “I am going to punish American consumers for purchasing desirable Canadian product. By collecting a tariff on those imports, U.S. consumers will learn to shop local.”
It would be political suicide to come out and just say that, so instead, this “rip off” language targets Canadians, and all other countries as bad actors. The end game however, is to bring offshore jobs home. And while it may seem that Canadians are the bad guys, they aren’t. We are the bad guys because we like our Dad’s Cookies. The President’s hope is that one day, those cookies will be made here.
You can see this happening now in Canada. With new Canadian tariffs on U.S. goods, Canadians are encouraged to buy Canadian: SHOP LOCAL. To which they are proudly responding.
Mean time, the home-wrecking language and bombastic posturing from the White House has had a toxic effect on the USA’s goodwill account. Who knows how long that major faux pas will take to smooth over?
