Why Trump's tariffs will work.

[Woodznutz]

My own prediction is that all three countries - US, CAN, MX - will be negotiating to find a face-saving way out. The US will (soon, I think) realize that these tariffs aren't that strategic and even if people don't really notice them that much, they're not really delivering positive bang for the buck. So I think Trump will eventually look for an off ramp, and so will Sheinbaum and Trudeau.

But the latter (CAN and MEX) will need to score a victory. They can't just agree to end tariffs without some sort of political victory in hand, and that, to me, is the worrisome part: the possibility of trade/political tensions that fester because of the need to project strength in the face of American pressure.

"The United States has the largest trade deficit in the world. In 2023, the trade deficit of this nation was $773.4 billion. While the country brought in $3,826.9 billion in imports, the amount of exports was just $3,053.5 billion, (BEA, 2024). The largest exports of the United States were cars, food, and commercial aircraft. The largest imports were cell phones, oil, and cars."

US Trade Deficit by Country 2024

worldpopulationreview.com

 

[multivita-man]

"The United States has the largest trade deficit in the world. In 2023, the trade deficit of this nation was $773.4 billion. While the country brought in $3,826.9 billion in imports, the amount of exports was just $3,053.5 billion, (BEA, 2024). The largest exports of the United States were cars, food, and commercial aircraft. The largest imports were cell phones, oil, and cars."

US Trade Deficit by Country 2024

worldpopulationreview.com

We changed our economy back in the 1970s to encourage more trade, and in particular, we began exporting our currency as a global reserve. In exchange we facilitate global trade. International deals done in dollars, which gives us political power. We export dollars in exchange for the importation of goods. This worked well for well-financed multi-nationals and the banks/investors who financed them, but not so well for manufacturers and their laborers here. We could shift back in the other direction and make more things here, but that takes a LOT of time.

The tariffs that are on the table starting tomorrow don't appear to be moving us in the right direction. They're going to lead to retaliatory tariffs, which will hurt all three major North American economies. And this time, politically, CAN and MEX have to fight back. Their leaders cannot be seen as looking weak.