Trump’s chaos

The impact of the utter chaos that has descended on Washington, D.C. over the past three weeks is going to start impacting the economy, and not in the way that Donald Trump would like you to believe.
Donald Trump may enjoy the chaos he brings to virtually everything, but businesses and most individuals prefer some sense that their world isn’t going to be overturned every ten minutes.
Just consider the tariffs that Trump had proposed last week against Canada and Mexico, a policy that even the conservative Wall Street Journal described as “The Dumbest Trade War in History.” While Trump put the tariffs on hold until early March after markets plunged in reaction, that’s slim comfort to those who are likely to be affected if and when he finally follows through on the threat.
If you’re a prospective homeowner looking to build your dream house, or a contractor sending quotes to potential customers, the uncertainty over the price of Canadian lumber and wallboard in the months to come is simply maddening. Trump’s proposal would add 25 percent to the cost of Canadian lumber, which totally dominates the market in the northern U.S. That’s the kind of thing that can make or break a housing project, and it all depends on the whims of one man who seems to change his mind moment to moment depending on the latest thing he saw on Fox News.
While Trump supporters might argue that the tariffs will encourage more investment in lumber production here in the U.S., that’s unlikely because Trump is so unpredictable. Building plant capacity takes time. Factories don’t go up overnight. They require investigation and planning by companies, land acquisition, construction contracting, equipping, commissioning, and testing, not to mention the investment of millions of dollars before the first board comes off the line. Who is going to take that risk with a president who threatens tariffs one day, then delays them a month, then, who knows?
It’s the same with tariffs on Canadian oil, which provides almost all of the fuel we use in the Upper Midwest. Canada produces a heavy crude and the refineries in the Great Lakes and Northeast regions are engineered specifically for it. In addition, all of our existing pipelines are designed to bring that Canadian crude where it’s refined.
While the U.S. currently produces more oil that it uses, a development that occurred under Biden, adjusting our transportation and refining infrastructure to make use of the type of oil produced in the U.S., such as sweet Texas crude, would take years and an investment of tens of billions of dollars. And by the time the companies involved even got around to calculating that price tag, Trump could have lifted the tariffs, tripled them, or, who knows, maybe nuked Canada.
In other words, if Trump imposes tariffs on Canadian crude, states in the Great Lakes and the Northeast will be stuck paying them. A ten percent tariff is expected to add another 20 cents at the pump. It’s not live or die, but it’s just one more tax that falls most heavily on those least able to afford it. Despite what Trump says, Canada won’t be paying these tariffs. We will. And the proceeds will go to help fund yet more tax cuts for corporations and the super wealthy.
Let’s be clear, tariffs have their place, particularly when they help to level the playing field for workers. It’s not fair to pit American factory workers against those willing to work for a quarter of the pay in Mexico, or one-tenth the pay over in China. Tariffs on those goods shipped into the U.S. can help bridge that gap.
But goods shipped across the border from Canada don’t have that advantage, since wage and benefit scales north of the border are fully in line with the U.S. Slapping tariffs on Canadian goods is simply imposing a tax on U.S. consumers.
There have been occasions when Canada has been accused of dumping some products at below-market prices, primarily its lumber exports. If that’s the case, there is a process for adjudicating that through the trade agreement currently in place, a trade agreement that Trump negotiated in 2018 and now claims is a disaster. So much for “the art of the deal.”
Rather than do the hard work of proving a legitimate claim, Trump simply declares an emergency over fentanyl, even though just 0.2 percent of the fentanyl coming into the U.S. flows through Canada according to U.S. Customs and Border Patrol. Far more fentanyl flows from the U.S. into Canada than vice versa. It’s stupid.
And this is just one issue of many in which the Trump chaos threatens to harm the U.S. and its economy. This much is clear – misinformed voters have set the U.S. economy up for a very rough ride.