Here’s a letter to Politico.
Editor:
Daniel Desrochers gives good reasons why the U.S. economy would be harmed if Trump withdraws the U.S. from the USMCA trade agreement (“Trump now ‘hates’ his own trade deal. But he’ll have a hard time killing it.” June 30). One of these reasons is the resulting uncertainty that American exporters and importers would suffer – uncertainty that raises these companies’ costs of doing business.
There is, however, another major source of rising costs – one more direct than rising uncertainty – that Mr. Desrochers doesn’t mention, namely, many American producers would pay higher prices for inputs if the demise of the USMCA prompts the U.S. government to raise tariffs on imports from Canada and Mexico.
According to Dartmouth trade economist Douglas Irwin, about 60 percent of U.S. imports are inputs into production. In 2025, the U.S imported $917.4 billion of goods from Canada and Mexico – meaning that, in all probability, about $550 billion of those imports are inputs used by producers in the U.S.
Mr. Trump poses as a friend of American business. But what kind of friend recklessly inflicts on businesses not only unnecessary uncertainty and a loss of foreign markets, but also higher production costs?
Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030
