Here’s a letter to the Wall Street Journal.
Editor:
Among the reasons President Trump is imposing the newly announced 50% tariffs on Canadian goods is, as you report, White House opposition to “Canadian policies that require companies to invest in auto production in Canada, rather than the U.S.” (“Trump Imposes Additional 50% Tariffs on Certain Canadian Goods,” July 21).
The president apparently is unaware that these Canadian policies – by increasing U.S. investment abroad and decreasing foreign investment in the U.S. – ensure that U.S. trade deficits are lower than they would be absent these policies. Therefore, if the new tariffs decrease U.S. investment in Canada and increase Canadian investment in the U.S., U.S. trade deficits will be larger than they would otherwise be. Because U.S. trade deficits are Mr. Trump’s bête noire – the supposed beast that he has long wished to slay – this latest tariff announcement only further exposes the president’s ignorance of the economics of trade.
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
