In Bid to Increase Costs for Americans, Trump Aims to Escalate Canada Trade War

With one social media post, Donald Trump on Monday once again confirmed that he doesn’t know how international trade works and that he doesn’t care about Americans being crushed by an affordability crisis that has been made worse by his decisions.

In response to Canada walking away from negotiations over an agreement that would have prevented a trade war between the neighbors, the president issued new threats aimed at forcing Prime Minister Mark Carney’s government to succumb to his bullying.

“Canada has been ripping off the United States of America for years,” Trump wrote. “Their ridiculously high tariffs on our Farmers and farm products has made life impossible for these great American Patriots, and has long created a 60 Billion Dollar Deficit between our two Countries. Not sustainable, and NOT ANYMORE!”

Specifically, starting next year, the president is threatening to put a 50 percent tariff on cars, trucks, automotive parts, and steel from Canada.

While Trump falsely claims — and wants his supporters believe — that Canada is paying for these import taxes, the costs are actually mostly borne by American consumers, who are already suffering from a high cost of living exacerbated by the president’s tariffs and the war with Iran.

“Canada will be treated like a State no longer!” added Trump, who has been talking about annexing the US’s neighbor to the North since taking office for a second time last year. “On Trade, and in other ways, also, they are among the worst Nations in the World to deal with. They feel entitled, and yet, WE DON’T NEED CANADA, THEY NEED US! They do 95% of their business with the U.S., with us, the exact opposite!”

While it is true that Canada does a lot of trade with the US (but obviously not 95 percent), Trump’s attacks on its economy have forced Carney’s government to seek out new partners to decrease that dependence.

“Our existing free trade deals already provide Canada with preferential access to 1.5 billion consumers, and we are on track to double that market access by the end of this year,” the prime minister said on Friday when he announced that his negotiators would walk away from talks.

For Carney, standing up to Trump’s bullying has proven to be politically beneficial. While the US president is historically unpopular and Americans disapprove of his tariffs, the prime minister’s approval rating is 60 percent, and a new poll shows that Canadians overwhelmingly support his decision to end negotiations.

And this even though they will also end up paying more from some goods imported from the US since Carney vowed to match Trump’s tariffs “dollar for dollar.”

As for that trade deficit between the two countries, it remains unclear whether the president doesn’t grasp how they work or whether he merely thinks that his supporters don’t.

Here is a quick refresher: A country accumulates a trade deficit when its residents import more stuff (and services) from another country than it exports. But that’s not inherently bad.

It could just mean that the people in one country have more money or that they need certain goods that they would otherwise not have access to (like coffee, for example).

To better understand this, let’s pretend that countries are merchants: One of them sells trucks, and the other runs a bakery. When the baker purchases a new truck for $80,000 to grow his business but only sells $500 worth of donuts to the car salesmen, then there is technically an imbalance of $79,500.

But that doesn’t matter since both got what they wanted.

While Trump doesn’t seem to understand tariffs, the Republicans running in border states do.

Like vulnerable Maine Sen. Susan Collins.

“The on-again/off-again trade talks between the US and Canada lead to higher costs, risk, and uncertainty for Maine businesses,” she said this weekend in response to the collapse of the talks. “If the Administration proceeds with these tariffs, they will increase costs for Maine families, as most businesses will have no choice but to pass on the tariffs to their customers through higher prices.”

The issue of tariffs, higher costs, and this trade war will likely also be an issue in tight races in other border states like Michigan, Ohio, and Alaska.

Now, one would think that Trump would take that into account to prevent Democrats from taking over the Senate and being able to stifle his agenda and delay confirming judges and other appointees.

Then again, one would also think that a US president would understand how trade and tariffs work, but that’s clearly not the case.