Tariffs Part 3: Foreign Relations, Reactions, and Retaliations

This is Part 3 of a multiple part series.

• Tariffs Part 1: An Introduction
• Tariffs Part 2: An Impossible Balance
• Tariffs Part 3: Foreign Relations, Reactions, and Retaliations

In Part 2, I mentioned that I had a few points left over from Part 1 but I only covered one in Part 2. Here I will address another major set of thoughts with regard to tariffs and especially widespread application thereof.

Retaliation

With the imposition of tariffs against another nation, especially the broad application of them - comes the high probability of retaliation.

This retaliation comes in many forms, but taking Canada as just one example that has been public about the fact that they will retaliate if broad tariffs are imposed.

• Canada could cut US energy supply in reply to Trump’s tariffs
• Canada’s Revenge: Hitting Trump Where It Hurts - His Red State Base

These are just some of the retaliatory measures Canada has openly discussed, which could significantly harm the U.S. and that is just one country.

When Canada applies retaliatory tariffs on us - that could affect almost half a trillion dollars in exports by US companies (exports from US to Canada were $427.7 billion in 2022 - Source). In total (imports and exports) - the U.S. and Canada do a total of about 1 trillion dollars in trade each year - this represents a large amount of goods that will instantly be more expensive for companies and consumers in both countries.

Trade wars hurt everyone, massively. While implementing broad scale tariffs on a nation or set of nations hurts people in your country — starting a trade war and getting retaliatory tariffs imposed on you makes this many times worse.

It is incredibly hard to estimate just how bad it will be with any concrete numbers - but what is clear is that imposing significant tariffs to multiple of our largest trading partners could cost our economy hundreds of thousands (or potentially 1 million+) jobs. Take a look at what the Tax Foundation thinks about estimating harm (they have numbers that estimate even before retaliation).

Buy what you need now, stock up on things.

Relations

Threatening a country with tariffs is hardly the way to ensure larger successes. You may be able to bully a few small things out of the other country - but the harm it does to trade, relations, and national security - is massive. If our neighbors and treaty partners can’t trust us on a trade agreement, what can they trust us with? Why not expand trade with China (or any of the BRICS countries) instead of the U.S.?

What happens when there is sensitive intelligence that could help the US protect itself? If that intelligence includes implicating a source or a spy operation - will that country be willing to share the details?

Bullying our allies with tariffs weakens the U.S. drastically—before even accounting for the devastating economic fallout of trade wars. These tactics specifically strengthen all of the nations who are competitors of ours in the world, in many ways. They are laughing and excited in Beijing.