Ink Spo ts Matt Paxton
As I write this on Sunday, tariffs on most Canadian and Mexican goods are on hold until April 2. Given the w h i p s aw course of tariff imposition over the pa st month and a half, that may have changed by the time you read this. Tariffs on goods from Mexico and Canada, the United States’ top and number two trading partners, if imposed across the board, would have a significant impact on every American and every business, I think it’s safe to say.
The U.S., Canada and Mexico have seen tremendous economic growth for all three countries since the creation of a North American free-trade zone. Trump, while denigrating the NAFTA agreement which took effect in 1994, negotiated the USMCA agreement in 2020, which was essentially NAFTA with a few tweaks. The few tariffs between the three countries were targeted to industries that the respective countries believed were being subjected to unfair competition. These are called countervailing tariffs.
Today, we have the specter of across-the-board tariffs of 25% or more threatened to begin April 2. This machete approach to tariffs will surely increase inflation for American consumers and put additional strain on businesses of all sizes. Fruits and vegetables from Mexico will get more expensive. Energy and paper from Canada would also. Cars and trucks may, or may not, depending on which way the winds in the White House blow. That guacamole at your favorite Mexican restaurant will cost more because the cost of avocadoes will be higher.
For our small business, The News-Gazette, across the board tariffs that include newsprint, the paper that your copy of the paper is printed on, would have a disastrous effect. Between the newspaper and the other publications we print, I estimate that it would cost us about $50,000 a year. That would be a huge hit to our budget. This makes no sense to me, because this will not bring back newsprint manufacturing to the U.S. It will, though, allow the few U.S. manufacturers to raise their prices to meet the tariff- inflated price of Canadian newsprint.
The last time tariffs on Canadian newsprint were imposed in 2018, in a countervailing tariff, it was overturned by the International Trade Commission as unwarranted. The tariffs were in effect for several months, though, and after they were lifted, prices never came down to the pre-tariff level. I worry this would happen again, even if the current tariffs are short-lived.
I have written before about my views on tariffs. I think they should be used very sparingly. Tariffs, by their nature, distort the function of free markets. They can shelter inefficient producers. They are a burden on consumers, both individuals and businesses. They almost invariably cause other countries to impose retaliatory tariffs on us. The effect of all of these is to reduce business activity. The best example of this is the Hawley-Smoot Tariff of 1930, which most economists credit with deepening and extending what was a sharp recession into the Great Depression.
You can’t draw direct comparisons to historical events, but as Mark Twain said, “History doesn’t repeat itself, but it often rhymes.”
Make no mistake – tariffs are a tax, paid by the consumer. Lower and middle income Americans will be paying the bulk of these taxes, subsidizing lower tax rates on corporations and high-income Americans. Regardless of who you voted for last year, I doubt anyone voted for that.
With tariffs having the potential to impact the average American, you’d think our representatives in Congress would have some say in how, and against whom they are imposed. But, the decision rests with one person, the president. As dysfunctional as Congress is, we, the taxed, should have a say in this process through our elected representatives. The chaos of the past month created by on again-off again tariff policy is ridiculous, and damaging to the economy. I don’t see this Congress taking away this unilateral, unsupervised power from the president, but I hope a future Congress will. No president, Democrat or Republican, should be able to impose tariffs without the consent of Congress.
