There is general agreement that tariffs add to the cost of importers and users of the imported products. That conclusion seems obvious. If United States businesses and consumers are buying Canadian products and tariffs are added to those prices going forward, that can only make those products more expensive.
It seems equally obvious that if we impose retaliatory tariffs, then those products that we buy will be more expensive. The list proposed includes grocery products we can’t get practically elsewhere or, even if we can, the cost of these products will rise. This can’t be good for Canadians.
Why, though, is it necessary for us to retaliate? The objective of the retaliation is to induce the US government to change its policy. The best people to do that are citizens of the United States. If the products are essential, then they will object. If the costs of tariffs being imposed, not only on Canadian goods but on products from other nations, increase consumer prices directly or by impacting producers who use Canadian products, those ultimate users are going to complain.
The best penalty for punishing a nation which imposes tariffs seems to be those same tariffs themselves. Tariffs penalize their own nationals.
Now, the thinking seems to be one of two themes: the top one seems to be reducing US trade imbalances. That seems to be an appropriate impulse, as the trade imbalances of the US are not sustainable for them or, therefore, any nation trading with them. You can’t keep selling to someone who can’t afford it. But achieving a restored balance by tariffs seems more likely to damage further the American economy than cure it. At the least, it will be very destabilizing economically, with consequent political instability you might expect.
The other mooted theme is that these tariffs are meant to extract greater effort by the Canadian government to impede migrants and illegal drugs from entry into the United States. That doesn’t seem to be a logical explanation but it is one offered. If that is the reason, then dealing with the objection directly seems much better for everybody than retaliatory tariffs.
Whether we impose tariffs in retaliation or not, the process of working through whatever issues we must with the United States are not going to be accelerated in an obvious way by our retaliation. But the cost and the disturbance to our economy seem assured.
An incidental effect of these tariffs would seem to be that they would further depress the Canadian dollar against the American currency. That would have the ironic effect of lowering the cost to Americans of Canadian goods, counteracting the effects, in part, of the tariffs.
No doubt, as a politician, one wants to show some sensitivity to Canadian producers and a willingness to act decisively. Tariffs don’t seem to be the way to improve Canada’s conditions.