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Donald Trump tells Canada to become a state to avoid his tariffs (www.huffpost.com)
submitted 2 years ago by to c/worldnews@lemmy.ml
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cross-posted from: https://lemmy.world/post/24657192

Summary

In a virtual speech at the World Economic Forum, Trump suggested Canada could become a U.S. state to avoid his proposed tariffs on imports.

The remark elicited gasps from the audience.

Trump claimed the U.S. does not need Canadian lumber, energy, or vehicles, vastly overstating the trade deficit between the two nations.

He reiterated his intention to impose tariffs, potentially as high as 25%, on imports from Canada and Mexico starting February 1.

Economists warn such tariffs would raise prices for U.S. consumers.

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[–] 20 points 2 years ago (9 children)

Canada is avoiding Trump's tariffs by not becoming a state.

They are not paying the tariffs, american people do. So by joining the US they would start paying all the tariffs that Trump is putting on China's products, European products ....

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  • [+] -11 points 2 years ago (8 children)

    Why do people think that happens? It does not happen. 90% of the tariffs will be absorbed by Canadian companies trying to keep up sales to the US because there's nowhere else to go, and even if they sell elsewhere, it'll be discounted that much to other countries because of the general laws of supply and demand.

    The only way, and it's one that we have nothing in place to effect, is to mark prices as of the tariff date and to enact an export tariff for the amount of the sale under the price set point. That would highly discourage discounting sales and pretty much just cut them off since, in the case of products made or produced in the US, it would be competing with local products at 125% of the local price.

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  • [–] 8 points 2 years ago (6 children)

    The importer, not the exporter pays tariffs. Aka Canada pays nothing, things made in Canada have an extra tax attached to them when they cross the boarder into the us, paid by Walmart or whomever ordered the goods

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  • [–] -2 points 2 years ago (5 children)

    Yes, but in the real world, while the importer pays the tariff, they've taken a discount on cost from their supplier in order to compete with local goods that aren't tariffed. That's why no country wants tariffs applied to their imports. Its almost like governments understand how this works.

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  • [–] 6 points 2 years ago (4 children)

    Ummm no.

    In the real world consumers ultimately end up paying the tariffs.

    Domestic suppliers have a tendency to raise prices is response to increased demand and decrease competition from imports.

    When Trump implemented a tariff on Washing Machines in 2018 during his first term. The price of imported washing machines went up, the price of domestic washing machines went up, the price of dryers… which weren’t tariffed went up.

    Eventually it did led to more washing machines and dryers being manufactured domestically. Which did lead to a small increase manufacturing in jobs. But it was a net loss for the consumers.

    Tariffs function as a flat tax on goods. Like all flat taxes this benefits the wealthy and hurts poor and the working class.

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  • [–] -5 points 2 years ago* (last edited 2 years ago) (3 children)

    Well, when it's been in place and the Canadian economy is in free fall, you can come here and tell me how wrong I and all the governments were about how this works. I'm sure it'll go totally different than the softwood lumber tariffs that shut down the forestry industry in BC for a decade.

    Here's the Canadian forest industry take on tariffs. Mostly borne by Canadian producers:

    https://forestresources.org/2024/12/19/a-discussion-around-tariffs-on-cdn-lumber/

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  • [–] 8 points 2 years ago (2 children)

    I’m confused friend.

    The article you linked to says:

    … Canadian lumber producers would not be able to absorb this, the price of lumber will adjust upwards ….

    Is that not, quite literally, a direct contradiction of your earlier statement that:

    90% of the tariffs will be absorbed by Canadian companies

    And if the price increases, is that not the consumer paying the tariffs?

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  • [–] 0 points 2 years ago (1 child)

    I'm out of energy for this.

    You're right, we should just ignore it because it'll only affect the USians. Maybe we lobby them to make it 50% so it punishes them more. It'll all be perfectly fine here.

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  • [–] 2 points 2 years ago

    No one should ignore Trump’s tariff threats. Tariffs would hurt the economies of both countries involved. Literally no one wins in a trade war.

    The last time America passed large blanket tariffs like the kind Trump is threatening was the Smoot–Hawley Act of 1930. Which had the effect of reducing both imports and exports by almost 2/3 and was broadly considered to have significantly prolonged the Great Depression.

    I’m not sure why Trump thinks tariffs are a good idea. He talks about it like it’s a way to get other countries to pay money to the US… but that’s not how tariffs work. Tariffs cause inflation for the US consumer, which is bad for the economies of both the USA, and the country being tariffed.

    I suspect Trump framing of this as “external” revenue will be used to justify income tax cuts which will predominantly benefit the wealthy in the US and the expense of both middle class in both countries.

    Countries being threatened by Trump should focus on diversifying their trade partners to mitigate the damage,

    Americans should be calling their representatives and demanding they put a halt to this nonsense.

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