With the implementation of the ill-advised US import tariffs, a global trade war is getting started. As a consequence, most economist predict a fall of the US GDP and an increase in US inflation. This at a time that the US economy is already displaying signs of cooling off. Consumer confidence is down.
What most economist do not include in their models is the fast build-up of an anti-American sentiment in the various US export markets. This leads to an even steeper decline in US exports as to what models normally would predict and as such thus a steeper decline in GDP.
Tesla sales
The worldwide fall of Tesla sales is a prime example. Tesla CEO Elon Musk is seen as closely linked to the US administration and as such with the start of the US import tariffs. This is leading to an international boycott of Tesla.
As a consequence, Tesla sales worldwide are currently falling off a cliff:
• Tesla sales Germany sales were down by a massive by 59.5% in January 2025 and 76.3% in February
• Sales in Norway collapsed by 44.4% through January and February.
• Overall, in Europe Tesla sales dropped with 45%
• In Australia sales dropped with 65.5% in the first two months of 2025 and 71.9% in February
• Tesla’s sales in China in February 2025 fell 49.16%
The issue is Tesla specific and not applicable to the EV market. Overall EV sales are increasing. In Germany for example EV sales climbed 30.8% in February.
Let us hope that the US government sees the light and drops the import tariffs as soon as possible. The public does not like them and the stock market neither. Import tariffs are beginning to affect the US economy.
Tesla getting destroyed by US import tariffs.
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Petroleum economist
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Tesla getting destroyed by US import tariffs.
Regards
Harry
Harry
Re: Tesla getting destroyed by US import tariffs.
The US needs reciprocal tariffs to make trade fair. I was always a free trade guy but realize this was nothing but a "pie in the sky" mentality while the rest of the world laid tariffs on US exports. So free trade has become fair trade. It's sad that tariffs and even value added taxes are necessary because one can look at them as a protective mechanism for a failed state. Which is most of Europe.
Re: Tesla getting destroyed by US import tariffs.
From Grok on X:
The U.S. has historically maintained a low average tariff rate (around 2-3% on a trade-weighted basis), while many trading partners impose higher tariffs on U.S. exports. Below, I’ll outline key countries with significant tariff disparities on goods, focusing on examples where the U.S. has flagged non-reciprocal trade practices, as these would likely face the largest reciprocal tariffs if implemented. This analysis draws on general trade data and specific examples from U.S. policy statements up to March 11, 2025.
Key Countries and Goods with Largest Tariff Disparities
India
Tariff Disparity: India’s average applied Most Favored Nation (MFN) tariff rate is approximately 17-18%, with some goods facing much higher rates, compared to the U.S. average of 2-3%. For specific goods like motorcycles, India imposes tariffs as high as 100% on U.S. exports (e.g., Harley-Davidson motorcycles), while the U.S. charges only 2.4% on Indian motorcycles.
Goods Affected: Motorcycles, agricultural products (e.g., peanuts at 30-40%), and distilled spirits (up to 150%). India’s high tariffs on U.S. agricultural goods average 39%, contrasting with the U.S.’s 5% on Indian agricultural imports.
Reciprocal Impact: If the U.S. imposed reciprocal tariffs, Indian exports like pharmaceuticals, textiles, and steel (significant U.S. imports) could face tariffs jumping from near-zero to 17-100%, depending on the product.
European Union (EU)
Tariff Disparity: The EU’s average tariff rate is around 5%, higher than the U.S.’s, but specific goods show stark differences. For example, the EU imposes a 10% tariff on U.S. cars, while the U.S. applies 2.5% to EU cars (though U.S. light truck tariffs are 25%). Agricultural goods and shellfish also face non-tariff barriers; the EU effectively bans shellfish from 48 U.S. states, while U.S. tariffs on EU shellfish are negligible.
Goods Affected: Automobiles, shellfish ($274 million imported from the EU vs. $38 million exported in 2023), and agricultural products. The EU’s Value-Added Tax (VAT), averaging 21%, is also cited by the U.S. as an unfair trade barrier, potentially adding to reciprocal calculations.
Reciprocal Impact: U.S. reciprocal tariffs could raise duties on EU pharmaceuticals (the top U.S. import from the EU), autos (e.g., Mercedes, BMW), and luxury goods (wine, cosmetics) to 10-21%, significantly increasing costs.
China
Tariff Disparity: China’s average tariff rate is around 7-8%, but U.S. goods often face higher rates due to retaliatory measures. For instance, China has imposed tariffs up to 25% on U.S. agricultural goods like soybeans and pork in response to prior U.S. tariffs, while U.S. base tariffs on Chinese goods were lower before escalation (now 20% on all Chinese imports as of March 2025, per recent actions).
Goods Affected: Soybeans, pork, autos (China’s tariffs on U.S. cars hit 40% during trade disputes), and electronics. China’s exports to the U.S. include electronics, machinery, and apparel, which face existing U.S. tariffs but could see further reciprocal alignment.
Reciprocal Impact: With U.S. tariffs on Chinese goods already at 20% (doubled from 10% on March 4, 2025), reciprocal adjustments could push these higher to match China’s rates on specific U.S. exports, affecting $500+ billion in annual Chinese imports.
Canada
Tariff Disparity: Under the USMCA, most trade is tariff-free, but Canada’s tariffs on certain U.S. goods (e.g., dairy at 200-300% under supply management) far exceed U.S. rates. The U.S. imposed a 25% tariff on Canadian goods on March 4, 2025, citing border issues, prompting Canada to retaliate with tariffs on $20.7 billion of U.S. goods.
Goods Affected: Dairy, steel, aluminum, and energy products. Canada’s exports to the U.S. include oil, vehicles, and lumber, now hit by the 25% tariff.
Reciprocal Impact: If fully reciprocal, U.S. tariffs on Canadian oil and autos could rise to match Canada’s dairy tariffs (200%+), though current policy focuses on a flat 25%, suggesting a broader retaliation rather than precise reciprocity.
Mexico
Tariff Disparity: Like Canada, Mexico benefits from USMCA, but specific U.S. goods face higher barriers (e.g., agricultural products). The U.S. applied a 25% tariff on Mexican goods on March 4, 2025, leading Mexico to plan retaliatory tariffs by March 9.
Goods Affected: Avocados, autos, and steel. Mexico’s exports to the U.S. include vehicles ($100+ billion annually) and agricultural products, now under the 25% tariff.
Reciprocal Impact: Reciprocal tariffs could see U.S. duties on Mexican autos and produce rise to match any Mexican barriers, though the current 25% rate reflects a punitive rather than strictly reciprocal approach.
Analysis and Context
Current U.S. Policy: As of March 11, 2025, the U.S. has implemented 25% tariffs on Canada and Mexico and 20% on China (effective March 4), but these are framed around security (e.g., fentanyl) rather than pure reciprocity. The “Fair and Reciprocal Plan” (announced February 13, 2025) aims to systematically match foreign tariffs, with proposals due by April 1, 2025, and implementation possibly starting April 2. This suggests countries like India and the EU, with higher baseline tariffs, could soon face larger reciprocal tariffs.
Goods Focus: Agricultural products, automobiles, and manufactured goods (e.g., steel, electronics) show the widest tariff gaps, making them prime targets. VATs, applied by over 170 countries (e.g., EU at 21%, China at 13%), may also inflate U.S. reciprocal rates, though economists argue VATs aren’t equivalent to tariffs.
Scale: The largest reciprocal tariffs, if fully enacted, would hit countries with high tariffs and significant U.S. import volumes: China ($500+ billion), EU ($600+ billion), India ($80+ billion), Canada ($400+ billion), and Mexico ($250+ billion).
Conclusion
The countries with the potentially largest reciprocal tariffs with the U.S. by goods, based on tariff disparities and trade volume, are India (motorcycles, agriculture), EU (autos, pharmaceuticals), China (electronics, agriculture), Canada (dairy, oil), and Mexico (autos, produce). Exact reciprocal rates depend on the final U.S. policy, but these nations’ higher tariffs on U.S. goods and substantial exports to the U.S. position them as key targets. Data reflects trade realities as of March 11, 2025, with policy evolution ongoing.
Explain tariff calculations
Trade agreement impacts
The U.S. has historically maintained a low average tariff rate (around 2-3% on a trade-weighted basis), while many trading partners impose higher tariffs on U.S. exports. Below, I’ll outline key countries with significant tariff disparities on goods, focusing on examples where the U.S. has flagged non-reciprocal trade practices, as these would likely face the largest reciprocal tariffs if implemented. This analysis draws on general trade data and specific examples from U.S. policy statements up to March 11, 2025.
Key Countries and Goods with Largest Tariff Disparities
India
Tariff Disparity: India’s average applied Most Favored Nation (MFN) tariff rate is approximately 17-18%, with some goods facing much higher rates, compared to the U.S. average of 2-3%. For specific goods like motorcycles, India imposes tariffs as high as 100% on U.S. exports (e.g., Harley-Davidson motorcycles), while the U.S. charges only 2.4% on Indian motorcycles.
Goods Affected: Motorcycles, agricultural products (e.g., peanuts at 30-40%), and distilled spirits (up to 150%). India’s high tariffs on U.S. agricultural goods average 39%, contrasting with the U.S.’s 5% on Indian agricultural imports.
Reciprocal Impact: If the U.S. imposed reciprocal tariffs, Indian exports like pharmaceuticals, textiles, and steel (significant U.S. imports) could face tariffs jumping from near-zero to 17-100%, depending on the product.
European Union (EU)
Tariff Disparity: The EU’s average tariff rate is around 5%, higher than the U.S.’s, but specific goods show stark differences. For example, the EU imposes a 10% tariff on U.S. cars, while the U.S. applies 2.5% to EU cars (though U.S. light truck tariffs are 25%). Agricultural goods and shellfish also face non-tariff barriers; the EU effectively bans shellfish from 48 U.S. states, while U.S. tariffs on EU shellfish are negligible.
Goods Affected: Automobiles, shellfish ($274 million imported from the EU vs. $38 million exported in 2023), and agricultural products. The EU’s Value-Added Tax (VAT), averaging 21%, is also cited by the U.S. as an unfair trade barrier, potentially adding to reciprocal calculations.
Reciprocal Impact: U.S. reciprocal tariffs could raise duties on EU pharmaceuticals (the top U.S. import from the EU), autos (e.g., Mercedes, BMW), and luxury goods (wine, cosmetics) to 10-21%, significantly increasing costs.
China
Tariff Disparity: China’s average tariff rate is around 7-8%, but U.S. goods often face higher rates due to retaliatory measures. For instance, China has imposed tariffs up to 25% on U.S. agricultural goods like soybeans and pork in response to prior U.S. tariffs, while U.S. base tariffs on Chinese goods were lower before escalation (now 20% on all Chinese imports as of March 2025, per recent actions).
Goods Affected: Soybeans, pork, autos (China’s tariffs on U.S. cars hit 40% during trade disputes), and electronics. China’s exports to the U.S. include electronics, machinery, and apparel, which face existing U.S. tariffs but could see further reciprocal alignment.
Reciprocal Impact: With U.S. tariffs on Chinese goods already at 20% (doubled from 10% on March 4, 2025), reciprocal adjustments could push these higher to match China’s rates on specific U.S. exports, affecting $500+ billion in annual Chinese imports.
Canada
Tariff Disparity: Under the USMCA, most trade is tariff-free, but Canada’s tariffs on certain U.S. goods (e.g., dairy at 200-300% under supply management) far exceed U.S. rates. The U.S. imposed a 25% tariff on Canadian goods on March 4, 2025, citing border issues, prompting Canada to retaliate with tariffs on $20.7 billion of U.S. goods.
Goods Affected: Dairy, steel, aluminum, and energy products. Canada’s exports to the U.S. include oil, vehicles, and lumber, now hit by the 25% tariff.
Reciprocal Impact: If fully reciprocal, U.S. tariffs on Canadian oil and autos could rise to match Canada’s dairy tariffs (200%+), though current policy focuses on a flat 25%, suggesting a broader retaliation rather than precise reciprocity.
Mexico
Tariff Disparity: Like Canada, Mexico benefits from USMCA, but specific U.S. goods face higher barriers (e.g., agricultural products). The U.S. applied a 25% tariff on Mexican goods on March 4, 2025, leading Mexico to plan retaliatory tariffs by March 9.
Goods Affected: Avocados, autos, and steel. Mexico’s exports to the U.S. include vehicles ($100+ billion annually) and agricultural products, now under the 25% tariff.
Reciprocal Impact: Reciprocal tariffs could see U.S. duties on Mexican autos and produce rise to match any Mexican barriers, though the current 25% rate reflects a punitive rather than strictly reciprocal approach.
Analysis and Context
Current U.S. Policy: As of March 11, 2025, the U.S. has implemented 25% tariffs on Canada and Mexico and 20% on China (effective March 4), but these are framed around security (e.g., fentanyl) rather than pure reciprocity. The “Fair and Reciprocal Plan” (announced February 13, 2025) aims to systematically match foreign tariffs, with proposals due by April 1, 2025, and implementation possibly starting April 2. This suggests countries like India and the EU, with higher baseline tariffs, could soon face larger reciprocal tariffs.
Goods Focus: Agricultural products, automobiles, and manufactured goods (e.g., steel, electronics) show the widest tariff gaps, making them prime targets. VATs, applied by over 170 countries (e.g., EU at 21%, China at 13%), may also inflate U.S. reciprocal rates, though economists argue VATs aren’t equivalent to tariffs.
Scale: The largest reciprocal tariffs, if fully enacted, would hit countries with high tariffs and significant U.S. import volumes: China ($500+ billion), EU ($600+ billion), India ($80+ billion), Canada ($400+ billion), and Mexico ($250+ billion).
Conclusion
The countries with the potentially largest reciprocal tariffs with the U.S. by goods, based on tariff disparities and trade volume, are India (motorcycles, agriculture), EU (autos, pharmaceuticals), China (electronics, agriculture), Canada (dairy, oil), and Mexico (autos, produce). Exact reciprocal rates depend on the final U.S. policy, but these nations’ higher tariffs on U.S. goods and substantial exports to the U.S. position them as key targets. Data reflects trade realities as of March 11, 2025, with policy evolution ongoing.
Explain tariff calculations
Trade agreement impacts
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Petroleum economist
- Posts: 294
- Joined: Wed Aug 23, 2023 7:01 am
- Location: The Netherlands
Re: Tesla getting destroyed by US import tariffs.
Cliff, thanks for an excellent summary on tariffs. Two remarks: one on VAT and one dairy products.
VAT
Many countries in the world levy a Value Added Tax (VAT). This tax is a sales tax applicable to any goods sold in the county, independent whether the goods are locally manufactured or imported. VAT is not an import tariff and does not put a foreign manufacturer at a disadvantage.
Dairy
Dairy and some other agricultural products tend to be overproduced from time to time. In France this has led in the past to a “wine lake” and in Holland to a “milk lake”. As a consequence, product prices collapsed, followed by dumping in markets abroad. Also, bankruptcies and social misery were a consequence.
To circumvent this problem already for decades a system has been put in place where farmers are giving a quota above which they are only allowed to produce if they pay a penalty. This has stopped overproduction, dumping in markets abroad and has stabilized the systems.
Canada has a similar system for dairy. Within this system Canada has set an allowance for imports (I believe 18% of the total although I am not an expert). Allowing more imports would collapse the system. I can see the desire for US export to a high price market, but this would re-introduce old problems for dairy in Canada and does not make any sense.
I have seen some data which suggests that Canada is importing more dairy from the US as it is exporting to the US. Dairy should not be the reason for a US/Canada trade war.
VAT
Many countries in the world levy a Value Added Tax (VAT). This tax is a sales tax applicable to any goods sold in the county, independent whether the goods are locally manufactured or imported. VAT is not an import tariff and does not put a foreign manufacturer at a disadvantage.
Dairy
Dairy and some other agricultural products tend to be overproduced from time to time. In France this has led in the past to a “wine lake” and in Holland to a “milk lake”. As a consequence, product prices collapsed, followed by dumping in markets abroad. Also, bankruptcies and social misery were a consequence.
To circumvent this problem already for decades a system has been put in place where farmers are giving a quota above which they are only allowed to produce if they pay a penalty. This has stopped overproduction, dumping in markets abroad and has stabilized the systems.
Canada has a similar system for dairy. Within this system Canada has set an allowance for imports (I believe 18% of the total although I am not an expert). Allowing more imports would collapse the system. I can see the desire for US export to a high price market, but this would re-introduce old problems for dairy in Canada and does not make any sense.
I have seen some data which suggests that Canada is importing more dairy from the US as it is exporting to the US. Dairy should not be the reason for a US/Canada trade war.
Regards
Harry
Harry
Re: Tesla getting destroyed by US import tariffs.
The only thing worse than tariffs are bad trade agreements.
Re: Tesla getting destroyed by US import tariffs.
Harry, Canada has a 200% tariff on milk imports from the US. It would be interesting to the data
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Petroleum economist
- Posts: 294
- Joined: Wed Aug 23, 2023 7:01 am
- Location: The Netherlands
Re: Tesla getting destroyed by US import tariffs.
Cliff, you are correct. Canada has indeed tariffs above 200% on dairy products imported from the US - for example, 298.5% for above-maximum butter and 245.5% for above-maximum cheddar cheese. These high tariffs however kick-in only after the US has hit a certain quantity of tariff-free dairy sales to Canada each year.
The above-maximum tariffs are comparable with the penalties imposed on local producers if they exceed their allocated quota's.
The US is not hitting its allowed zero-tariff maximum in any category of dairy product. In many categories, notably including milk, the US is not even at half of the zero-tariff maximum.
In practice the high above-maximum tariffs are not actually paid by anyone.
The tariffs were left in place by the United States-Mexico-Canada Agreement, or USMCA, which Trump negotiated and signed in 2018. Under the USMCA, Canada guaranteed it would not apply any tariffs to specific amounts of US imports per year in 14 dairy categories, such as milk, cream, cheese, ice cream, butter and cream powder, and yogurt and buttermilk. These US-specific quotas gave American farmers and companies more access to the Canadian market.
Canada is the second-largest US export market for dairy, purchasing about $1.1 billion worth in 2024.
I believe if you do not like a certain treaty you should renegotiate it. Imposing unilaterally tariffs is not the answer. Tariffs may bring back long-term some manufacturing jobs to the US but will destroy in the short term more export related jobs due to retaliation tariffs.
Tariffs cause chaos, uncertainty, lack of consumer and investor confidence. Increase inflation and reduce the GDP at either side of the border. Let us hope that the GOP can gather the votes in the house to lift the economic emergency status and stop the tariffs.
If the US revokes its recent introduced import tariffs, then no doubt the retaliation tariffs will disappear on the spot as well.
The above-maximum tariffs are comparable with the penalties imposed on local producers if they exceed their allocated quota's.
The US is not hitting its allowed zero-tariff maximum in any category of dairy product. In many categories, notably including milk, the US is not even at half of the zero-tariff maximum.
In practice the high above-maximum tariffs are not actually paid by anyone.
The tariffs were left in place by the United States-Mexico-Canada Agreement, or USMCA, which Trump negotiated and signed in 2018. Under the USMCA, Canada guaranteed it would not apply any tariffs to specific amounts of US imports per year in 14 dairy categories, such as milk, cream, cheese, ice cream, butter and cream powder, and yogurt and buttermilk. These US-specific quotas gave American farmers and companies more access to the Canadian market.
Canada is the second-largest US export market for dairy, purchasing about $1.1 billion worth in 2024.
I believe if you do not like a certain treaty you should renegotiate it. Imposing unilaterally tariffs is not the answer. Tariffs may bring back long-term some manufacturing jobs to the US but will destroy in the short term more export related jobs due to retaliation tariffs.
Tariffs cause chaos, uncertainty, lack of consumer and investor confidence. Increase inflation and reduce the GDP at either side of the border. Let us hope that the GOP can gather the votes in the house to lift the economic emergency status and stop the tariffs.
If the US revokes its recent introduced import tariffs, then no doubt the retaliation tariffs will disappear on the spot as well.
Regards
Harry
Harry
Re: Tesla getting destroyed by US import tariffs.
Canada has no leverage with Trump..
https://x.com/profstonge/status/1900162428064632870
https://x.com/profstonge/status/1900162428064632870
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Petroleum economist
- Posts: 294
- Joined: Wed Aug 23, 2023 7:01 am
- Location: The Netherlands
Re: Tesla getting destroyed by US import tariffs.
Tesla hurting from import tariffs
Tesla is hurting more and more from the US import tariffs.
Tesla international sales have been suffering massively from a buyers boycott as a protest against of the US import tariffs. On top of this Tesla US prices soon will have to increase as a consequence of the tax on imported materials (steel/aluminum), materials utilized in the construction Tesla’s. The higher prices will dampen US sales.
An unsigned letter has been sent by Tesla to the White House expressing concerns. Also the Tesla motor shows on the driveway of the White House are not exactly signs of strength.
Import tariffs on Canada
The justification for 25%/10% general import tariffs placed on imports from Canada appears to be changing as time is passing by. Numbers coming available do not support the implementation of import tariffs on Canada.
Fentanyl smuggling and illegal immigration
The initial justification for the Canadian import tariffs was fentanyl smuggling and illegal immigration at the northern border. These arguments do not hold water. Fentanyl smuggling from Canada into the US is minimal. In the fiscal year of 2024, only 43 pounds of fentanyl (0.2% of the total) was seized at the northern border. Most likely more Fentanyl is smuggled from the US into Canada than in the other direction.
In the fiscal year 2024 there were more than 1.5 million Border Patrol apprehensions of people who illegally entered the U.S. At the northern border the Border Patrol apprehended only 23,721 people (=1.5%). To reduce this small number even further, counter measures have been put in place to reduce the Illegal immigration from Canada into the US. Tariffs will not improve the situation
Trade imbalance, the effect of oil and impact on US jobs, GDP and inflation
The justification for the tariffs on Canada has shifted recently to the trade imbalance with Canada and the creation of US manufacturing jobs.
In 2023 the US imported $ 482 B of goods from Canada and exported $ 441 B of goods resulting in a trade imbalance of -$ 41 B. The trade imbalance with Canada stems mainly from the oil imports (approx. $ 100 B). Without oil the US has a trade surplus of $ 60 B with Canada.
Oil imported from Canada is a heavy crude. The heavy crude is processed at refineries in the NW district. These refineries have no choice of supply as they cannot process lighter US crudes. The Canadian oil imports will continue, with or without tariffs.
The import of Canadian crude helps the US in maintaining a positive import/export balance of oil related products. Without the import of Canadian crude, the positive balance would reduce. Based on last week IEA data the US net oil balance was a negative -2.2 M bbl/d (oil imports = 5.5 M bbl/d, oil exports = 3.3 M bbl/d) while the net product balance was a positive 4.2 M bbl/d (product imports =2.0 M bbl/d, product exports =6.2 M bbl/d).
Economically speaking Canadian energy is just passing through the US, with NW refineries adding value to the Canadian oil. Without Canadian oil imports, the US positive oil products import/export balance would reduce.
Impact on employment, GDP and inflation
Tariffs will hurt both the Canadian as well as the US economy. Tariffs and counter tariffs will reduce the imports and exports of products and as such will negatively impact employment, GDP and inflation.
With a positive trade balance on goods more jobs as the US side will disappear on the US side than on the Canadian side. However, with Canada being a smaller economy, the impact of unemployment percentages at the Canadian side will be much steeper. The same applies to GDP and inflation.
The justification of the creation of US manufacturing jobs does not hold. The US export related jobs reduction will outweigh the created manufacturing jobs.
Apart from no gains, why would you want to hurt the economy of our neighbors in such a big way.
The Aja57 argument “Canada has no leverage with Trump” may be correct but is with any moral justification. It is the same as endorsing the bully in the school taking the lunch money from the smaller boys because you agree that "he is bigger".
Empire dreams and place in history
The real reason for the tariffs seems to be the Trump dream of becoming the US president who added Canada as a 51st state. What has started as a joke has become more serious matter. Calling the prime minister “Governor” can be a good joke amongst friends, but is insulting if this is done in a telephone call with the Canadian prime minister.
With the tariffs Trump has started an economic war, trying to get Canada on its economic knees and beg for admittance into the US. This justification for tariffs is immoral and I am sure is not supported by the majority of the American electorate.
The Republicans in the house should revoke the Trump economic emergency declaration and the import tariffs on imposed Canada. This will take courage!
Tesla is hurting more and more from the US import tariffs.
Tesla international sales have been suffering massively from a buyers boycott as a protest against of the US import tariffs. On top of this Tesla US prices soon will have to increase as a consequence of the tax on imported materials (steel/aluminum), materials utilized in the construction Tesla’s. The higher prices will dampen US sales.
An unsigned letter has been sent by Tesla to the White House expressing concerns. Also the Tesla motor shows on the driveway of the White House are not exactly signs of strength.
Import tariffs on Canada
The justification for 25%/10% general import tariffs placed on imports from Canada appears to be changing as time is passing by. Numbers coming available do not support the implementation of import tariffs on Canada.
Fentanyl smuggling and illegal immigration
The initial justification for the Canadian import tariffs was fentanyl smuggling and illegal immigration at the northern border. These arguments do not hold water. Fentanyl smuggling from Canada into the US is minimal. In the fiscal year of 2024, only 43 pounds of fentanyl (0.2% of the total) was seized at the northern border. Most likely more Fentanyl is smuggled from the US into Canada than in the other direction.
In the fiscal year 2024 there were more than 1.5 million Border Patrol apprehensions of people who illegally entered the U.S. At the northern border the Border Patrol apprehended only 23,721 people (=1.5%). To reduce this small number even further, counter measures have been put in place to reduce the Illegal immigration from Canada into the US. Tariffs will not improve the situation
Trade imbalance, the effect of oil and impact on US jobs, GDP and inflation
The justification for the tariffs on Canada has shifted recently to the trade imbalance with Canada and the creation of US manufacturing jobs.
In 2023 the US imported $ 482 B of goods from Canada and exported $ 441 B of goods resulting in a trade imbalance of -$ 41 B. The trade imbalance with Canada stems mainly from the oil imports (approx. $ 100 B). Without oil the US has a trade surplus of $ 60 B with Canada.
Oil imported from Canada is a heavy crude. The heavy crude is processed at refineries in the NW district. These refineries have no choice of supply as they cannot process lighter US crudes. The Canadian oil imports will continue, with or without tariffs.
The import of Canadian crude helps the US in maintaining a positive import/export balance of oil related products. Without the import of Canadian crude, the positive balance would reduce. Based on last week IEA data the US net oil balance was a negative -2.2 M bbl/d (oil imports = 5.5 M bbl/d, oil exports = 3.3 M bbl/d) while the net product balance was a positive 4.2 M bbl/d (product imports =2.0 M bbl/d, product exports =6.2 M bbl/d).
Economically speaking Canadian energy is just passing through the US, with NW refineries adding value to the Canadian oil. Without Canadian oil imports, the US positive oil products import/export balance would reduce.
Impact on employment, GDP and inflation
Tariffs will hurt both the Canadian as well as the US economy. Tariffs and counter tariffs will reduce the imports and exports of products and as such will negatively impact employment, GDP and inflation.
With a positive trade balance on goods more jobs as the US side will disappear on the US side than on the Canadian side. However, with Canada being a smaller economy, the impact of unemployment percentages at the Canadian side will be much steeper. The same applies to GDP and inflation.
The justification of the creation of US manufacturing jobs does not hold. The US export related jobs reduction will outweigh the created manufacturing jobs.
Apart from no gains, why would you want to hurt the economy of our neighbors in such a big way.
The Aja57 argument “Canada has no leverage with Trump” may be correct but is with any moral justification. It is the same as endorsing the bully in the school taking the lunch money from the smaller boys because you agree that "he is bigger".
Empire dreams and place in history
The real reason for the tariffs seems to be the Trump dream of becoming the US president who added Canada as a 51st state. What has started as a joke has become more serious matter. Calling the prime minister “Governor” can be a good joke amongst friends, but is insulting if this is done in a telephone call with the Canadian prime minister.
With the tariffs Trump has started an economic war, trying to get Canada on its economic knees and beg for admittance into the US. This justification for tariffs is immoral and I am sure is not supported by the majority of the American electorate.
The Republicans in the house should revoke the Trump economic emergency declaration and the import tariffs on imposed Canada. This will take courage!
Regards
Harry
Harry
Re: Tesla getting destroyed by US import tariffs.
“Fentanyl smuggling and illegal immigration
The initial justification for the Canadian import tariffs was fentanyl smuggling and illegal immigration at the northern border. These arguments do not hold water. Fentanyl smuggling from Canada into the US is minimal. In the fiscal year of 2024, only 43 pounds of fentanyl (0.2% of the total) was seized at the northern border. Most likely more Fentanyl is smuggled from the US into Canada than in the other direction.”
I suggest reading this thread from X, PE. If Canada is not looking for it, then the fentanyl numbers are quite small. Canada has become a major money launderer through their banking system and real estate market.
https://x.com/StephenPunwasi/status/1884813232201674799
The initial justification for the Canadian import tariffs was fentanyl smuggling and illegal immigration at the northern border. These arguments do not hold water. Fentanyl smuggling from Canada into the US is minimal. In the fiscal year of 2024, only 43 pounds of fentanyl (0.2% of the total) was seized at the northern border. Most likely more Fentanyl is smuggled from the US into Canada than in the other direction.”
I suggest reading this thread from X, PE. If Canada is not looking for it, then the fentanyl numbers are quite small. Canada has become a major money launderer through their banking system and real estate market.
https://x.com/StephenPunwasi/status/1884813232201674799
Re: Tesla getting destroyed by US import tariffs.
re: Fentanyl smuggling across the Canadian border and the argument that the amount must be small based on interceptions at the border...
This article from Doomberg (published 2/5/2025) may be behind a paywall, but it's worth consideration when discussing among other things, the problem with fentanyl smuggling: https://newsletter.doomberg.com/p/undeclared
This is an excerpt from the article that resonates to me whenever I read statements that fentanyl smuggling across the Canadian border is small...
(Bold case is mine)
Consider that the 2023 population of Canada was 40.1 million, vs. the ability to produce 96 million doses of fentanyl. The drug has to be going somewhere. Is any of it going to the United States? Perhaps to Europe, maybe Asia?
Keep in mind the 96 million doses is from one illegal laboratory in Canada. Can anybody reasonably argue that there are no more laboratories remaining in Canada?
This article from Doomberg (published 2/5/2025) may be behind a paywall, but it's worth consideration when discussing among other things, the problem with fentanyl smuggling: https://newsletter.doomberg.com/p/undeclared
This is an excerpt from the article that resonates to me whenever I read statements that fentanyl smuggling across the Canadian border is small...
(Bold case is mine)
The article then addresses the question of whether fentanyl is actually being produced in Canada. Below is a quote from an article in the New York Times (last November):Many in the Canadian and US press corps have questioned the scale of drugs flowing over the border from Canada, disputing Trump’s statements on the matter. The data used to support this line of rebuttal is dubious at best. See if you can spot the logical fallacy in a recent report in The New York Times:
Comparing 19 kilograms intercepted at Canada’s border against 9,600 kilograms at Mexico’s implies that those borders are equally guarded. This is hardly the case. The US and Canada share the longest international border, the vast majority of which has no physical barriers. So little fentanyl is seized at crowded crossing points because virtually none of it is likely to be entering through such channels, moving instead across remote terrain between small rural border towns on either side.“As the opioid epidemic raged in the United States, killing thousands, Congress in 2020 established a commission to look into ways to reduce the flow of the drugs into the country. The commission found that ‘Canada is not known to be a major source of fentanyl, other synthetic opioids or precursor chemicals to the United States, a conclusion primarily drawn from seizure data,’ according to its February 2022 report.
Last year, U.S. Customs and Border Protection agents intercepted about 19 kilograms of fentanyl at the northern border, compared with almost 9,600 kilograms at the border with Mexico, where cartels mass-produce the drug.”
link to NYT article: https://www.nytimes.com/2024/11/01/world/canada/canada-drug-lab-fentanyl.html#:~:text=Canadian%20authorities%20have%20dismantled%20what,leading%20cause%20of%20overdose%20deaths.“Canadian authorities have dismantled what they described as the country’s largest drug laboratory, hidden in a rural part of British Columbia, seizing enough chemicals and other material to produce roughly 96 million doses of fentanyl, the country’s leading cause of overdose deaths.
For the first time in Canada, the police also found evidence of a drug production method used primarily by Mexican cartels to make opioids. The process requires a particular precursor chemical, and is often used to mass produce a potent synthetic drug known as ‘super meth.’”
Consider that the 2023 population of Canada was 40.1 million, vs. the ability to produce 96 million doses of fentanyl. The drug has to be going somewhere. Is any of it going to the United States? Perhaps to Europe, maybe Asia?
Keep in mind the 96 million doses is from one illegal laboratory in Canada. Can anybody reasonably argue that there are no more laboratories remaining in Canada?