Uh oh! The bloodthirsty Canadians are rattling their sabers and maple syrup and threatening acts of war against America because they thought Donald Trump was bluffing.
America’s greatest president ever threatened to impose a 25% tariff against imported Canadian goods if they didn’t start taking positive action to stop the flow of fentanyl into our country. Canada F’ed Around and now they’re about to enter the Find Out stage of this process.
Ontario Premier Doug Ford says he’s going to cut the electricity off to New York, Minnesota, and Michigan unless President Trump eliminates his fair and just tariffs. How exactly would that even work? Some don’t even think it’s possible since the US and Canadian power grids are directly tied together.
What’s Doug Ford going to do? Cut the power lines? This dude is a psychopath.
Meanwhile, the other tyrants running the Canadian government have announced that they will impose retaliatory tariffs against the United States. In other words, the idiots have taken the bait and stepped directly into President Trump’s sophisticated trap. If you’re a Canadian and you’re reading this, now would be a good time to start buying gold.
It’s been so long since the United States imposed tariffs on anyone that many mainstream economists who are ignorant of history have never learned an extremely important principle. President Trump has studied this and he gets it.
Write this down because it is an ironclad law of economics:
The country with the trade deficit always wins the trade war. Always.
The US has a $67 billion trade deficit with Canada. They ship $67 billion a year more in goods to America than they accept from American companies in return. Our trade deficit with Mexico is $152 billion per year and it’s $279 billion with China, so those two countries are about to get jackhammered like Lindsay Graham during Pride Week.
We weren’t imposing any tariffs on these countries before Trump’s new tariffs just went into effect. Agriculture is an extremely important part of Canada’s economy. To protect that industry, Canada imposes incredibly restrictive tariffs on American agricultural products.
If you’re an American beef producer, you would have to pay the Canadian government a 109% tariff on every steak you try to sell in Canada. You’d have to be a crazy person to try to sell your beef in Canada. You’d have to charge $100 for a steak just to get it into a grocery store and break even. Meanwhile, the Canadian-grown steak right next to it in the store sells for $15.
No one would buy your product, because Canada imposes such a restrictive tariff on it. As a result, American farmers and ranchers don’t export much to Canada. They have similar tariffs on poultry, eggs, pork, and even farmed trout.
Trump’s new 25% tariff will cut into the profit margins of Canada’s agriculture sector dramatically. But here’s where it starts to get really bad for Canada. (We’re not kidding when we say Canadians should buy gold right now.)
Starting on April 2nd, the Trump administration will impose reciprocal tariffs on all countries that we trade with. That means the 109% tariff that Canada imposes on American beef will suddenly be imposed on Canadian beef.
1 out of every 9 jobs in Canada is in the agricultural sector. By April 30th, many of those Canadian workers will have lost their jobs. Farms and ranches will go bankrupt very quickly because they can no longer afford to sell their products in America. The sector that produces Canada’s food will grind to a halt. It will be so bad for their economy that Canadian people will be stopping by Justin Trudeau’s house with pitchforks and torches, demanding that he cut a new trade deal with America.
By May 1st, Canada will come groveling back to President Trump just like Vladimir Zelensky—the other guy who F’ed Around and Found Out this week.
Will there be some short-term food inflation in America because of this mini trade war? Unlikely. But even if it does, America has a lot more runway in this fight before it starts to dramatically impact our economy. That’s because of the trade deficit. Canada can only hold out for a few weeks before they’re hit with crippling job losses, runaway inflation, and impoverishment.
They’re going to come crawling back and begging for a new deal and do you know what we’re going to say when that happens?
Trump was right again.
