September 01, 2018
Donald Trump is very confused about trade and it seems the confusion has spread to the NYT. Its article on the trade negotiations between the United States and Canada told readers that Trump is threatening with tariffs on the cars it exports to the United States.
Canada doesn’t pay tariffs on cars exported to the United States. The companies that import the cars to the United States would be the ones that pay the tariffs. This would primarily be Ford and General Motors, although there may also be some foreign auto companies that bring cars in from Canada.
In Trump World, it seems that trade is a battle between countries, with the ones that have the largest trade surplus being the winners. In reality, many US corporations have benefited hugely from the imports that have been associated with the U.S. trade deficit. They have taken advantage of lower cost labor (not really true in Canada) in other countries to reduce costs.
The basic story is that trade is about class, not country. Our patterns of trade were put in place to redistribute income upward.
When Trump threatens to disrupt the patterns of trade established over the last quarter century he is most immediately threatening US corporations. While there may also be some negative effects for workers in other countries, the direct targets are US corporations. Trump may not understand this fact, but the NYT should.
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