Canada

As Canada, Mexico, and the E.U. Respond to Trump’s Tariffs, Actions Speak Louder Than Words

Justin Trudeau and others condemn Trump's protectionist tactics, then respond with protectionism of their own.

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Sean Kilpatrick/ZUMA Press/Newscom

Within hours of President Donald Trump's declaration last week that the United States will begin imposing steel and aluminum tariffs on Canada, Mexico, and the European Union, leaders of those countries offered sharp criticisms of Trump's protectionism and defended the importance of free trade.

Those remarks stand in sharp contrast to the actions those same leaders have taken in response to Trump's tariffs.

"The government of Canada is confident that shared values, geography and common interests will ultimately overcome protectionism," Canadian Prime Minister Justin Trudeau proclaimed. Then he took steps to impose a 25 percent tariff on American steel and a 10 percent tariff on several other American goods, including maple syrup, whiskey, and various aluminum products, effective July 1.

The Mexican government's statement was equally high-minded: "Mexico reiterates its position against protectionist measures that affect and distort international commerce in goods." Its actions, meanwhile, were equally irreconcilable with that anti-protectionist rhetoric: It announced new tariffs on American steel and various food items, including pork and bourbon.

The European Union—whose foreign policy chief, Federica Mogherini, promised "no protectionism" back in March—now promising $7.5 billion's worth of tariffs on various American goods beginning June 20.

Trump could damage the American economy by leading the country into a trade war with some of its top allies and trading partners, but those other countries' responses are self-destructive too. America may be shielding itself from greater competition and lower consumer prices, but that doesn't mean that the E.U., Canada, and Mexico should do the same.

Free trade is beneficial even when it's unilateral, points out Veronique de Rugy, a senior research fellow at the Mercatus Center (and a Reason columnist).

"The only argument for retaliation is to remind the world that trade wars are neither painless nor easy to win, but it is going to be a high price to pay," she says. "The thing that people don't seem to understand is that, based on the studies out there, when you retaliate, you take a policy measure that hurts your own people, with no exceptions." Through their retaliation, these governments are forcing their citizens to pay higher prices for the same goods and services. They'd be better off if they abandoned the absurd games of tit-for-tat that have long dominated trade policy, and instead embraced the prosperity that comes from genuinely open trade over national frontiers.

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19 responses to “As Canada, Mexico, and the E.U. Respond to Trump’s Tariffs, Actions Speak Louder Than Words

  1. Question about trade wars being good and easy to win: is this true for all countries that engage in trade wars or just the US? Because with everyone throwing out their own tarrifs in response to Trump, I don’t know how we’re going to handle all the #winning.

    1. Winning? You should be bored of that by now.

  2. You can’t fault the Canadians, Europeans, and Mexicans for responding to tariffs in-kind. I understand the point being made, but it’s politically unpalatable.

    Also, we should stop pretending like the EU didn’t already have tariffs levied against American goods. “Managed trade” deals masquerading as “free trade” are worse than tariffs, because it legitimizes the cronyism inherent in these deals.

    1. I agree with you there. Don’t let perfection be the enemy of good, but also don’t let good enough keey you from seeking better.

      1. I reread my answer and it feels like I responded to a different question. Don’t get sick! It never ends well.

        What I meant was we had these trade deals, which was often called Free Trade, and probably was better than nothing. But I think over time we became so satisfied with them that they became what people thought of as the ideal of free trade, rather than a concession to having achieved true free trade.

      2. I don’t understand why NAFTA is seen as some kind of sacrosanct document. It should be renegotiated. But, probably not in the manner that President Trump would like.

        1. Yes. In particular I think there is danger in it having become nearly synonymous with free trade. It’s a fairly complex system of agreements between several nations. Maybe it’s freer, but it’s still full of government meddling.

    2. “Mexico reiterates its position against protectionist measures that affect and distort international commerce in goods.”

      How can anyone read this without laughing? Mexico opposes protectionism? Woah- if true!

    3. I’ve actually seen the reverse quite a bit more often – the blatant cronyism epidemic in managed trade deals ends up getting used to bludgeon the whole idea of free trade.

      1. Like when people point to bank bailouts and say “look at what capitalism did”. And that’s the problem with treating managed trade deals as the greatest thing since sliced bread. Your whole argument collapses along with the pieces of paper that you hold up as some kind of divine providence.

        NAFTA and the EU deserve criticism from a free trade perspective.

        1. Exactly. “No, it’s totally free trade, it says so right in the name!”

          1. ^this new guy gets it!

  3. I’m no big-city international economist, but Trudeau is out of his league in virtually all arenas…maybe ballet

  4. If Trump is posting 4D chess with his interfere tariffs, then Mexico must be playing 5D chess. Their tariffs are mostly targeted at Trump’s Republican base, especially rural areas, in an attempt to pressure his administration.

    1. Meddlers!

  5. Not every law is bad you know

  6. In a free market H & B Clinton got $250,000 for a speech. Now, with Trump tariffs, H & B Clinton get $25,000 for a speech.

  7. None of this mean shit without showing the trade barriers in place *prior* to Trump’s retaliatory tariff.

    What were the trade barriers before?
    What are they now?

    That will tell us which countries are *actually* more in favor of free trade.

  8. This is rich! I find it hilarious that all these countries around the world say “Waaaaah! Don’t put tariffs on our products! Protectionism is bad!”

    When Trump has offered to NOT put tariffs on anything, if they simply lower their outrageously high tariffs they have on our goods. Yet not a one of them has taken this deal… I wonder why that is since they’re such anti-protectionism crusaders!?

    It’s so ridiculous. I honestly think Trump should just pick a country that relies on importing to the USA and send them into a depression to make the point that we won’t tolerate this one sided shit anymore. Just DESTROY an entire nations economy for fun, and then watch all the others STFU and start dropping their barriers. Then we can have ACTUAL free trade.

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