Fast and Furious Trade War

 Fast and Furious Trade War

I do not know what the ultimate strategy happens to be for the Trump administration.  Yet it seems that his team has truly bought into stupid.  The tariff concept is easy to describe and even understand but it also happens to be wrong.  all trade is natuarally bilateral between two principals of which the government is best excluded except to charge a minimal tax which is always minimal because none of the heavy lifting ever falls back on the governemt.

Quite simply, the lower the impost, the more traffic is generated.  Let us imagine tarrifing marriage licenses.  That would obviously be silly  Now do any of these tarrifs pass that test.  As said, stupid is what you produce.. and economic contraction.

Now understand that what Canada has done is to accept the tariff regime.  Two terrible things have already happened or will happen.  all those charges bounce right back on USA customers at the super high level which will now force massive layoffs and general shutdowns.  And it is almost impossible to replace aluminium.

The second thing is that they have diverted a significant percentage of targeted commodities to Europe, asia and elsewhere which tightens future supply in te USA.  Recall just in time manufactuing?  This could not be worse and going back may well take decades.  A ten percent shift, and we are already there obviously puts everyone in the USA on rationing.  and oh, you are no longer a preferred customer..

The real surprise has been the massive disruption of USA Agriculture where Canada has stolen a march across the board. Guys, having Mexico switch twenty percent of the USA milk export market to Canada should have taken decades. And thanks to port impost fees on Chinese built shipping, it is now cheaper for a farmer to ship product from Ohio to Prince Rupert than to new orleans via the Panama Canal..

These are trends brewing up for decades driven  by geographic advantage that was under optimized and conservative.  Suddenly the script got blown up and suddenly best practise must emerge and the advantage is completely in Canada..

understand all aluminium manufacturing is best placed along the Seaway where the power supply is hydro and massively in surplus supply.  Thanks to this stupid trade War, it will now happen in a hurry.