Tariffs Hurt Canadians and Americans

Am I subsidizing Safeway? Why would I ask? Here’s why. My wife and I spend at least $400 a month at Safeway. Safeway doesn’t buy anything from us. So, our monthly trade deficit with Safeway is at least $400. And, in Trump’s view of the world, a trade deficit equals a subsidy. By Trump’s reasoning, yes, I am subsidizing Safeway.

This sounds ridiculous. It is. But it’s no more ridiculous than Trump’s claim that Americans are subsidizing Canadians. When you spend more on someone’s goods than that someone spends on your goods, there’s no subsidy involved. The fact that the spending occurs across borders doesn’t change that fact.

And that fact makes Trump’s proposed tariffs on Canadian goods and services all the more tragic.

This is from David R. Henderson, “Tariffs Will Hurt Canadians and Americans Alike,” Defining Ideas, December 19, 2024.

Read the whole thing. It is unusually long–about 2,500 words.

Shout out to Don Boudreaux, who looked at an earlier draft and gave good comments.