Such a powerful neighbor | Addictive, Trump’s customs duties?

Donald Trump’s most recent decisions in terms of international trade make you dizzy? It’s normal. The waltz of customs duties has accelerated a little more in the United States last week.

New customs duties have entered into force on exports of dozens of countries. And the impact is major. It is estimated that the average rate on products imported by the United States should now oscillate around 20 %.

To give you an idea of the historical character of what is happening, this rate has never been so high since the 1930s.

Is it just an anomaly, derived from a temporary fad of Donald Trump?

Is it also heresy, as several economists support it?

What if it was actually … the new reality?

A reality to which Canada and the other trade partners in the United States will probably have to get used to it, even if it is unfair.

At the risk of getting your back coffee swallowing, know that many believe today that these customs duties will not disappear anytime soon.

The possible successors of Donald Trump might want to keep them. And maybe even the Democrats!

The American government could downright develop an “addiction” to customs duties, suggested a recent analysis published by the New York Times ^⁠1.

How is it possible?

Already, as Donald Trump pointed out, “billions of dollars in tributary customs rights” in government chests.

“Revenues from taxes received on imported goods” reported to the federal state 152 billion US in the first six months of the year, said the New York Times. A year earlier, for the same period, these revenues amounted only to 78 billion US.

And this is only the beginning.

The customs duties that have just entered into force will increase the kitty. And the American president provides for others. Especially on pharmaceutical products and semiconductors.

For an over -indebted state, it is an enticing windfall.

The second variable of this equation is that the Republicans decided to continue to reduce taxes. The sums taken in this way by the federal government will therefore fall more.

In this context, the sums obtained using customs duties become all the more important.

I tested this hypothesis with the associate professor at the Higher School of Public and International Affairs of the University of Ottawa, Patrick Leblond.

He stresses that this law will ensure that some $ 3400 billion will be added to the American deficit over the next 10 years (according to a recent report from the Budget Budget of the US Congress). A colossal sum.

From there will probably establish a vicious circle which will further increase dependence on customs duties, provides Patrick Leblond.

See how logical would be.

In the coming years, the volume of products imported by the United States will surely decrease due to customs duties.

“Because possibly, either companies will produce inside the United States and get their supplies in the United States to circumvent customs duties or will simply abandon the American market,” said the expert.

If the United States imports fewer products, customs duties already in place will generate less and less income.

So, to remedy it, Donald Trump or his successors are likely to have them climbed to generate additional income, thinks Patrick Leblond.

I also discussed the future of customs duties with the Chair’s holder on the new challenges of economic globalization of Laval University, Richard Ouellet.

He is hardly more optimistic.

“It is a reasoning at the [William] McKinley, the former American president who thought we could fill the US government chests with customs duties because the United States of the time became the major import market, “he added.

We are talking about American protectionism from the end of the 19th century^e century.

However, for Americans, the problem … is that we no longer live in the 19th century^e century.

The trade partners of the United States can now, much more easily than in the past, go to be seen elsewhere.

Richard Ouellet evokes, for example, the possible development of “partnerships towards economic opponents such as China and India”. Which, geopolitically, would be very bad news for Washington.

It is important to mention, too, that many economists continue to believe that in the medium term, inflation will necessarily increase significantly in the United States due to customs duties. And that, more broadly, the American economy will feel it.

But so far, the announced disaster has not taken place.

Even that the American president has managed to obtain concessions from certain allies – and not just any – such as the European Union and Japan.

Donald Trump therefore made those who laughed at him, a few weeks ago, by dealing with Taco on the issue of customs duties.

This nickname meant “Trump Always Chickens Out”, because the president was still dumbstanding.

This is no longer the case.

Allow me humbly to suggest a new acronym, which corresponds more to today’s reality: TFSDT.

Because in matters of customs duties, “Trump brought the toothpaste out of the tube”.

This is very bad news for the business partners of the Americans, because it could be very difficult to hand it over.

1. Read the analysis of New York Times (in English; subscription required)

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