Donald Trump will blame damage done by his tariffs on foreigners

Since his first stay in the White House, the big shift in Mad King Donald’s thinking on tariffs is not just applying them universally (because the first time, against China, worked so well), but also expanding them from a tool of trade policy to a universal one to achieve any foreign policy goal.

The Biden administration expanded tariffs (or, as the economically literate might call them, taxes on American consumers and businesses) from trade to a tool of strategic containment of China, with DeepSeek demonstrating what a failure that’s been.

For Trump, tariffs are the answer to every problem. Colombia won’t take back migrants? Tariffs. Too much fentanyl coming in from Canada (in fact, it’s minimal)? Tariffs. China too competitive with a declining America? Tariffs.

The result? Higher inflation for Americans, right at the time when the US Federal Reserve has halted its interest rate cuts out of concern that recent progress in reducing inflation has faltered.

And the penny seems to have dropped within MAGAland. Not all Canadian imports will be subject to a 25% tariff — energy imports from Canada will be taxed at 10% instead. As we noted last week, Canada provides about 20% of America’s daily oil consumption, so the tariff will feed straight into higher gasoline prices. Together with Mexico, the two countries provide around 28% of US oil consumption.

A “senior Trump administration official” (as quoted by Reuters and the AP) said the lower rate on energy reflected a desire to minimise disruptive increases on the price of gasoline or utilities and therefore on inflation and voters. But “folks in the Midwest could look forward to spending an extra 20 or 25 cents a gallon,” Reuters quoted one market analyst.

So much for Canada/Mexico/China paying tariffs, not Americans.

Canada may also be able to divert oil into Asian markets — a new pipeline flowing to the West Coast with an additional 590,000 barrels per day capacity opened last year, meaning refiners outside America might be the real winners.

But if the impact on energy prices is more muted, the 25% tariffs on imports of food from Canada and Meixco could be very inflationary. Food imports from both nations totalled more than US$85 billion in 2023. That year, the US bought more than US$45 billion in agricultural products from Mexico — including 63% of all imported vegetables and 47% of fruits and nuts. Farm imports from Canada came to $US40 billion.

Any economic impact on the Canadian and Mexican economies will in turn reduce demand for US exports.

Of course, US agriculture could pick up some of the slack in meeting American consumers’ demand for food — except, who provides labour for US agriculture? Undocumented migrant workers, currently the focus of Trump’s deportation orders, account for more than 40% of the US agricultural workforce. Farm groups have already warned Trump of the impact of his deportations on food supply. Trump administration officials have dismissed the impact as “hypothetical“.

Trump’s order includes a mechanism for the US to escalate the rates charged if there is retaliation by the other countries, raising the spectre of an even more severe economic disruption. Canadian Prime Minister Justin Trudeau immediately responded at the weekend that his country would put matching 25% tariffs on up to US$155 billion in US imports, including alcohol (Canada is the US’s biggest liquor market) and fruit.

The Trump administration is already preparing its defence about subjecting US consumers to a new round of inflation: any price rises will be the fault of foreigners, not Trump’s additional taxes. In MAGAland, everything is the fault of foreigners, even when Trump deliberately wreaks havoc on the long-suffering US consumer.

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