How Should the EU, Mexico, China, and Canada Respond to Trump’s Tariffs?
I have two answers. One idea is radical but it would work.
Answer One: Do nothing
Tariffs are a tax on consumers. So it Trump want to be raise taxes on US consumers, then let him.
And if he wants to make the US an island, them let him. Besides, it’s impossible to negotiate with someone who cannot be trusted to honor any deal he makes.
Vietnam thought Trump agreed to 11 percent tariffs only to discover the deal was really 20 percent.
It’s best to ignore Trump, or perhaps praise him. But offering concessions seems to do nothing but get trump demanding more concessions.
Given tariffs are a tax on consumers, so are tariff retaliations.
If your neighbor blows off his foot, do you really want to do the same?
Answer Two: Retaliate by More than Trump Can Take
This is much easier for China than any other country. Trump deescalated tariffs on China when China blocked rare earth exports.
Mexico and Canada could block exports of auto parts. Canada has oil the US needs.
Mexico provides most of the hospital kits for the US. Blocking those kits would cause shortages and negatively impact patient care. It would also cause delays in treatments and compromise patient safety.
Canada and Mexico are also leading exporters of copper to the US. And Canada is the largest Aluminum exporter to the US.
What If?
The EU is dysfunctional, but what if China, Mexico, and Canada coordinated by shutting down exports of rare earth elements, copper, aluminum, auto parts, oil, and medical kits?
It’s an economic form of MAD, Mutually Assured Destruction. However, in this case, threats don’t work. To achieve the desired result, you actually have to pull the trigger.
CHMCA (China, Mexico, and Canada) could force Trump to put tariffs at zero percent or the US economy would implode.
Trump would fold in one second flat because the US would grind to a halt immediately.
Tariff retaliations are like shooting yourself in the foot with higher taxes. But export controls are another matter because of the speed at which Trump would fold.
Q: On what grounds could nations implement export controls?
A: National security of course
Trump uses that for whatever reasons he wants, so why shouldn’t everyone else?
Related Posts
April 13, 2025: China Halts Rare Earth Exports Desperately Needed by the US
I have been warning about this for years. It’s now happening.
June 5, 2025: Two-TACO Trump Day on His Call to Xi Over Rare Earth Elements
Trump is hyping up his call with China’s Xi. But chalk up 2 more TACOs.
June 12, 2025: China Keeps Leverage on the US with a 6-Month Limit on Rare Earth Exports
Trump’s crowing over a new deal is more hype than reality in 3 ways.
Now, imagine simultaneous shutdown of rare earths, copper, aluminum, auto parts, and medical kits.
This post originated on MishTalk.Com
Thanks for Tuning In!
Mish
