No Retaliatory Tariffs
Last week, the United States imposed tariffs of up to 50% on billions of dollars of Canadian goods.
This came after talks that had initially seemed to be headed in a positive direction broke down, with both sides blaming each other for the failure.
In response to the US tariffs, Mark Carney has announced that the Canadian government is preparing to retaliate with tariffs of its own.
That would be a mistake.
Tariffs are essentially just taxes, paid for by the citizens of the country imposing them.
When the US government puts a tariff on a Canadian product entering the US, the Americans who buy those products pay that tariff.
Similarly, if the Canadian government puts a tariff on a US product entering Canada, the Canadians who buy those products pay that tariff.
Tariffs used to be a very common government policy around the world.
Governments used them as a way to generate revenue while supporting local industries.
The idea was, if importers have to pay a tariff, but local companies don't, then local companies have an advantage.
But economists realized that the harm done to the people of the country that imposes the tariffs actually far outweighs that small benefit to those few industries.
This is especially true when you take into account the fact that those industries are now also having to pay tariffs on many of the inputs they use to make their products, and that their local customers are poorer and can't afford to buy as much of their product.
So, yes, tariffs are a handy way for governments to raise revenue.
But they're not good for citizens or businesses of either country.
That's why, over the years, almost every country has dramatically reduced its use of tariffs and other trade restrictions.
So if Washington makes the mistake of putting up trade barriers, why should Ottawa respond by putting up barriers of its own?
Two wrongs don't make a right.
Imagine someone crashed their car into their own fence.
Would it make any sense for you to respond by crashing your car into your own fence?
Of course not.
Their bad decision doesn't make your bad decision any better.
That's what retaliatory tariffs risk doing.
The United States has made a decision that could hurt American consumers and businesses as well as Canadians.
We shouldn't copy it.
Canada should be taking the opposite approach.
We should be making it easier to trade - not harder.
We should be looking for more customers around the world, not making it more expensive for Canadian businesses to buy the goods and materials they need.
We should be reducing barriers to trade, not adding new ones.
Canadians need more trade, not a trade war
Canada is a trading country.
The answer to American protectionism shouldn't be Canadian protectionism.
If the United States wants to make trade more difficult, Canada should make the case for more free trade, not join the race to build higher walls.
Don't punish Canadians to send a message to Washington
Retaliatory tariffs may make for a good headline.
They may allow politicians to say they are "standing up" for Canada.
But the real question is simple:
Do retaliatory tariffs make Canadians better off?
If they don't, why impose them?
Canada shouldn't make Canadian businesses and consumers pay higher prices simply to demonstrate that Ottawa is willing to retaliate.
The goal should be to get trade flowing again.
Instead of escalating a tariff war, Canada should be pursuing new trade agreements and removing unnecessary barriers to doing business.
Don't shoot ourselves in the foot because someone else did.
Don't make Canadian businesses pay more because Washington made a bad decision.
Don't turn a dispute with the United States into a broader trade war that leaves Canadian consumers and businesses footing the bill.
The Government of Canada must reject retaliatory tariffs and pursue free trade instead.
If you agree, please sign our petition for No Retaliatory Tariffs.
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