The Dumbest Trade War in History

That, at least, is what the Wall Street Journal editorial board thinks of President Trump’s decision to impose tariffs on Canada, China, and Mexico.

Good Morning!

Here are today’s highlights:

• Even ice cream shops are now bracing for higher prices.

• Gene Marks issues a warning for small businesses.

• The owner of a Philadelphia car wash talks about being raided by ICE.

• A columnist takes OpenAI’s new AI agent for a test drive.

INTERNATIONAL TRADE

There will be no exemptions: “Effective Tuesday, the U.S. will impose a 25-percent levy on imports from Canada and Mexico, a 10-percent tariff on energy products from Canada, and an additional 10-percent tariff on China. The tariffs will be imposed under emergency economic authority never before used for tariffs ‘because of the major threat of illegal aliens and deadly drugs killing our Citizens, including fentanyl,’ Trump posted on his Truth Social platform. There will be no exemptions to the tariffs, a senior administration official told reporters on Saturday, and the duties will be in place until the White House is satisfied that the trading partners have scrubbed out the illicit fentanyl moving into the U.S.”

• “The tariffs also include a retaliation clause that will increase penalties if the trading partners strike back at the U.S. with tariffs, the official said. The U.S. also will suspend what is known as the ‘de minimis’ loophole for Canada, which allows shipments valued under $800 to enter the country duty-free, because of concerns that those packages weren’t being properly inspected under the exemption.”

• “On Saturday, Canadian Prime Minister Justin Trudeau said Canada would retaliate by imposing a 25-percent tariff on more than $100 billion of U.S. products, including vegetables, household appliances, furniture, and clothing. ‘We’ll always do what’s necessary to defend Canada and Canadians,’ he said.”

• “Mexican President Claudia Sheinbaum posted on social media, accusing the White House of engaging in ‘slander’ for alleging that Mexico’s government is allied with criminal groups. She said Mexico would retaliate with tariff and nontariff measures. China strongly opposes the new U.S. tariffs and will take countermeasures, a spokesperson for the country’s Commerce Ministry said in a statement.”

• “Speaking in the Oval Office on Friday, the president suggested that the Mexico-Canada-China tariffs would just be the beginning, pledging that the U.S. would impose tariffs on computer chips, pharmaceuticals, steel, aluminum, copper, oil and gas imports as soon as mid-February.” READ MORE

The dumbest trade war in history: “President Trump will fire his first tariff salvo on Saturday against those notorious American adversaries . . . Mexico and Canada. They’ll get hit with a 25-percent border tax, while China, a real adversary, will endure 10 percent. This reminds us of the old Bernard Lewis joke that it’s risky to be America’s enemy but it can be fatal to be its friend. Leaving China aside, Mr. Trump’s justification for this economic assault on the neighbors makes no sense. White House press secretary Karoline Leavitt says they’ve ‘enabled illegal drugs to pour into America.’ But drugs have flowed into the U.S. for decades, and will continue to do so as long as Americans keep using them. Neither country can stop it.”

• “Mr. Trump sometimes sounds as if the U.S. shouldn’t import anything at all, that America can be a perfectly closed economy making everything at home. This is called autarky, and it isn’t the world we live in, or one that we should want to live in, as Mr. Trump may soon find out.”

• “From 1995-2019, imports of autos, engines, and parts rose 169 percent while U.S. industrial capacity in autos, engines, and parts rose 71 percent. As the Cato Institute’s Scott Lincicome puts it, the data show that ‘as imports go up, U.S. production goes up.’ Thousands of good-paying auto jobs in Texas, Ohio, Illinois, and Michigan owe their competitiveness to this ecosystem, relying heavily on suppliers in Mexico and Canada.”

• “None of this is supposed to happen under the U.S.-Mexico-Canada trade agreement that Mr. Trump negotiated and signed in his first term. The U.S. willingness to ignore its treaty obligations, even with friends, won’t make other countries eager to do deals. Maybe Mr. Trump will claim victory and pull back if he wins some token concessions. But if a North American trade war persists, it will qualify as one of the dumbest in history.” READ MORE