35% of 
's GDP is exports to 
1.2% of 's GDP is exports to
22% of 
's GDP is exports to
1.5% of 's GDP is exports to
We literally have all of the leverage
These numbers probably fluctuate some from year to year, but the reality is the the US can likely outlast both Canada and Mexico in terms of trade. Worst case for them is that we develop other sources for products and simply move on. Why is no one complaining about the tariffs Canada imposes?
4 comments:
That final question can be said to be the basis of Trump's use of tariffs. Indeed, he's said as much, that other nations are not treating us as they demand we treat them on the issue of trade. I think Trump has proven he has a far better understanding of tariffs and when to use them than too many feel comfortable in conceding.
IMO that's a whole other deal. Trump is trying to use tariffs to change behavior, not for economic reasons.
It's literally impossible to completely replace income taxes with tariff revenue, and irresponsible to suggest that we can. But can we use tariffs to encourage nations to change policy? We can try. In this case, tariffs (ignoring the high tariffs Canada and Mexico already impose) will likely hurt them more that they do us.
I don't know that we can't replace income taxes with tariff revenues, especially since that's how our government was once funded. But to say we can't must consider how much unnecessary spending has been routine, and until only what's necessary is spent can we consider alternatives to the income tax. For now, I think we must concentrate on eliminating as much spending as possible, use the savings to pay down the debt, and then see where we stand. Some of that paying down will come from reduced tax rates and regulation as well. Maybe someday, we can eliminate income taxes in favor of some other method, but I wonder if our wallets would recognize the difference.
I saw the numbers the other day and unless we massively expand out exports (increase by more than 1 trillion) or massively cut spending, the math just doesn't work. Especially if the tariffs start to push consumers to by US made goods instead of foreign or push foreign countries to invest in the US to avoid the tariffs.
That's the problem with Trump's tariff rationale. He's using tariffs to drive behavior changes in other countries/companies/consumers, yet those changes with lower the amount of revenue produced by tariffs.
I'm not saying that tariffs are bad or that Trump shouldn't be doing what he's doing, but I am saying that the chances of replacing income taxes with tariffs is tiny.
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