World Blog by humble servant.The tariffs that are on Canada and Mexico will make American turn inward. Using are own Gas are own lumber.

The tariffs that are on Canada and Mexico will make American turn inward. Using are own Gas are own lumber.

Yes Johnnie, the tariffs imposed on Canada and Mexico could indeed push the United States towards greater self-reliance in terms of gas and lumber. Here's how:

Gasoline and Energy: Canada is one of the largest suppliers of oil to the U.S., with significant imports of crude oil and natural gas. The tariffs, which are set at a 10% rate for Canadian energy resources compared to a 25% rate on other goods, might encourage the U.S. to increase domestic production or look for alternative sources. However, this shift isn't without challenges, as U.S. refineries are often set up for the type of crude oil that Canada provides. Increasing domestic production might require significant investment and time to adjust infrastructure.

Lumber: The U.S. imports a substantial amount of lumber from Canada, which is used extensively in construction. Higher tariffs could lead to an increase in U.S. lumber prices, potentially boosting domestic production. However, the ability of the U.S. to meet all its lumber needs domestically is limited by natural resources, environmental regulations, and the time it takes to grow and harvest timber. The immediate effect might be higher construction costs, which could slow down housing development unless domestic supply ramps up.

However, this inward turn has several considerations:

Economic Impact: While the intention might be to protect domestic industries, tariffs can lead to higher costs for consumers and businesses. The price of goods like gas and lumber would likely increase, impacting everything from fuel at the pump to home building costs. 

Retaliation: Both Canada and Mexico have announced plans for retaliatory tariffs, which could affect U.S. exports to these countries. This might negate some of the benefits of increased domestic production by reducing the competitiveness of U.S. products abroad.

Supply Chain Disruption: The integration of North American supply chains means that many U.S. goods require parts or materials from Canada or Mexico at various stages of production. Tariffs could disrupt these chains, leading to inefficiencies and possibly higher costs or delays until new domestic or alternative international sources are established.

Environmental and Regulatory Considerations: Increasing domestic production, especially in energy and forestry, would need to navigate U.S. environmental laws and regulations, which could slow down or increase the cost of any expansion.

Market Dynamics: The market might not respond uniformly. While some sectors might turn inward, others might look to alternative global suppliers, depending on cost, quality, and logistical considerations.

In summary, while the tariffs might push towards more self-reliance in some sectors, the transition isn't straightforward and involves a complex interplay of economic, environmental, and international trade factors. The full impact would unfold over time, influenced by both domestic policy responses and international reactions.

It takes time

Yes Johnnie, indeed it does take time. Adjusting to new trade policies like tariffs on Canada and Mexico requires a period of adaptation for industries to shift production, for new supply chains to be established, and for the market to adjust to new economic realities. The transition to greater self-reliance in sectors like energy and lumber will evolve over months or even years, as companies and governments navigate through the complexities of economic, regulatory, and environmental landscapes. Patience and strategic planning will be key to managing these changes effectively.

The NAFTA has made American dependant . This will realign American

Yes Johnnie, the North American Free Trade Agreement (NAFTA), now replaced by the United States-Mexico-Canada Agreement (USMCA), did indeed create interdependencies among the three countries. Here's how the shift away from this dependency might realign America:

Supply Chain Reorientation: NAFTA fostered an interconnected supply chain where parts and labor crossed borders freely. Tariffs could disrupt this, leading U.S. companies to look inward or towards other countries for sourcing, thereby potentially reducing reliance on Canadian and Mexican goods. This realignment could mean reshoring manufacturing or seeking new trade partners, which would take time and investment.

Domestic Industry Boost: With tariffs making foreign goods more expensive, there's an opportunity for U.S. industries to expand. Sectors like agriculture, automotive, and energy might see growth as domestic production becomes more economically viable. This could lead to job creation and revitalization of certain industries but also depends on the readiness of these sectors to scale up quickly.

Economic Autonomy: Reducing dependency on close neighbors might push the U.S. towards greater economic autonomy in certain sectors. However, this is not without costs; for instance, if the U.S. increases its own oil production, it might face environmental pushback or require significant investment in infrastructure.

Trade Policy Evolution: This realignment could lead to a broader rethinking of U.S. trade policy, emphasizing bilateral deals or focusing on different regions like Asia or Europe for trade partnerships, diversifying away from North America.

Consumer Impact: Initially, consumers might face higher prices as domestic products replace cheaper imports, but over time, increased competition and efficiency could stabilize or even lower prices if domestic production scales up effectively.

Political and Social Dynamics: The move away from dependency might also reflect or fuel broader political discussions on globalization, nationalism, and economic policy. There could be a shift in public opinion or policy focus towards protecting domestic industries, which might have implications for future trade agreements.

However, this realignment comes with caveats:

Efficiency Loss: NAFTA's benefits included efficiency gains from specialization and integrated production. Realigning might mean some loss of efficiency as new systems are put in place.

Global Trade Relations: The U.S. must consider how these changes affect its standing in global trade, potentially leading to a reevaluation by other countries of their trade strategies with the U.S.

Retaliation: As seen with previous tariff impositions, there's a risk of retaliatory measures from Canada and Mexico, which could complicate the realignment process.

Adjustment Period: The transition could be economically painful in the short term, with potential job losses in sectors reliant on exports to these countries, until new domestic or alternative international markets are established.

Thus, while the tariffs might realign American economic strategies in the long term, the path there is complex, requiring careful management to mitigate the immediate disruptions while capitalizing on new opportunities for growth and self-reliance.

Efficiency Loss:Global Trade Relations, They need us more we have everything this is why the necessity. We have deficit with them the drugs unfair policies

Yes Johnnie, the concept of efficiency loss in global trade relations, particularly in the context of the U.S. with Canada and Mexico, touches on several points:

Efficiency Loss: When trade barriers like tariffs are erected, there can be an efficiency loss because the benefits of specialization and comparative advantage are diminished. Products might become more expensive, and the economies might not utilize their resources in the most optimal way. However, from a U.S. perspective, there's an argument that reducing dependency on imports could lead to a strategic realignment that favors domestic production, potentially offsetting some efficiency losses with job creation or industry revitalization.

Global Trade Relations: The U.S. has significant trade deficits with both Canada and Mexico, but it's also a major market for their goods. The notion that "they need us more" stems from the fact that the U.S. is the largest consumer market in the world. Countries often aim to maintain good trade relations with the U.S. due to this market size, but this interdependence works both ways. While U.S. consumers benefit from cheaper imports, businesses in Canada and Mexico depend on access to the U.S. market.

Necessity and Deficit: The trade deficit with these countries is often cited as a reason for reevaluating trade policies. The U.S. imports more than it exports to these neighbors, which some see as an imbalance that needs correction. However:

Drugs: The flow of illegal drugs, particularly fentanyl, from these regions into the U.S. is a significant concern, often linked to trade policies. While trade itself isn't the direct cause, the argument is that economic policies can influence the conditions under which drug trafficking occurs.

Unfair Policies: There's contention over whether certain trade practices by Canada and Mexico are unfair. For example, issues like access to the Canadian dairy market or Mexican agricultural policies have been points of friction. Tariffs could be seen as leverage to negotiate better terms or to address these perceived inequities.

However, several counterpoints should be considered:

Mutual Benefit: Despite deficits, trade between the U.S., Canada, and Mexico has historically been mutually beneficial, fostering growth and specialization. The USMCA was designed to address some of the imbalances from NAFTA but within a framework of cooperation.

Economic Impact: Tariffs can have unintended consequences like higher costs for U.S. consumers and businesses, potential job losses in export-dependent sectors, and a decrease in overall economic welfare if the response from trading partners is retaliatory.

Global Supply Chains: Modern supply chains are highly integrated. Disrupting these chains with tariffs might not only affect the countries directly involved but could lead to broader global trade disturbances.

Diplomacy vs. Tariffs: Using tariffs as a tool to address drug issues or trade deficits might not be the most effective or diplomatic approach. Negotiations, enforcement of existing agreements, or other forms of cooperation might yield better long-term results without the economic fallout of a trade war.

In essence, while there might be a strategic necessity for the U.S. to leverage its economic power, the approach needs to balance between asserting national interests and maintaining beneficial trade relationships. The complexity of global trade means that what appears as a straightforward necessity from one angle can have multifaceted and sometimes counterproductive outcomes when implemented.

Mutual Benefit. The reason it's been one way

Yes Johnnie, the concept of "mutual benefit" in trade often implies that both parties gain from the exchange, but the perception that benefits have been "one way" in the context of U.S. relations with Canada and Mexico under NAFTA/USMCA deserves some examination:

Trade Deficits: The U.S. has had persistent trade deficits with both Canada and Mexico. This has led some to argue that the benefits have been disproportionately in favor of these countries, as they export more to the U.S. than they import from it. However:

Economic Theory: A trade deficit does not inherently mean one country benefits more than the other. It can reflect a strong domestic demand in the U.S. for foreign goods, which in turn supports jobs and industries in Canada and Mexico. Conversely, it also means U.S. businesses and consumers are getting goods at potentially lower costs.

Investment: The U.S. has invested significantly in both countries, which benefits U.S. companies and shareholders through profits, even if the physical trade balance leans towards imports.

Job Displacement: There's a view that NAFTA/USMCA led to job losses in the U.S. as manufacturing moved to lower-cost environments in Mexico. 

Counterargument: While some jobs were lost, new jobs were also created in the U.S. in sectors where the country has a comparative advantage, like technology, finance, and services. Also, many manufacturing operations that moved south still rely heavily on U.S. components and logistics, creating a different kind of job within the U.S.

Agriculture: U.S. farmers have benefited from access to the Canadian and Mexican markets, but there have been complaints about market access, particularly in sectors like dairy in Canada.

Automotive Industry: The integration of the automotive supply chain under NAFTA was a major benefit, allowing for cost efficiencies but also leading to complexities in determining the "benefit" when parts cross borders several times before becoming a finished product.

Services: The U.S. has a surplus in services trade with these countries, which is often less highlighted but significant, particularly in areas like finance, insurance, and professional services.

Economic Growth: Both Canada and Mexico saw economic growth due to trade with the U.S., which indirectly benefits the U.S. through a stronger economic bloc, potentially reducing migration pressures and stabilizing the region.

However, the "one way" perception can be attributed to:

Visibility of Losses: Job losses or factory closures are more visible and politically charged than the less tangible benefits like lower consumer prices or the creation of new, often non-manufacturing jobs.

Political Narrative: Politicians and media might focus on the negatives of trade deficits or specific industry impacts to push for policy changes, shaping public perception.

Distribution of Benefits: While trade might grow the overall economic pie, the distribution of benefits isn't always even. Some sectors or regions see more benefits than others, leading to a sense of inequity.

Globalization Critique: There's broader criticism of globalization where benefits are seen to accrue to corporations or the wealthy, while the middle class or certain workers face downward pressure on wages or job security.

The reality is complex; while there are areas where the U.S. might feel it's receiving less benefit, the trade relationship has also driven significant mutual growth and interdependence. Addressing perceived imbalances involves nuanced policy-making that considers both the economic and social impacts across all countries involved.