By Walter E. Block
Before we answer the question, let us give some evidence of the accuracy of this description. He calls tariffs “the most beautiful word in the English language.” That alone in and all by itself ought to establish him beyond doubt as belonging in the loony bin of economics. Trade is necessarily mutually beneficial at least in the ex ante sense and almost always ex post as well.
Jones engages in barter with Smith. The former gives to the latter a shirt, the latter offers the former a tie. If Jones did not prefer Smith’s tie to his own shirt, he would scarcely have agreed to the deal. Ditto the other way around. This holds true whether the two of them live in the same country, the same province or the same town. Tariffs reduce trade opportunities of this sort, so they necessarily reduce prosperity. This is so heavily baked into economics 101, that one of the greatest dismal scientist who has ever lived, Thomas Sowell, characterized support for tariffs as “beneath contempt.”
Ok, ok, Trump has recently gone berserk with his interferences of international trade for a change. How should Canada react? There are four and only four realistic options (I rule out physically attacking the US over this imbecilic action of their government).
One, do nothing, stand pat, ignore this latest moronic display of economic ignorance. Two, raise our tariff levels against the US; Trump threatens that if we do so, he will reciprocate, and then we will be off to the races with a real trade war. Three, lower the barriers to trade with the US that we have previously enacted. Four, eliminate them entirely.
Before answering, consider the following. There are two men in a wooden rowboat, and one of them shoots a hole in the bottom of this vessel. The water starts to seep in. If the saner of the two of them wants to maximize utility, should he shoot a second hole in the boat, allowing even more water to enter?
The answer is yes and no. (Where oh where are we going to get a two handed economist, who doesn’t say on the one hand this, on the other hand that? Not here, thank you very much). The “no” answer is obvious. If the boat takes in too much water, it will capsize, and both passengers will drown. What about “yes”? This too, can be defended. If the second man thinks that his maniacal fellow passenger will keep shooting holes in the boat unless he does so, then a second hole is justified. Better that than turning the bottom of this conveyance into a veritable Swiss cheese.
Sorry, there is no clear answer emanating from the discipline of economics to this query. It is, rather, a matter of strategy and tactics. If Canada thinks that a trade war, shooting a second hole in the boat will bring Trump to his feeble senses, then, yes, shoot a second hold by all means; engage in a trade war with this nutcase. My own gut feeling is that this is a bad strategy, so I recommend against the second option a trade war. Not all bullies are also cowards, and I think this applies to the present President of the US who is a lunatic on this issue.
What about the first option, doing nothing? Should we let the intimidator get his way? All I can say in favor of this choice is that it beats an escalation of tariffs.
In my humble opinion, and you had better be sitting down now while you read this because you are not going to like what I have to say, is to lower our tariffs, even better, eliminate them entirely. No more “taking off the gloves” and fighting this fanatic.
No, I have not entirely lost my marbles. The case for full free trade is virtually an article of faith among economists. It is based upon a long history of empirical evidence and irrefutable logic. (For a hint of the latter, see Smith and Jones above).
If we want to be the proverbial adult in the room, then we should start acting like one. What better way to embarrass this economic illiterate (I don’t really blame the Donald; he probably never had an econ 101 course; instead, I hold his PhD advisors responsible. We really ought to have a recall for them, and they be stripped of this prestigious degree) than by eliminating all tariffs, not only against the US, but which impact any nation on the planet. (You say you have a fondness for tariffs; ok, I am nothing but a world class compromiser. You can have a tariff against the Martians, with my blessing).
And for goodness sakes, while we are on the subject, eliminate all intra Canadian tariffs forthwith, and sow salt where once they stood. They make this country a laughing stock. One of the reasons the US is so prosperous (Canadian per capita GDP is lower than most US states; if inducted into the US, Ontario would be fifth-poorest, Quebec the second-poorest, U.S. state) is because the country to the south of us boasts a gigantic free trade area. There is no tariff interfering with trade between Commiefornia and Florida, between Louisiana and Montana, no between any other US states.
Pegs:
Trump calls tariffs “the most beautiful word in the English language” https://www.npr.org/2025/04/09/nx-s1-5355661/tariffs-history-meaning
Sowell tariffs beneath contempt
https://www.wsj.com/opinion/why-bad-economics-thrives-thomas-sowell-trade-3b6b0863
Ontario Would Be Fifth-Poorest, Quebec Second-Poorest, U.S. State
https://www.nationalreview.com/corner/ontario-would-be-fifth-poorest-quebec-second-poorest-u-s-state
