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Happy Sunday.
I want to make a “caveman cheat sheet” overview of what the heck is going on. It’s easy to get caught up in news jargon and misrepresentation of the situation.
I’m writing this strictly focused on empirical outcomes and data, removing as much political coloring as possible.
So lets lay out the facts and have a quick discussion.
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Lets dig in…
The New Tariff Cheat Sheet
(Effective February 4th)
Why Now? Politics vs. Policy
The White House Claims:
Border Security: Stop fentanyl trafficking (Canada is a transit route for U.S.-bound drugs).
Pressure Canada: Force stricter border controls and drug interdiction.
Critics Argue:
Election-Year Politics: Rally protectionist voters ahead of November.
Distraction: Shift focus from domestic inflation (still lingering at 3.4% as of May 2024).
Key Data:
U.S. drug overdose deaths hit 112,000 in 2023, with 70% linked to fentanyl.
Canada accounts for <1% of U.S. fentanyl seizures (DEA data), raising skepticism about the tariff’s true goal.
Key Tariff Rates: Who’s Taxed What?
Country | Tariff Rate | Targeted Goods | U.S. Reliance |
|---|---|---|---|
Canada | 25% (10% on energy) | Lumber, maple syrup, car parts, dairy | 30% of U.S. lumber, 15% of auto parts |
Mexico | 25% (includes energy) | Cars, electronics, oil | 40% of U.S. avocado imports |
China | 10% | Electronics, clothing, appliances | 18% of U.S. consumer goods |
Immediate Consumer Impacts
1. Groceries & Daily Essentials
Maple Syrup: 25% price hike (Canada supplies 85% of U.S. imports).
Cheese & Dairy: Canadian retaliation taxes U.S. cheese (Wisconsin exports $635M/year to Canada).
Avocados: Mexican tariffs could spike prices (already up 30% in 2023 due to climate issues).
2. Gas Prices
Northern States: 10% tariff on Canadian oil → +10–15¢/gallon (Canada supplies 60% of U.S. foreign oil).
Southern States: 25% Mexican oil tariff risks refinery shortages (Mexico provides 10% of U.S. imports).
3. Home Projects
Lumber: 25% cost increase (Canada supplies 30% of U.S. lumber) → $5K–$8K added to new home builds.
Furniture: Domestic brands gain, but IKEA-like imports (reliant on Canadian wood) jump 15–20%.
4. Car Repairs & Purchases
Parts: Canadian-made engines/brakes (used in 50% of GM/Ford vehicles) → repairs cost 15–25% more.
New Cars: Tariffs on parts + retaliatory taxes → $3K–$5K price hike on trucks like Ford F-150.
Jobs & Business Ripple Effects
✅ Winners
U.S. Lumber Mills: Georgia and Oregon mills gain as Canadian wood costs rise (U.S. lumber jobs: 55,000 workers).
Midwest Steel: Tariffs shield plants in Ohio/Pennsylvania (steel prices up 20% → short-term job stability).
❌ Losers
Auto Workers: 25% pricier Canadian parts → Detroit automakers warn of 5–10% production cuts (threatening 12,000 jobs).
Farmers: Canada’s $35B retaliation targets U.S. cheese, pork, soybeans (Wisconsin dairy exports to Canada: $636M/year at risk).
Small Businesses: Border-state companies (MI, WA) face 15–30% cost increases for Canadian supplies.
Canada’s Retaliation: Phased Escalation
Phase | Timing | Targets | Impact |
|---|---|---|---|
1 | Immediate | $35B: Cheese, pork, machinery | Midwest farmers lose $2B/year in exports. |
2 | Feb 21 | $120B: Cars, tech, machinery | Silicon Valley and Detroit face $15B in losses (tech parts, auto assembly). |
Energy Reality Check
Canadian Oil: 10% tariff → U.S. refiners pay more, but Canada has few alternatives (pipelines already built to U.S.).
Mexico’s Oil: 25% tariff → Minimal short-term pain (only 10% of U.S. imports), but risks long-term supply diversification.
Long-Term Outlook
Inflation: Groceries (+4–6%), gas (+5%), and housing (+3%) drive up cost of living.
Trade Wars: China/Mexico likely retaliate (e.g., Mexico taxes U.S. corn; China slows EV parts exports).
Job Market: Net loss of 80,000–100,000 jobs (auto, farming, tech) vs. 15,000 saved (lumber, steel).
TL;DR
Pay More: Gas, groceries, cars, and homes get pricier.
Jobs at Risk: Auto, farming, and tech workers lose; lumber/steel workers gain (temporarily).
Political Theater: Tariffs are less about fentanyl, more about elections.
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Stay curious 🙂
- John
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Note: This article explores academic research findings and is for educational and entertainment purposes only. Nothing in this piece constitutes personalized financial advice. Always conduct your own research and consult qualified professionals for investment decisions.