A Wonkish Note on Trade with Canada and Mexico

Why does the U.S. run bilateral deficits? Does it matter?

To subscribers: There’s a lot of noodling around going on behind the scenes of this newsletter — that is, I spend considerable time chasing data and analyses that seem as if they might be relevant. Sometimes these chases lead to dead ends; sometimes they end up reflected in the discussion, but I don’t think readers will be interested in my seeing my homework.

Now and then, however, I’ll do some wonky homework that doesn’t feel like a hot button topic — and these days it’s hard to justify writing about anything that isn’t hot button — but that I think a limited set of readers might find interesting. This is one of those cases. I’m going to make it for paid subscribers only, because I should be offering something for your subscription dollar.

So we’re having a trade war — and even the Wall Street Journal, which normally finds a way to rationalize whatever Trump does, calls it “the dumbest trade war in history.” We have some real trade (and national security) issues with China, but China is getting off lightly; the brunt of Trump’s tariffs will fall instead on Canada and Mexico.