The tariff as blunt instrument

The BBC reports that President Trump has threatened new tariffs against Canada on the grounds that wildfires are sending what he describes as 'filthy' air across the border into American cities, and that Canadian Prime Minister Mark Carney has answered that both nations bear equal responsibility for the climate conditions driving those fires. I will leave the atmospheric science to those equipped for it. What I am equipped to address is the reach for the tariff — because that reach reveals a habit of mind I spent a considerable portion of my life arguing against.

The tariff, as I described it in The Wealth of Nations, is at its most defensible a revenue instrument or, in carefully bounded cases, a temporary encouragement to an infant industry of genuine national importance. At its least defensible, it is a weapon wielded by the sovereign on behalf of a narrow domestic producer interest, at the direct expense of the consumer who pays higher prices for the restricted good. What it has never been — what it cannot logically be — is a remedy for a shared environmental condition that no act of commerce produced and no act of trade restriction can cure. Smoke does not respect a schedule of duties.

There is something worth naming plainly here. When a government reaches for the tariff in response to a wildfire, it is not engaging in trade policy; it is performing displeasure. The threat substitutes the appearance of action for the substance of it. The consumer on both sides of the border pays the real cost of any tariff that follows, through higher prices on Canadian goods — lumber, energy, agricultural products — while the smoke continues its passage unmolested by any customs officer.

The deeper principle, one I hold to be as durable as any in political economy, is that exchange between nations is not a competition in which one party wins and the other loses. It is, when conducted under honest rules, a mutual gain. Canada and the United States share a continent, share rivers and airsheds and supply chains so interwoven that the notion of 'winning' a trade dispute against one's largest trading partner is a kind of mercantilist illusion — the same illusion I observed in the chartered companies and corn laws of my own century, dressed now in the language of national strength.

Mark Carney, as reported by the BBC, is correct that shared environmental challenges require shared responsibility. That is, at its root, an institutional claim — and institutional claims are the ones I find most worth attending to. The question is not which nation is to blame for the smoke, but what framework of agreement, law, and mutual obligation can address a problem that neither sovereign can solve alone. Tariffs dissolve such frameworks; they do not build them. If the air between two nations is to be made cleaner, the instrument is cooperation, not restriction — and the failure to see this marks not strength, but a poverty of political imagination.

I will note, as inference rather than recollection, that this pattern — reaching for the trade lever when a diplomatic or environmental instrument is required — is not new to any era. What is required is the institutional honesty to name the problem correctly before choosing the remedy. A wildfire is not a trade violation. The consumer, as ever, will pay for the confusion.