Canada Implements Retaliatory Tariffs on U.S. Goods Amid Trade Dispute
Tariffs Are Taxes Without Trial
When rulers tax cross‑border trade by tweet and counter‑tax in rage, they cease to govern by known law and begin to play at arbitrary power over other men’s livelihoods.
I read that in late August the president of the United States ordered new tariffs, some as high as fifty per cent, on Canadian goods such as dairy, alcohol, hockey sticks and perfume; that these measures cover some twenty billions of dollars in imports; that he has also threatened to stop the sale of Canadian aircraft in his country, and has publicly denounced Canada’s exchange rate as “unacceptable”. I read in turn that the Canadian government has answered with “dollar‑for‑dollar” tariffs, ranging from fifteen to fifty per cent, on hundreds of American products, and that both sides speak now of a trade war. The words are modern; the pattern is very old.
In the Second Treatise of Government, when I defined political power as a right to make laws with penalties of death and lesser pains for the regulation of property only for the public good, I had in view plain inland taxes and conscriptions, not these elaborate engines of international commerce; but the principle does not change because the theatre is wider. A tariff is a tax under another name. It takes from merchants, producers, and consumers a portion of their estates by the force of law, not for a service they chose to purchase, but because the magistrate so wills. Such a power can be just, but only if those on whom it falls could reasonably be supposed to have consented to it for their preservation, and only if it is employed by known rules for that end.
I observe here instead sudden increases to fifty per cent on selected trades, timed to the minute of 12.01 in the morning, announced in the heat of public messages, and answered not by reasoned negotiation but by retaliatory duties said to be “dollar‑for‑dollar”. This looks less like the calm administration of a standing rule and more like the exchange of blows. When one side declares another’s exchange rate “unacceptable” and threatens particular companies by name, it does not reason with its neighbours as with free and equal partners, but speaks as if it held dominion over their choices. When the other side boasts that its counter‑tariffs will match the injury item for item, it does not chiefly inquire what best serves its own people’s long‑term livelihoods, but what will hurt the other nation most. Who, in all this, considers first the butcher, the brewer, the dairy farmer, the worker in steel or paper, whose property and liberty of trade are the very stuff being played with?
Because I take all men to be by nature free, equal and independent, I have always placed the burden of proof on power, not on liberty. The magistrate who would restrain a man from selling his goods to a willing buyer in a neighbouring country, or who would raise the price of that exchange by great impositions, must show that this restraint and this taking are necessary for the preservation of the whole and that those burdened either expressly consented, or at least tacitly consented by living under a constitution that assigns such powers on terms they could approve. Here I see only that the tariffs respond to previous tariffs, that each is styled a retaliation, and that there is much talk of “cost” and of shifting trade elsewhere. I do not see, in the reports before me, any clear demonstration that these sudden duties are the least injurious means to a necessary public end, rather than instruments of pressure in a quarrel between governments.
Some will say that, though individuals suffer, such sharp measures are a prerogative of the executive, needed to defend the nation’s industry against unfair dealings abroad, and to gain better terms for the future; and I admit there is here a serious claim. In my time I allowed that there is a power of prerogative, whereby the ruler may act for the public good without a law, or even against the letter of one, when urgent necessity leaves no time for the ordinary remedy. But I added that this power is tolerable only so long as it is manifestly employed for the people’s benefit and remains revocable by them. Where extraordinary discretion hardens into a way of rule, where private judgments about “unacceptable” exchange rates or particular companies are enforced by massive economic penalties on multitudes who never had a hearing, prerogative turns into arbitrary power. Then the magistrate becomes judge in his own case, and the subjects have no impartial judge to appeal to.
It is no answer to say that the other country may answer in kind, for that merely doubles the wrong. Nor is it enough to reply that the people voted for rulers who spoke of tariffs; a vague approbation of firmness in bargaining is not a blank cheque for any measure that can be labelled “trade defence”. When the legislators or those who wield power in their stead employ taxes and restraints not as stable instruments of a known commercial policy, debated and settled under the eyes of those who must pay, but as sudden weapons in a contest of indignations, they put at hazard the very trust on which their authority rests. If, as I wrote in the chapter on dissolution of government, legislators who invade the property of the people and set up their own arbitrary wills in place of law thereby rebel against the people, then a long train of such abuses in economic matters may work the same mischief as more open assaults on life and liberty.
Yet I would not have every merchant who loses a contract, or every worker displaced by a retaliatory duty, think himself justified in taking up a private war. The law of nature teaches both that no one ought to harm another in his life, health, liberty, or possessions, and that great changes in government answer only to great and settled designs of mischief, not to every single grievance. The proper resistance here is first in the understanding and the voice: to demand of one’s own rulers that they submit these policies to the ordinary legislative process, that they justify them by public reasons directed to the common good, and that they bind themselves by rules known beforehand rather than by sudden decrees. The dissolution of a particular commercial arrangement between nations is not the dissolution of civil society itself; peoples can change the terms on which they trade, or even the hands that manage that trade, without falling into chaos. But they will do so safely only if they remember that governments hold the power of the customs‑house on trust, and that to play at war with tariffs is, very often, to make war upon their own.
From the works cited
- Second Treatise of Government — Political power defined narrowly as the right to make laws, with penalties, only for the public good — anything beyond that definition must justify itself or stand condemned.
- Second Treatise of Government — The state of nature as analytic baseline: perfect freedom and equality under the law of nature, so that government must be shown to improve on that baseline for everyone who leaves it.
- Second Treatise of Government — Dissolution of government and the right of resistance: when legislators invade property or set up arbitrary power, they rebel against the people, not the people against them.