We Have a “Trade Deficit” with Canada

And Why that’s a Good Thing

If I build a house in America and go back and look at how much it cost me, I’m going to see that I spent a lot of money at Lowe’s. On a microeconomic scale, it will look like I have a “trade deficit” with Lowe’s. I have given them a lot of money, and what have they given me in return? Some products? Why didn’t Lowe’s buy anything from me? That doesn’t seem fair, right?

So, should I demand that Lowe’s make everything more expensive so I’m less likely to buy it?

That’s absurd, right?

Right?

Please tell me that you understand how absurd that is.

That’s the Canadian tariffs in a nutshell.

Most of Canada's exports to the US are raw materials and unfinished goods. They sell us car parts, we make them into cars. They sell us oil, and we make it into gasoline. They sell us timber; we make it into homes. I cannot stress how much this is a good thing. We can’t just magically create more forests, oil wells, and car parts.

Now everyone is thinking, “Yes, we can! We can make anything Canada can make!” Well, sometimes, yes, but there are some nuances.

First, there are legal restrictions around trademarks, patents, and copyrights. We don’t want to bend those rules, as America profits immensely from intellectual property protections. So, sometimes, we can’t legally make the products we import. Harvard uses a…