Paradoxically, tariffs intended to punish China could result in it facing lower duty rates than US allies like Japan or South Korea. This is because China possesses unique retaliatory leverage (e.g., rare earths) to force targeted tariff reductions from the U.S., an option unavailable to other nations.

Instead of immediately passing tariff costs to consumers, US corporations are initially absorbing the shock. They are mitigating the impact by reducing labor costs and accepting lower profitability, which explains the lag between tariff implementation and broad consumer inflation.

The tariff war was not primarily about revenue but a strategic move to create an "artificial negotiating point." By imposing tariffs, the U.S. could then offer reductions in exchange for European countries committing to American technology and supply chains over China's growing, low-cost alternatives.

Contrary to its goals, the U.S. trade war has resulted in self-isolation. Data shows the U.S. is the only country buying less from China, while U.S. allies and developing nations have increased their trade, leading to a record $1 trillion surplus for China. This highlights a strategic miscalculation in U.S. foreign trade policy.

While the US exports less to Canada by volume, its exports (electronics, pharma) have far higher margins and shareholder value multiples than Canadian exports (lumber, oil). Therefore, for every dollar of trade disrupted by tariffs, the US loses significantly more economic value, making the policy self-defeating.

Tariffs are a direct tax paid by the domestic importer, period. This functions as a significant, unacknowledged fiscal tightening by massively increasing the corporate tax bill. This drain on the economy is a primary driver of the current recessionary impulse, contrary to political narratives.

Tariffs are politically useful in a fiscal crisis because they function as a hidden consumption tax. They allow politicians to claim they're taxing foreigners and protecting the nation, while the revenue raised is insufficient to solve the debt problem and domestic consumers bear the cost.

When trade policies force allies like Canada to find new partners, it's not a temporary shift. They build new infrastructure and relationships that won't be abandoned even if the political climate changes. The trust is broken, making the economic damage long-lasting and difficult to repair.

Despite significant US tariffs hitting labor-intensive goods, China's overall export volume remains strong. This resilience stems from a structural shift towards high-tech sectors like semiconductors and autos, combined with strategically rerouting trade through intermediary ASEAN countries to circumvent direct tariffs.