That just about sums up Canada’s recent decision to slap a high tariff on corn imported from the United States: The Canadian government may think they’re in the right, but they’re going to wind up hurting a bunch of people who definitely aren’t in the wrong.
The current problem began at the end of last year, when the Canadian government declared that American farmers were dumping corn and flooding the Canadian market. The Canadian Border Services Agency (CBSA) retaliated by announcing new duties of $1.65 on every bushel of unprocessed grain corn imported from the United States. Next month, the CBSA will decide whether to extend the tariff, reduce it, or perhaps even hike it.
I don’t mean to take up the question of whether the Canadians are right to complain about American corn sales. They may very well be making a fair point here. At the very least, their honest concerns suggest that even after the full implementation of the North American Free Trade Agreement, our two economies would benefit from greater integration.
The result of these new tariffs will be simply to pull us further apart–and to punish the innocent for crimes they did not commit. It’s a classic case of unintended consequences.
The first victims of the new Canadian policy are Canadians themselves: The United States already supplies Canada with about one-fifth of its corn, and the Canadian government has just raised the tax on it. The new tariff will increase the price of these imports by about 75 percent. That means grocery-store bills will go up.
Perhaps politicians and bureaucrats in Ottawa think ordinary citizens will be willing to bear this burden because it will affect everyone equally. But in truth, it won’t affect everyone equally. Some Canadians stand to lose much more than others.
Canadian cattle and hog producers, for example, say that the new duties will force them to dig deeper into their pockets for animal feed. The Canadian Cattlemen’s Association claims that the tariff will add about $100 per head to the cost of corn-fed cattle. The Canadian Pork Council says it will increase the cost of hogs by about $20 per head. (Those are Canadian dollars; in American dollars, the higher costs come to roughly $87 for cattle and $17 for hogs.)
Price hikes such as these tend to impact jobs–in other words, there may very well be fewer of them. It could place additional pressure on the packing industry, and conceivably might turn some Canadian jobs into American ones. Bottom-line, hogs and cattle that would have been fed and harvested in Canada may now move to the US.
In the United States, we’ve learned that protectionism comes with a price. Tariffs on foreign steel and Canadian lumber have added to construction costs–influencing the price of new homes and, in some places, making it more difficult to break ground for new schools.
Countries that throw up trade barriers often think they have noble motives, and indeed they may. But what they produce is ignoble. Instead of helping themselves, they often wind up helping only one small segment of their population and hurting the rest. That’s exactly what’s happening in Canada right now with this corn duty.
Perhaps the recent elections in Canada will bring change. The new Prime Minister, Stephen Harper, is understood to be much friendlier toward the United States than his predecessor. It’s probably too much to hope for a North American farm bill–a grand union of agricultural policies that makes disputes like the present one obsolete. But perhaps we can hope for a more sensible response than the one we’re getting: a policy with a small handful of beneficiaries and a large mass of victims.
Every trade war, no matter how noble, seems to produce unacceptable levels of collateral damage. When will politicians and bureaucrats finally realize that the costs for the many outweigh the benefits for the few?
Tim Burrack raises corn and soybeans in partnership with his brother on their NE Iowa family farm. Tim is a Board Member of Truth About Trade and Technology (www.truthabouttrade.org) a national grassroots advocacy group based in Des Moines, IA formed and led by farmers in support of freer trade and biotechnology.