Customs Duties Likely to Outlast Trump, Become Permanent Feature of US Trade policy
WASHINGTON - Even if current customs duties generate less revenue than initially projected, future U.S. administrations are unlikely to eliminate them due to the considerable income they provide and their political appeal, according to a new analysis. The assessment suggests Canada and other nations should prepare for these tariffs to become a permanent fixture of American trade policy, regardless of who occupies the White House.
The enduring nature of these duties stems from a confluence of factors: strained state finances necessitating revenue streams, the politically advantageous “invisibility” of the tax to voters, and a trend toward consolidating executive power. Angelo Katsoras,an analyst at the National Bank,believes future presidents will be hesitant to relinquish powers gained by the current management,making a return to pre-Trump trade norms increasingly improbable.
“Future administrations may hesitate to eliminate many of these customs duties due to the substantial income they generate,” Katsoras stated. He further explained that customs duties are an “ideal tax because it is invisible for voters.”
The analysis highlights the difficulty of alternative revenue-raising measures. Increasing domestic taxes is considered politically unfeasible – “Introducing a national sales tax, for example, would probably be considered political suicide in the United States,” Katsoras said. The current administration’s argument that exporting countries bear the cost of tariffs is also challenged, with the reality being that American consumers ultimately pay more for imported goods.
Canada, in particular, is urged to adapt to this “new reality” and align its policies with Washington to maintain access to the U.S. market. Prime Minister Mark Carney has already begun this process, eliminating the digital sector tax and reprisal measures on American products, and investing heavily in border security to meet U.S. requirements.
The shift reflects a broader trend of the current President assuming powers previously shared with other government bodies, a move Katsoras believes subsequent administrations will be unlikely to reverse. This suggests a long-term recalibration of trade relations is underway, extending far beyond the current political cycle.
