almost everybody's missing the point. donald trump is trying to replace income taxes with consumption taxes, and get foreigners to pay off the united states' debt. it's hard to get your head around because it's wrong, but it is what it is. he's not failing to learn ricardian equivalence, and wouldn't know what the fuck you're talking about. this isn't a debate between free trade and protectionism, this is donald trump thinking he's got a sneaky scheme to get the united states out of debt to china by taxing europe, japan and canada. 

let's try to understand this. 

in principle, if the united states wants to tax canadian imports, it is just taxing it's own people. it's a sovereign state. canada shouldn't really care, in principle. nor should we see any logic in responding by hiking tariffs. europe was correct to accept 0% tariffs. that's a benefit for european consumers, that get access to american agricultural products at lower prices. europe will continue to tax income and other forms of wealth, like the economists tell them to. it's america's choice if it wants to tax european goods, and it doesn't really hurt europe because there's little to no direct competition.

the problem with that approach when it comes to canada is that we are competing over a lot of key items.

but, that's not what donald trump is thinking. donald trump is trying to raise tax revenue.

i think that breaking this impasse might have something to do with finding some other way for trump to generate tax revenue other than taxing canadian imports, because that's what he wants. nobody in canada wants to pay twice as much for orange juice, or thinks that hiking the price of food shipped into canada is sticking it to the yankees. that only hurts us. that's a stupid policy.

if canadian negotiators can find some other way to increase tax revenue coming into the united states from nominal canadian sources (even if americans actually pay it) that doesn't include making our goods uncompetitive in american markets, donald trump might be convinced that he's getting what he wants.

stop pretending this is an economics argument. it isn't. it's about taxation.