Earlier this week, President-elect Donald Trump announced he intends to punish all Americans because some Americans buy illicit drugs from traffickers, most of whom pay U.S. citizens to smuggle them through legal border crossings. Through increased tariffs, Trump wants to make Americans pay more for goods — including domestic manufacturing inputs — imported from Canada, China and Mexico (our three largest trading partners) until the U.S. wins the war on drugs.
Waging a war on drugs is like playing a game of whack-a-mole.
According to The New York Times, Trump believes China can do a better job stopping the flow of Chinese-made fentanyl precursors to the transnational cartels in Mexico, where they synthesize fentanyl in underground labs. But fentanyl precursors also come from India, Myanmar and other parts of Southeast Asia. And Canadian traffickers have recently begun producing fentanyl in “super labs,” smuggling it to the U.S., Australia and New Zealand. If China cracks down on domestic precursor labs, that means increased business for dealers in those countries.
Waging a war on drugs is like playing a game of whack-a-mole.
Trump may not realize he’s punishing law-abiding Americans for drug prohibition violations because he misunderstands tariffs. During his first term, Trump levied heavy tariffs on imported solar panels, washing machines, steel, aluminum and about 70% of all products from China.
Despite his repeated assertions to the contrary, tariffs are taxes (almost always) paid by Americans, not foreigners. Countless academic studies by university economists, think tanks and government agencies found that American consumers — both firms and individuals — paid for (and continue to pay for) the Trump tariffs.
Given that Mexico, Canada and China are the United States’ three largest trading partners, the pain for American consumers will be particularly acute. American consumers purchased about $1.5 trillion worth of goods and services from the three countries. A back of the envelope calculation by Ernie Tedeschi, director of economics at Yale’s Budget Lab and a former economist for President Joe Biden’s Council of Economic Advisers, suggests the tariffs would amount to a nearly $1,200 annual tax hike for the average American family.
American firms would also face severe consequences. Tariffs would disrupt tightly integrated supply chains that stretch across North America, bound together by the U.S.-Mexico-Canada Trade Agreement (USMCA) — one of the signature initiatives of the first Trump administration. Import taxes of 25% would be a disaster for automakers in particular; shares of GM, Ford and Stellantis (owner of Jeep, Chrysler and Ram) fell in the aftermath of the tariff threat.
Broad-based tariffs will increase the tax burden on American firms and families, lead to a loss in wages, reduce consumption, stifle investment, reduce exports and lower aggregate welfare.
Likewise, Mexican President Claudia Sheinbaum suggested that Mexico would likely retaliate against the tariffs, and China and Canada would almost certainly do the same. Given that American firms export about $1 trillion worth of goods and services to the three countries, retaliatory tariffs would jeopardize the millions of jobs supported by exports to the three countries.
In short, broad-based tariffs like the ones the president-elect is threatening will increase the tax burden on American firms and families, lead to a loss in wages, reduce consumption, stifle investment, reduce exports and lower aggregate welfare.
What’s more, in the unlikely event Trump’s tariffs make it harder for traffickers to obtain fentanyl precursors, drug dealers might find it more attractive to shift from fentanyl to nitazenes. Nitazenes, more dangerous and potent than fentanyl, belong to the benzimidazole class, commonly used in drugs like antacids, antifungal agents and blood pressure medicines — making their precursors widely available. The shift is already underway. Isotonitazene (“iso”), linked to overdoses in the U.S. since 2019, is driving a “second wave” drug crisis in the U.K. President Ronald Reagan famously argued that we and our trading partners are in the same boat. If one partner shoots a hole in the boat — with tariffs — it makes no sense for the other partner to shoot another hole in the boat. Trump intends to shoot holes in the bottom of our boat until Canada, China and Mexico are compelled to — some way, somehow — help us win the endless, unwinnable war on drugs. During his campaign, Trump pledged to get the U.S. out of endless wars. Instead, he will make Americans pay an endless tax.
Jeffrey A. Singer
Jeffrey A. Singer, MD, a general surgeon in Phoenix, is a senior fellow at the Cato Institute.
Clark Packard
Clark Packard is a research fellow at the Cato Institute’s Herbert A. Stiefel Center for Trade Policy Studies. 
