President Trump’s High-Risk Tariff Gamble

President Trump should concentrate on the bold process he has launched to streamline and reduce the size of government, which has run up a stupefying $36.2 trillion in debt and has been adding almost $2 trillion annually in recent years.

What he should not do is impose more tariffs on China, proceed with his plans to apply them to European imports, play a game of tit-for-tat with every other country with which the U.S. does business, or use them to threaten Canada and Mexico in the pursuit of objectives those countries can’t meet.

The United States has many tools to address drug and immigration issues. They all amount to one thing: adapting U.S. policy to reality and considering the forces of supply and demand.

The U.S. also has many tools to help American companies become more competitive against Chinese and other companies whose lower-priced imports have caused Mr. Trump to become obsessed with trade deficits. Although government subsidies and trade barriers account for some cost differentials, the primary culprits are U.S. monetary policy, which has fueled domestic inflation, and government-imposed bureaucratic and regulatory burdens, making it exceedingly difficult for U.S. producers to hold down costs.

Because of these missteps, unit labor costs have doubled in the U.S. since the mid-1980s. Tariffs cannot correct that.

Mr. Trump has until March 4 to decide whether to proceed with his plan to place 25% tariffs on products imported from Canada and Mexico. U.S. imports from the two countries total some $900 billion annually. Assum ing import levels remain steady rather than decline, which is more likely, levying a 25% tax would add some $225 billion to the total cost of these products, including buses, cars, chemicals, food, fuel, livestock and machinery.

The Trump tariff regime doesn’t end there. The president also has proposed another 10% tax on Chinese products, steel and aluminum, and a round of “reciprocal tariffs” that would match, product by product, country by country, any protectionist tax levied against U.S. imports anywhere in the world.

Of course, America’s trading partners will not say, “Thanks, Mr. President, no problem.”

Canada announced its retaliation plan when Prime Minister Justin Trudeau and Mr. Trump negotiated a one-month truce and President Trump delayed the tariffs. Mexico was also ready to strike back, but it abstained after President Claudia Sheinbaum spoke with Mr. Trump.

This part of the trade war, the retaliation, would have increased the costs of the nearly $700 billion in U.S. products and services sold to Canadians and Mexicans annually. As sales predictably plummet, U.S. jobs would be impacted.

This is a risky game for Mr. Trump. It hurts U.S. consumers and producers, undermines the freedom to exchange goods, services, ideas and capital across borders, and could drive some friends and allies into China’s arms.

Free trade involves fundamental American values: the right to buy, sell, own and exchange. It should fall under the Fifth Amendment’s protection from expropriation without just compensation.

Contrary to the White House talking points, there is nothing to be gained from trade wars. Canada and Mexico are not in a position to eliminate migration to the United States, nor can they prevent the flow of fentanyl—the main reasons Mr. Trump gives for punishing his neighbors.

History has repeatedly shown that anything with a huge market will find its way to those who seek it despite the best efforts of law enforcement to stop it.

Immigrant labor, for example, keeps crossing the U.S. border because American employers desperately need it. After the onset of COVID-19, the U.S. labor force would have contracted if not for the more than 3.5 million undocumented immigrants hired these past four years.

The unlawful importation of fentanyl has also spiked because other pain relief and recreational drugs have become more costly and harder to obtain, even legally.

Suppose the Trump administration is serious about solving the immigration and illicit drug problems. In that case, it should focus on their root causes rather than engaging in self-destructive trade wars against friends and allies. Trade wars won’t solve anything. All they will do is create new and bigger problems.