electronics, and Polish sausages. Surely, the argument goes, these polices
will create more employment in Canadian industries producing similar
products. This may be true but it will also reduce employment in other
industries.
The Japanese, Indians, Chinese, and Poles can buy products from Canada
only if they earn Canadian dollars by selling their domestically produced
goods and services to Canada (or by borrowing dollars from Canada).
The decline in their sales of cars, textiles, electronics, and sausages will
decrease their purchases of Canadian lumber, software, banking services,
and holidays. Jobs will be lost in Canadian export industries and gained
in industries that formerly faced competition from imports. The major
long-term effect is that the same amount of total employment in Canada
will merely be redistributed among industries. In the process, average
living standards will be reduced because employment expands in
inefficient import-competing industries and contracts in efficient
exporting industries.
The relationship between tariffs and employment was sharply illustrated
in 2018 when U.S. President Trump imposed high tariffs on the import of
foreign-produced steel and aluminum. Though firms and workers in these
American industries favoured this policy, it was soon pointed out that far
more jobs were at risk in the many U.S. industries that relied on low-
priced steel and aluminum as vital inputs in the production of finished
products. The tariffs would raise costs in these industries and place them
at a competitive disadvantage with foreign firms who could purchase steel