‘Is MAGA that stupid?’: Trump torn into over possibly raising gas prices through tariffs

President Donald Trump’s bullying has arrived on the world stage, as a threat to impose 25% tariffs on Canadian and Mexican goods has sparked fierce criticism over potential self-inflicted damage to the U.S. economy, mainly through higher gas prices.

Speaking via video as some Bizzaro Big Brother figure to the World Economic Forum in Davos on Thursday, Trump doubled down on his February 1 tariff deadline, dismissing concerns about energy independence. “We don’t need their oil and gas. We have more than anybody,” Trump declared to the gathered global jet-set elite. “We have our own.”

Well, see, this is the thing. That not exactly true. In fact, this disingenuous stance ignores an essential reality tht the president cannot evade: Canada is America’s largest source of foreign oil, with Canadian and Mexican imports accounting for a whopping 71% of U.S. oil imports in 2023, according to Congressional Research Service data. Patrick De Haan, head of petroleum analysis at GasBuddy, projects the tariffs could trigger gas price increases of 20 to 50 cents per gallon in the Great Lakes region alone, with increases of 10 to 30 cents likely in the Midwest, Rockies, and Northeast.

“Trump is threatening to impose big taxes on the oil we buy from Canada and send our gas prices soaring. It’s very MAGA!” economist Dean Baker wrote sarcastically on social media platform X. The ramifications extend beyond the pump. The Peterson Institute estimates the tariffs could wipe $200 billion from U.S. GDP while inflicting proportionally more significant damage on Canadian and Mexican economies.

Ontario Premier Doug Ford, whose province stands at the epicenter of North American auto manufacturing, warned the tariffs would “devastate our country” and potentially eliminate 500,000 jobs in his province alone.

“Everything is on the table,” Canadian Prime Minister Justin Trudeau warned when asked about Trump’s potential retaliatory measures, suggesting an escalating trade war could compound economic damage across North America. But it appears Trump is more than willing to have the United States—and its workers—burn in the course of setting other countries on fire.

Despite Trump’s tough talk, and since everyone is taking bets on this game of chicken, Goldman Sachs analysts assign only a 20% probability to the tariffs being implemented, noting Trump’s previous unfulfilled threats of Mexican tariffs in 2019. However, the market’s apparent complacency may underestimate Trump’s determination to reshape North American trade relationships in what he thinks is his favor through economic vice-turning. His Davos remarks revealed a sensational and frightening vision of continental dominance, suggesting Canada “can always become a state” to avoid tariffs.

This aggressive posturing marks a dramatic shift from decades of carefully cultivated economic integration that have helped the growth of all North American countries. The deeply interconnected North American supply chains, particularly in the automotive and energy sectors, mean Trump’s tariffs would likely boomerang right back onto American consumers and workers—and in extremely short order.

“This would be a real trade war, not a trade skirmish,” warned Joe Brusuelas, chief economist at RSM. “You would see job loss and people lose their homes.”

Yet despite these warnings, global business leaders at Davos appeared to take Trump’s threats in stride, perhaps calculating that economic self-interest will ultimately prevail over protectionist impulses. This response itself may represent a dangerous new normal, where the threat of economic warfare becomes an accepted tool of statecraft, even at the cost of domestic prosperity. As Trump weaponizes tariffs against America’s closest allies, the ultimate price may be paid not by foreign competitors but by the very voters who trusted him to improve their economic fortunes.

Let’s say Trump decided to go ahead with his plans. The probable reality is grim, to take the least. Canada and Mexico could enter recessions, causing some capitulation concerning border security. Mexico, in particular, could face a “catastrophic” impact due to 25% of its GDP being American exports, according to the Peterson Institute.

On the flip side, both countries could enforce their own tariffs, and Canada could threaten to cut its hydroelectric power to New England. The Fed would likely keep interest rates high for the foreseeable future. The United States would almost certainly lose leverage with its allies when dealing with China. Even more importantly, the tariffs would undercut small business owners and accelerate the loss of manufacturing jobs.

What we would have is a legitimate continental crisis—and this is on top of the Trump administration’s wishes to hightail the country back to some version of Jim Crow.