Issue 18

By David Thomas Graves

Why

I started writing about labor policy the moment I realized most politicians have no idea what they’re talking about. I’ve sat across the table from lawmakers, given them advice, watched them nod along, and it became clear they didn’t understand the basics of how labor policy actually hits workers in the real world. They didn’t understand wage compression. They didn’t understand wage stagnation. They didn’t understand that when policy pushes wages up at the bottom, employers rarely pull the rest of the pay scale up with it. They comply, but they don’t compete. And when inflation and money-printing hit on top of that, what you thought was a raise is really just a pay cut disguised in bigger numbers.

This is the part politicians miss, compression and stagnation aren’t abstract ideas, they are the silent killers of the American paycheck. Compression means your wages get squeezed because the floor is raised while the ceiling stays stuck. Stagnation means your wages flatline altogether, sometimes by design, sometimes because regulation strangles growth. Either way, you end up working harder for less. Not because you’re “bad with money,” but because your money is worth less. And every time Washington floods the system with cheap dollars, it widens the gap between our wages and those in places like China, where labor costs don’t move with ours. That’s why talent flees industries, regions, even entire countries. It’s how we bleed competitiveness, and it’s why the American worker keeps losing ground.

Layer on top of that a generation of bad laws, overregulation in industries unions already kept safe, government stripping away union bargaining leverage, and so-called “right-to-work” laws that sold themselves as pro-worker but in reality gutted private sector unions by forcing them to represent freeloaders who refuse to pay dues. Conservatives still defend those laws, pretending they give people the “right to work,” when in fact they hand government the right to dictate how private business manages labor. That’s not free-market policy, that’s government intrusion wearing a different mask.

So this article isn’t about nitpicking the Trump tariffs or applauding one administration over another. It’s about zooming out to 30,000 feet, to show how tariffs, monetary policy, and labor policy collide. The U.S. economy is unique. We run on debt. We run on inflation. We are the world’s reserve currency, which means we can never stop inflating, even as it undercuts our workers’ competitiveness abroad. We’re off the gold standard, we’re chained to fiat, and we’re trapped in a system where workers pay the price of every policy mistake twice, once in higher prices, and again in weaker wages.

This isn’t a deep-dive into every trade dispute or every decimal point of inflation. This is an overarching look at how policy is built on myths, how workers are left holding the bag, and why tariffs on our allies, Canada and Mexico, aren’t just bad economics. They’re suicide.

The Political Theater of Tariffs

Tariffs aren’t about protecting you, the worker. They’re about protecting politician’s poll numbers. Slap a 25% tariff on steel, aluminum, or Canadian lumber and suddenly a senator gets to stand in front of a flag and pound their chest about “defending American jobs.” Sounds tough, feels patriotic. But here’s the problem, it’s bullshit.

When tariffs hit, Canada doesn’t write a check. Mexico doesn’t send us a wire transfer. You pay the bill. Every time you fill up your gas tank, buy groceries, or pay your electric bill, you’re covering the cost of some politician’s campaign slogan.

And history proves it. In 2018, the U.S. slapped 25% tariffs on steel and 10% on aluminum, supposedly for “national security.” The result? U.S. metal prices jumped, construction companies and auto plants saw costs spike, and downstream industries lost more jobs than the steel industry gained. The Federal Reserve and the U.S. International Trade Commission both found net job losses in manufacturing, while the Peterson Institute calculated that each steel job “saved” cost U.S. consumers and businesses about $650,000. That’s not protecting workers, that’s taxing them.

Tariffs are not strength. They’re self-sabotage. They’re a hidden tax dressed up as patriotism, a way for leaders to look like warriors while quietly reaching into your pocket.

Canada - Not Just a Neighbor, but an Extension of Our Economy

Canada isn’t just the neighbor upstairs. Canada is an extension of the US economy.

In 2022, about 60% of U.S. crude oil imports came from Canada, and nearly all of our imported natural gas came from there too. Most of our energy is domestic, but those Canadian flows are critical to keeping prices stable in U.S. regions that depend on them. Tariff those barrels and molecules, and American families pay more for heating, electricity, and transportation.

Canada is also the largest foreign supplier of aluminum to the U.S. and a leading source of steel. It supplies roughly 25 - 30% of the softwood lumber Americans consume and about 80% of our lumber imports. Every time the U.S. escalates the long-running lumber dispute, the cost of building a house in America shoots up by thousands of dollars. Tariffs don’t punish Canada, they punish American homebuyers.

And minerals? Canada holds vast reserves of nickel, cobalt, uranium, and rare earths, the building blocks of EVs, batteries, and defense systems. With China controlling much of the world’s supply, Canada is our secure alternative. Tariffs here don’t build resilience, they hand more leverage to Beijing.

Now, Canada isn’t innocent. It shields its dairy, poultry, and egg sectors with tariff-rate quotas and over-quota tariffs often exceeding 200%, and U.S. farmers have fought for decades against restricted access. But context matters. Canada’s economy is one-tenth the size of ours. Their protectionism stings; our tariffs blow holes in our own economy.

Canada isn’t the enemy. It’s part of our bloodstream. Cut it off, and you’re cutting off yourself.

Mexico - Our Economic Wingman

If Canada is our right hand, Mexico is our left. And despite the rhetoric, Mexico isn’t stealing from us, it’s stabilizing us.

Over three-quarters of Mexico’s exports go directly to the U.S. Their factories don’t compete with ours; they feed them. Auto parts made in Mexico can cross the border up to eight times before becoming a finished car. Electronics assembled in Mexico often use U.S. components. The economies are fused together.

Here’s the best news, jobs leaving China are landing in Mexico. That’s not just good news, it’s the best-case scenario. Moving production to Mexico means shorter shipping routes, safer supply chains, and Mexican wages move more in line with U.S. trends than China’s. With labor reforms under USMCA, they are steadily rising instead of being locked at rock-bottom levels. Under USMCA, autos must meet a 75% North American content rule, and 40 - 45% of that content must be made by workers earning at least $16 an hour. On top of that, the Rapid Response Labor Mechanism (RRLM) gives the U.S. and Canada real teeth to enforce labor standards inside Mexico. If workers are intimidated out of unionizing or denied fair contracts, the U.S. or Canada can zero in on that factory, investigate, and if violations are confirmed, suspend its tariff-free benefits or even block shipments until workers’ rights are restored. This isn’t theory, it’s already happened in Mexican auto and electronics plants, forcing re-run union elections and strengthening worker protections. That means when factories move from Shenzhen to Monterrey, they aren’t just staying in North America, they’re entering a system that raises wages, enforces labor rights, and steadily lifts standards across the entire continent.

And this is where U.S. monetary policy ties in. Because we’re the world’s reserve currency, our economy runs on debt and inflation. Every time Washington prints more money, U.S. wages rise in dollar terms, but Chinese wages don’t move with ours. That widens the gap and makes us less competitive with every new round of money printing. Mexico is different. Their economy is tied tightly to ours, so when inflation pushes up wages here, Mexican wages rise proportionally as well, reinforced by the labor reforms baked into USMCA. That alignment matters. Instead of the wage canyon that keeps growing between the U.S. and China, North America has a foundation where wages move together. That narrows the gap, stabilizes supply chains, and creates a fairer fight for American labor.

A prosperous Mexico means a stronger America. Stronger labor rights there mean stronger labor rights here. A rising Mexican middle class stabilizes our own. Mexico isn’t the problem, it’s the solution. The wingman flying formation with us while China circles overhead.

The Real Cost, Workers and Inflation

Tariffs don’t happen in a vacuum, they stack on top of inflation. And inflation is already killing workers’ paychecks.

Because we’re the reserve currency, the U.S. must inflate to keep the system running. During COVID, money growth exploded - M2 jumped 25% in 2020 and 13% in 2021. Inflation followed, 4.7% in 2021, 8.0% in 2022, while wages only partly kept up. Most “raises” were really cost-of-living adjustments, and they rarely matched the true increase in prices. That’s wage compression, working harder, but ending up with less.

Now add tariffs. Inflation already eats your paycheck. Tariffs push costs even higher, at the pump, in the checkout line, on your utility bill. And when Canada or Mexico retaliate, American farmers, exporters, and manufacturers lose sales. Workers get crushed between inflation on one side and tariffs on the other. That’s not protection, it’s punishment.

The Myth of “Pro-Worker” Tariffs

Politicians sell tariffs as pro-worker. They’re not. They’re Band-Aids on bullet wounds.

I’ve sat in the rooms where labor policy is discussed. They talk about job counts. They don’t talk about wage stagnation. They don’t talk about wage compression. They don’t talk about how inflation quietly robs workers year after year. That’s why you can work longer hours, bring home a bigger paycheck, and still have less to show for it. The system is designed to make you chase your tail.

Now layer tariffs onto that broken system. They don’t fix the disease, they accelerate it. Tariffs drive up consumer costs and cut jobs in downstream industries. They might protect a narrow sector temporarily, but when the tariffs come off, the jobs vanish.

That doesn’t mean tariffs are always useless. If you’ve got a fragile, strategic industry, like defense production, small, targeted tariffs can buy time. Tariffs could even play a role in tax reform, replacing part of federal income taxes if designed carefully. But broad tariffs on allies are not a strategy, they’re malpractice. They’re chemotherapy with poison doses. They don’t cure the cancer, they just kill the patient faster.

Fixing the System, A North American Alliance

So how do we fix this? The answer isn’t more isolation. It’s integration.

Canada, Mexico, and the U.S. already form one of the most powerful economic blocs in the world. Canada brings resources, oil, gas, minerals, lumber, metals. Mexico brings affordable near-shore manufacturing and labor standards that rise in sync with ours. The U.S. brings capital, scale, and industrial muscle. Alone, each country has vulnerabilities. Together, they’re an economic fortress.

Imagine a North American Strategic Compact:

Free, tariff-free trade across the continent.

Free, tariff-free trade across the continent means creating a truly open economic system between the United States, Canada, and Mexico where goods, services, and resources move without the hidden tax of tariffs. Instead of punishing workers with higher prices every time a product crosses a border, this approach recognizes that North America already functions as one integrated economy: Canadian oil fuels U.S. refineries, Mexican factories build U.S. cars, and American farmers feed both neighbors. By stripping away tariffs inside the continent, the three economies would operate as a single market, lowering costs for consumers, giving companies predictable rules for investment, and strengthening workers by ensuring industries can thrive without the constant threat of trade wars. It turns borders into bridges, transforming North America into an economic fortress that competes with China and Europe not by taxing itself, but by uniting its strengths.

Shared labor protections that lift all workers.

Shared labor protections that lift all workers means building a trade framework where workers in the U.S., Canada, and Mexico all rise together instead of competing in a race to the bottom. Instead of companies chasing the lowest wages or weakest regulations, the three nations would set common standards on issues like fair pay, safe working conditions, and the right to organize. Tools like the USMCA’s Rapid Response Labor Mechanism already point in this direction by targeting individual factories in Mexico that violate workers’ rights, forcing change at the shop floor level. Expanding and harmonizing these protections across the continent ensures that when jobs shift between Detroit, Monterrey, or Toronto, they move within a system that respects workers equally. The result isn’t just fairer conditions for Mexican laborers or stronger unions in the United States, it’s a continent-wide lift in wages, rights, and bargaining power that keeps North American workers competitive globally without exploiting one group to benefit another.

Pooled resources and manufacturing to secure supply chains.

Pooled resources and manufacturing to secure supply chains means North America stops treating each country’s strengths as isolated and starts treating them as parts of one larger system. Canada’s vast reserves of oil, gas, lumber, and critical minerals like nickel and cobalt aren’t just Canadian assets, they’re continental assets when paired with U.S. industrial capacity and Mexico’s growing manufacturing base. By aligning investment and production, the three nations can insulate themselves from shocks like the COVID supply crunch or China’s dominance in rare earths. Imagine Canadian raw materials flowing into U.S. factories, which then integrate Mexican assembly, all without bottlenecks at the border or tariff games. That kind of cooperation doesn’t just stabilize costs for consumers, it builds a supply chain immune to foreign manipulation, reduces dependence on geopolitical rivals, and guarantees that essential industries, energy, tech, defense, agriculture, stay firmly anchored in North America. It’s about taking what we already have, knitting it together strategically, and turning the continent into the most secure production hub on earth.

One voice in global trade negotiations, turning three economies into one negotiating powerhouse.

One voice in global trade negotiations would transform North America from three separate countries into the largest, most powerful economic bloc in the world. Together, the U.S., Canada, and Mexico already generate about $34.5 trillion in GDP, a number that dwarfs China’s $19.5 trillion and even surpasses the entire European Union. Acting as one, this bloc wouldn’t just be big, it would be unchallengeable. It would sit at the top of the global economy, setting terms instead of reacting to them, shaping rules on trade, climate, and technology, and negotiating with the clout of a $34-trillion engine behind it.

The strength of this bloc comes from balance. The U.S. anchors the dollar as the world’s reserve currency and leads in innovation, finance, and high-tech manufacturing. Canada contributes vast energy reserves, mineral wealth, and global diplomatic soft power. Mexico adds a robust, export-driven manufacturing base. Combined, these strengths create a supply chain that is shorter, safer, and less vulnerable to disruption than anything China or Europe can muster. Together, the three economies cover everything from oil to microchips, agriculture to aerospace, giving them a resilience no single country can achieve on its own.

And the influence would extend beyond economics. A bloc this large could dominate global forums like the IMF, World Bank, G7, and G20, steering development, aid, and infrastructure priorities worldwide. With one voice, North America could dictate fairer labor standards, press back against currency manipulation, and lead on climate and energy policy, not from a place of weakness or division, but from unmatched strength. This isn’t about erasing national identities; it’s about building a fortress of shared prosperity where workers in Detroit, Monterrey, and Toronto rise together. Three countries negotiating as one would mean the world no longer plays us against each other, it means North America becomes the rule-setter for the 21st century.

Tariffs divide us. Integration makes us unstoppable.

If Washington really cared about workers, they’d stop the political theater and start building the alliance that could actually save the American middle class. Because, every time a politician waves a tariff around like a weapon, it’s American families who get taxed, not foreign governments. Every time we fight with Canada or Mexico instead of partnering with them, we hand China and Europe the advantage.

The future isn’t about pretending we can go it alone, it’s about finally realizing the obvious, the United States, Canada, and Mexico already function as one integrated economy. Our supply chains are fused, our energy grids are linked, and our workers are tied together whether politicians like it or not. Formalize that reality into a Continental Alliance, and suddenly North America isn’t three countries scrambling to compete, it’s a $34.5 trillion dollar powerhouse that sets the rules for the rest of the world.

That’s the choice in front of us. We can keep replaying the same tired game of tariffs and counter-tariffs, watching workers get crushed between inflation, wage compression, and bad policy. Or we can think bigger. We can build a fortress of shared prosperity that unites Detroit, Monterrey, and Toronto into one economic engine, an engine strong enough to lift wages, secure supply chains, and rewrite the rules of global trade. If Washington truly wants to protect the American worker, it’s time to stop the cheap talk and start building the alliance that could actually save them.

© David Thomas Graves 2025