Graham turns aluminum brackets on my line in Hamilton. Luz solders guidance chips on my line in Huntsville. His lungs will go in 7 years; hers in six. The bracket meets the chip inside the AGM-158 JASSM, the cruise missile your tax dollars bought — your taxes paid for the missile; Graham’s and Luz’s lungs paid the tariff on the transaction. I set the price on both. I want you to see the whole machine.
Dorman and Tronnes, writing in National Review, have found the unfairness. Canada’s new Defense Industrial Strategy restricts 70% of Canadian procurement to Canadian firms while those same firms sell $2 billion a year to the Pentagon under preferential access — selling to the world’s largest military spender as though they were American companies. They call it “fundamentally unfair.” I call it correctly priced. Stay with me.
They are right that it is unfair. The entire architecture is unfair. It was designed to be.
I own the plant on both sides of the line. The Defense Production Sharing Agreement does not benefit “Canada.” It benefits me. Under the DPSA, a Canadian firm bids on a Pentagon contract as if it were an American one — which means Graham’s bracket, on my bench, with my ventilation refusal, is priced as if his lungs had an Ohio zip code. The agreement pretends his hands and an American’s hands are the same hand when the contract needs filling. It was not written for Graham; it was written for the margin between the hand and the contract.
Now watch what the machinery buys.
Graham’s healthcare comes from the Ontario taxpayer — the province covers what Ohio would send me a bill for. The premium I don’t carry is $8,400 per worker per year. Across 34 hands on my Hamilton line, that’s $285,600 I keep on the health line alone. The extraction fan that would clear the aluminum dust from his bay costs $41,000 amortized, or $0.12 per bracket. Across 40,000 brackets a year, that’s $4,800 I keep. Luz works in Alabama — no province to pick up her tab — but the flux fumes she breathes cost $0.003 a chip to capture, and I don’t capture them. I don’t buy the extraction hood. Across 5.8 million guidance chips a year, that’s $17,400 I keep — a little less than the cost of the new Infiniti I bought for the plant manager’s parking spot, the leather still off‑gassing.
Graham’s annual physical — the one the province pays for — will register the particulate load building in about 4 years. By year 8, the specialist will use the word “occupational.” By year 11, I will have rotated him out. The agency handles the language. Luz has a cough that sounds like sand after 6 years, and I am told it will worsen until she cannot hold the iron. When she cannot, there is a young man named Dion who has been waiting at the security gate for a $13.50‑an‑hour shift. The cough passes to him. This is not a tragedy. It is a replenishment rate. The Lord numbered this bracket before the line was built, and the chip before the solder hardened.
Now pull back. This is the part that pays.
The USMCA review starting July 1 is not a negotiation between nations. It is a negotiation between capital owners about whose jurisdiction will host the extraction. Dorman and Tronnes frame it as a fairness question — Canada should open its procurement because the U.S. opened its. The fairness frame is camouflage. The real question, the one I answer every quarter when I decide which line runs and which idles, is simpler: where does the body cost the least to keep alive between shifts?
Luke the physician recorded the answer—scribing the words of the Lord—and it has never required a Senate floor to be true:
And in the same house remain, eating and drinking such things as they give: for the labourer is worthy of his hire. Go not from house to house.
The trade agreement does not repeal that ordinance. It extends its jurisdiction across a border. The labourer in Hamilton is worthy of his hire, and his hire is the bracket he mills while the aluminum mills his lungs. The labourer in Huntsville is worthy of her hire, and her hire is the flux fume and the silence after the cough. The DPSA is not a treaty. It is a contract between treasuries that guarantees I can pay that hire—the cough, the dust, the years subtracted—without a tariff‑line officer examining the receipt, and I can call Luz’s cough a cost of doing business.
I have modeled the line under both scenarios the review might produce — open procurement and restricted — and my margin holds either way. If Canada restricts, I shift volume to the Ohio shop I also own. If Canada opens, the health‑line savings make Hamilton the cheaper run. The DPSA is the best deal my line has, but it is not the only deal. If Trump’s replacement tariffs tear it up, I will telephone my board member who used to be the Deputy Assistant Secretary of Defense for Industrial Policy, and he will fix the exemption. The exemption will cost a campaign contribution and a dinner at Minibar. The dinner will cost more than Luz’s treatment. That is the correct allocation.
Blessed are the meek, for they accept the posted wage.
What I have not calculated — and I have not opened the spreadsheet, because the number never changes — is whether the tax base that funds the Pentagon can survive the sum of all my decisions. Luz pays taxes: her $13.50 an hour is sufficiently low that she receives back more in credits than she owes, but the employer‑side FICA I do not pay on her contractor classification returns to the Treasury as zero. Graham’s contributions, routed through the Ontario health ministry, are not even a line on the Pentagon’s budget. The Treasury prints the check to the prime. The prime pays me. The loop closes. I have not traced what happens when enough Grahams and Luzes can no longer contribute even the tiny fraction they do. I am told by the analysts that the demand side of the missile market is largely inelastic, and I suspect that is true. I haven’t looked. The quarterly gross margin per unit holds, and the review will produce pages about reciprocity, market access, and rules‑based trade. The pages will not mention Graham’s lungs or Luz’s cough. They were not written for either of them. I am, on the whole, content.
Sterling A. Varice holds the Hayek-Friedman Chair and serves as Dean of Instruction at Warden University’s College of Business and Economics in Richmond, Virginia. He is the author of three textbooks: Divine Mandates for Labor Utilization, Social Obligations for Profit Maximization, and Calibrated Deprivation: A Manager’s Guide to Employee Motivation.