00:00An hour north of the line dividing the U.S. and Canada, in a small town called Knowlton, the cross
00:05-border relationship feels fragile.
00:08We love the American people, but we're also defensive about our economy and want to support Canadian business, which we
00:16feel might be under attack right now.
00:18Having family in the United States as well makes things a little precarious right now.
00:24Since President Trump imposed new tariffs on imports from Canada, the relationship has soured.
00:29Canadian imports from the U.S. are down, and the nation slipped from being the largest buyer of U.S.
00:35goods to number two, behind Mexico.
00:38Canadians know that our old, comfortable assumptions and our geography and alliance memberships automatically conferred prosperity and security.
00:46That assumption is no longer valid.
00:49We are rapidly diversifying abroad.
00:51The past few days, we've concluded new strategic partnerships with China and Qatar.
00:56Although Carney is optimistic about Canada's economic agenda, February's jobs report paints a bleaker picture.
01:04The country shed the most jobs in more than four years last month, sending unemployment up to 6.7 percent
01:10from 6.5 percent in January.
01:13We're all going to lose around 2 percent of our GDP because of the new trade environment.
01:17That includes the United States.
01:20When I say 2 percent, for somebody, it's 100 percent of their livelihood.
01:24Stephen Polish succeeded Mark Carney as governor of the Bank of Canada and is now a special advisor at Canadian
01:30business law firm Osler.
01:32Let's talk a little bit more about the loss.
01:35Where do we see it now?
01:37Oh, you see it in autos.
01:38You see it in steel.
01:39You see it in aluminum.
01:41You see it in copper and you see it in the forestry sector.
01:44These are sectors that are deemed, you know, really strategically important.
01:49As U.S. tariffs weighed on Canadian exports for much of the year, real GDP contracted in two of the
01:55four quarters of 2025.
01:56And for the year, increased by just 1.7 percent, the slowest pace of annual growth since the economy shrank
02:04during COVID in 2020.
02:05But right now, you still encounter that belligerence at the grocery store, you know, looking for the thing not made,
02:12not grown in the United States.
02:13Or, well, look, Mexican vegetable versus U.S. California.
02:18You know, people are still doing that.
02:20Some Canadians say they feel betrayed by the U.S., with more than half of respondents in a political poll
02:26saying the country is no longer a reliable ally.
02:29Life here before this particular round was wonderful.
02:36We had a great relationship.
02:37I guess it was February of last year when everything changed.
02:45Louise Penny is a Canadian journalist-turned-author.
02:48When she was on tour last year, Penny decided to redirect her U.S. tour dates back to Canada in
02:54protest of Trump's tariffs.
02:56She's also refusing to return to the U.S. until the trade war is over, a trend that's becoming increasingly
03:02common amongst Canadians.
03:04The decision to not tour in the United States was obvious.
03:10It wasn't even a decision.
03:13There was no way I was going to go into a country that had declared war on us any more
03:19than I would imagine Americans if Canada had done the same thing to you.
03:24But we sell merchandise here, and the vast majority of it went into the United States, now no longer.
03:31Not because people don't want it, but because the tariffs are ruinous.
03:35They can't buy a $30 mug and have $50 worth of tariffs put on it.
03:42So we've lost huge amounts because of the tariffs.
03:46And we're small.
03:48I can only imagine what larger corporations in Canada are suffering.
03:53What are CEOs saying?
03:55What are they thinking at this point?
03:57Well, they remain very cautious, I would say.
04:01In areas where trade matters the most, they're essentially still frozen.
04:07And they're the type of just doing keep the lights on, do our maintenance spend, keep our powder dry.
04:14The truth is we need to be more competitive.
04:17We need to be more productive.
04:18This is not a unique problem to Canada.
04:20Goldie Heider is the CEO of the Canada Business Council.
04:24Prime Minister Carney always likes to emphasize that when it comes to the marginal effective tax rate,
04:30the Canadian rate is the lowest in the G7.
04:33Those kinds of things inspire confidence for businesses to be able to deploy capital.
04:38Otherwise, you're going to see a lot of chilling and freezing of the capital.
04:42Although small business owners and some industry CEOs are feeling the pinch, some have a more nuanced view.
04:49All those policies are working, more so than I've ever seen in my 40-year career.
04:54That's why I'd like Canada to endorse it and do the same thing.
04:58Barry Zeckelman is the chief executive of Zeckelman Industries, a steel pipe and tube manufacturer.
05:04He sees the relationship from both sides of the border, having started his business in Windsor, Ontario,
05:10now having his headquarters in Chicago and producing his products in both countries.
05:16How do the tariffs affect your business in Canada?
05:20Tremendously. I'm paying massive tariffs to ship products from Canada into the U.S.
05:25Can you put some kind of a dollar figure or percentage figure on what you're having to pay?
05:31We're having to pay roughly almost $250, $275 a ton U.S.
05:40So I'm paying $6, $7 million a month in tariffs.
05:45It's huge. We've got to eat it. I've got to keep this plant running.
05:48I'm trying. My U.S. customers need the product.
05:53I'm manufacturing more and more in the U.S. We've upped our production there tremendously.
05:57I mean, if you had to compare Canada to the U.S., the U.S. is booming.
06:02I have never seen more robust demand. So the policies are working over there.
06:07So the back and forth on tariffs, even though a lot's covered under USMCA, has put a chill on the
06:14Canadian economy.
06:15Yeah. We need to resolve it, all right?
06:18I understand Prime Minister Carney, and he's our prime minister, so I've got to stand behind the leadership of our
06:24country.
06:26But we have to have a healthy trading relationship with the U.S.
06:32It is not going to be replaced by other countries.
06:36We can't just keep poking them in the eye and telling them we don't need you and standing there at
06:40Davos pretending that these mid-market or mid-countries are going to band together against the U.S.
06:47Every one of them is in the back door trying to sign a deal with the U.S.
06:50It's not going to happen.
06:51It's the greatest economy in the world.
06:53It's the market that everybody in the world wants to be in.
06:57And we're right next door to it with the longest border in the world next to it and biggest trading
07:02relationship.
07:03And we're saying, oh, we're going to move on?
07:05That doesn't work.
07:07That doesn't hold water.
07:08When you sit there and, you know, oh, we're going to make it the 51st state, look, people got to
07:13relax and people have to calm down.
07:15You don't feel insulted by the president as a Canadian?
07:18No, I've got thicker skin.
07:19I mean, you can't get insulted like that and turn that into a global trading fight.
07:25You know, read in between the lines.
07:27I'm telling you, I believe with everything in my heart that if Donald Trump, President Donald Trump, had the right
07:34relationship with Canada, a fair trading relationship and resolve some of these issues,
07:39he'd put his arms around Canada and hug them and welcome them into the family because he would feel secure
07:45that that we've got a family that's working together for the greater good of North America
07:51against many bad actors who are bad for the U.S. and bad for Canada.
07:57Like Zeckelman, Heider says it might be hard to separate business from personal when it comes to cross-border relations,
08:04but in the long run, it might be for the best.
08:06Canadians have the right to respond the way that they have.
08:10Look, it's emotional response, but I will say this about Canadians.
08:14We can separate emotion from reason.
08:15We ran a survey not too long ago which shows that, you know, over 80% of Canadians feel very
08:21strongly that this agreement is good, that it's working, and that it should be reviewed and renewed.
08:26I mean, we have to some extent taken it for granted that we share this border with the largest economy
08:30in the world, and we've been a little bit comfortable.
08:32I have said this to many Americans, particularly in the administration.
08:36It is not in your interest to have a weak Canada and a weak Mexico.
08:40Let's be clear.
08:41We are a very lucky group of countries.
08:44This is not India, Pakistan, or China, Taiwan, or North Korea, or South Korea.
08:49We are very fortunate to live in a neighborhood where we find a way to work together.
08:54Half of Canadians believe it's still important to preserve Canada's trade agreement with the U.S. and Mexico, the USMCA,
09:01or KUSMA, as the Canadians call it.
09:04It's up for review in July of this year, begging the question, what comes next?
09:09As KUSMA gets renegotiated, and as the tariff situation goes on, there's been talk of Mexico and Canada sort of
09:16reaching over the United States and concluding some type of their own agreement.
09:22Do you see anything like that happening?
09:24Right now, I think we can both kind of treat as, you know, you can invest in Mexico, and that
09:29gives you access to the United States market.
09:31That's basically what USMCA kind of does.
09:35And same thing in Canada.
09:36And so that's where investment comes, the platform for trade in North America.
09:42Could it be the other way around, or as you say, go over?
09:45Well, of course it can, because that's the nature of the current agreement.
09:49We'll see how the KUSMA or USMCA renegotiations go.
09:55But frankly, they could go nowhere.
09:57I do not like the fact at all that there are these trade tensions between Canada and the U.S.
10:03I would absolutely love for this temperature to come down.
10:06I think that these two countries should have a robust trading relationship between the two of them.
10:12I think that there's a lot of things that Canada can offer to the U.S., and I think there's
10:17a lot of things the U.S. can offer to Canada.
10:19And I think that they need to get to the issues that are contentious, deal with them, and move on.
10:25I mean, if you talk to any Canadian, you know, they're upset.
10:29Their pride's been hurt, and they feel they're standing up to what they perceive as a bully.
10:35I think it will be an important component of his legacy if we're able to review and renew it
10:39and allow it to continue to bring about the prosperity and the growth and the security that it has offered,
10:45you know, for decades now.
10:46What we cannot have is an agreement that some have called a zombie agreement.
10:51It exists, but it doesn't really mean anything.
10:53It just kind of perpetuates out there in the abyss.
10:55That's not constructive.
10:57And let me be clear about one thing that your viewers of more than anywhere else in the world would
11:00understand.
11:01Capital doesn't have a heart.
11:03Canadians like Americans.
11:04I think Americans like Canadians.
11:06And we'll get through this.
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