00:00With the cost of the trade war set to impact numerous border businesses, we're joined now by Bloomberg Ottawa Bureau
00:05Chief Brian Platt.
00:07Brian, walk us through where exactly we should expect these tariffs to have an impact in the United States and
00:12what's coming.
00:14It's a real grab bag of products.
00:17The goal here is essentially to match the same value of the imports or of the tariffs that Donald Trump
00:25put on Canadian exports to the U.S.
00:30It's about $20 billion worth.
00:31It's a real mix of stuff.
00:33The Canadian tariffs, the new ones that are set to come in on Tuesday, will hit like copper wire and
00:37pulp and paper and a whole bunch of steel and aluminum products as well.
00:43Well, basically, it's not expected to have a wide-ranging effect on the economy on either side of the border,
00:50frankly, both these new rounds of retaliatory tariffs.
00:54It's more if you're – of course, if you have a business in that sector, you'll feel it and you
00:58won't like it.
00:59But the broader economy should be fine.
01:01The bigger risk here is the cycle of retaliation that we're in, the escalation that's happening right now.
01:07And at the moment, there does not appear to be any off-ramps.
01:10Yeah, Treasury Secretary Besant was on Fox last night, asked about that exact thing, the impact on the economy.
01:17We've got some sound for you.
01:22The opportunity for a great trade deal, and they didn't want it, and it looks like it's for political reasons.
01:29But the U.S., it is not much of a hit to us, if any.
01:36If any, because we're hearing all these stories, inflation, that it is negligible.
01:40I would like someone to show me the statistical significance of these – the Canadian tariffs on U.S. prices.
01:50I mean, I would assume that's something the Treasury Department might supply for us.
01:54But in lieu of that, I mean, in the macro, it seems like the argument from both sides is both
02:00economies can weather this spat.
02:03But in the micro, I mean, we're already hearing from small businesses on both sides of the border that this
02:07is really going to hurt them.
02:09Are there any particular industries in Canada that you think are going to be the hardest hit?
02:12We were talking a few weeks ago to whiskey producers here in the U.S.
02:16who say, you know, they haven't been able to get their product on shelves.
02:19Even if they do, Canadians might boycott it, and it's really, really impacted that industry here.
02:24What are you seeing on the Canadian side?
02:27I mean, the risk on the Canadian side all along has been more sort of that business erodes from, you
02:34know,
02:34especially from those original – they're called Section 232 tariffs that Trump put in on steel, aluminum, and autos, and
02:42lumber.
02:43That those businesses, which are really important industries in Canada, get hollowed out.
02:48And anybody looking to site a new factory or to expand a factory or whatever would do that in the
02:55U.S. instead of Canada because of these tariffs.
02:57So the worry has always been a bit of an effect over time rather than sort of an immediate one.
03:03I will say, like, there's a couple of – for the most part, of course, Scott Bissendt is right that
03:10these are not going to have a big immediate impact on prices in the U.S.
03:14There's a few exceptions, though.
03:16Like, look at the price of aluminum in the U.S. from the tariff, the 50% tariff that Trump
03:21put in last year.
03:22Americans right now pay far more for aluminum than anywhere else in the world.
03:26The price has gone up a lot over the past year.
03:28That's an example of an industrial input, right, that maybe doesn't have an immediate effect on prices.
03:34But over time, it's absolutely driving up the price of goods in the U.S.
03:39And globally, Bloomberg had a story a couple weeks ago about how they're having Coca-Cola parties in India because
03:44the cans are so expensive now.
03:46Having a Coke is like a cachet.
03:48So they're having parties where people bring Coca-Colas and drink them.
03:50Wow.
03:51The Canadians have been really strategic in their countertariffs.
03:55Michigan is, of course, a really important swing state in the United States, and it's going to suffer particularly.
04:00Can you walk us through that a little bit?
04:02How is it impacting Michigan and how – talk to us about the strategy behind that.
04:11Well, I mean, there's absolutely a – if you're in the border states, a lot of Canadians vacation to the
04:17U.S. normally, right?
04:18There's a lot of cross-border traffic that happens, and there's also just a lot of intertwined economic activity.
04:24I mean, the big one in Michigan, of course, is the auto sector.
04:26The Canadian and the U.S. auto industries are very integrated.
04:30Car parts – in the process of building a car, those parts cross the border.
04:34There's a famous stat that the average car crosses the border like seven or eight times before it's produced,
04:40and that's just a reference to how many parts go back and forth.
04:43And so when you tariff Canadian auto production, you're also tariffing essentially Michigan auto production
04:49just because of how conjoined the two supply chains are.
04:53But there's also – I mean, if you run any kind of business in the U.S. that relies on
04:58tourism,
04:59that tourism, I think it's somewhat down all over the world, but it's down significantly from Canada, right?
05:05And so anybody along those border states or some of the other places where Canadians visit,
05:10you feel the pinch of that.
05:12The alcohol – the fact that most Canadian provinces are not stocking U.S. alcohol,
05:17I mean, that's – again, that's a big market for alcohol producers in the U.S.,
05:21for bourbon and wine, the California wine regions.
05:25And so, again, it may not be impacting the whole economy.
05:28Of course it isn't.
05:29The U.S. economy is just way too big for that.
05:31But there are areas where it's feeling hurt.
05:33And I think in general, if you – from at least from what I've seen,
05:36the public opinion evidence in a state like Michigan,
05:39they're not looking for a trade fight with Canada.
05:41They don't see Canadians as their enemy or as hurting them nearly as badly
05:47as the president claims that Canada is hurting the U.S.
05:50So I think that this trade fight, from what I've seen,
05:53is really not a popular trade fight in those areas.
05:56So what do you expect Carney to do?
05:59I mean, I'm looking at – I brought this up because I was trying to remind myself.
06:02I Googled Canada-EU trade negotiations,
06:06and I got four completely different takes as the first hits.
06:09No, Canada is not joining the EU, but it might be pioneering a new care of partnership.
06:13What if Canada joined the EU?
06:14Canada invited to trade talks and don't count on Europe to save Canada.
06:18Is that a viable option?
06:20Is that something you think the Carney government will pursue
06:22in lieu of functional, sustainable, reliable trade ties with the U.S.,
06:27looking more towards Europe to bolster that intake instead?
06:31Well, I will say, first, just to frame this for Carney,
06:36the Canadian public is absolutely behind him on this.
06:39We have fresh polling evidence ourself that I think will be published soon.
06:43There's been other polls that have been published.
06:45The Canadian public does not want Mark Carney to back down to Donald Trump
06:51or to be seen backing down to him.
06:53They think that Trump is offering a bad deal, and they don't want Carney to sign it.
06:56He, at least from the broader Canadian public,
07:00he's under no pressure right now to sign a deal.
07:02So that's part of the dynamic here.
07:04And what he is trying to do, as you alluded to,
07:07is diversify Canada's trade all over the world.
07:10So that includes Europe.
07:11I would say there's a big emphasis on Asia as well,
07:15especially when it comes to trying to export more Canadian oil and gas to Asia.
07:20But this stuff is difficult, right?
07:22There's geography that's in the way.
07:23There's a reason why about three-quarters of Canada's exports generally go to the U.S.
07:28That number is dropping right now because of the trade war.
07:31But, you know, geography still rules here, right?
07:36Canada has only one border state, and that's the U.S.
07:40And it happens to be the biggest consumer goods market in the world by most measures.
07:46And so, you know, that's where Canada's exports go.
07:48And so Carney is going to try as hard as he can
07:52to direct some of that economic activity east and west.
07:58But, you know, there's long distances to go.
08:00Canadian supply chains are not really –
08:01they're much more set up to go south than they are to go east and west.
08:04So it's something that will, by necessity,
08:08just take a long time to actually show big results, I think.
08:11You mentioned the tourism piece.
08:13I was in a train station here in New York recently
08:15where I ran into a couple of Canadian visitors,
08:17and they said that they weren't telling their friends
08:19that they were coming to the U.S.
08:21because it was such a sensitive issue for them.
08:23We've only got about 30 seconds left.
08:25Give us a sense, Brian, of where the compromise could be if one is coming.
08:31I think ultimately if you – you know,
08:35I think ultimately the populations on both sides of the border
08:38would like to see this settled.
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