Nuanced. - 266. Jack Mintz: Canada vs. Trump — Trade War Explained by Economist

Episode Date: September 2, 2026

Economist Jack Mintz explains how Trump’s trade war and Mark Carney’s negotiations are reshaping Canada’s economic strategy, including tariffs, corporate taxes and inequality, with host Chief Aaron Pete.Send us Fan MailSupport the shownuancedmedia.ca

Can Canada survive Trump's trade war? Do actually have a fear that we don't know what the end game we want out of this. When you look at our previous election and the platform Prime Minister Mark Carney ran on, how do you think he's performing as a negotiator with the U.S.? So far, the results have not been very good. And so whatever strategy Canada's following, it's not working at all. In fact, things are just getting worse with even higher and higher tariffs being put on us. Why should workers trust another corporate tax cut?

I think one of the great values of dropping the corporate tax is that everybody benefits. And we're not picking which sectors are going to win. All the sectors are built for. What are your thoughts on do we tax the rich? How do we address the income inequality we're seeing in Canada? The idea that somehow the rich are getting away without paying taxes is not true. In fact, the rich do pay a lot of taxes. Do you think it was a good idea for the Canadians to walk away from the negotiation table?

Dr. Mintz, thank you so much for being willing to join us today. Would you mind briefly introducing yourself for people who might not be acquainted with your work? Yeah, well, thank you very much, Erin. It's a pleasure to be with you today. I'm Jack Mintz. I'm still president's fellow School of Public Policy at the University of Calgary, although I currently live in Toronto most of the time. These days, this is how one does things.

and I've had a very long career, basically an academic all my life, but also I've done other things. So it's been a bit of a different type of a career that most people have had in my field. Tremendous. My first question is bold. Can Canada survive Trump's trade war? Oh, I think so. I mean, Canada, you know, countries have had, you know, tariffs in the past and things. things like that. I think we get a little bit too excited over these things and forgetting that,

you know, one time they were terrorists in the past and, you know, we still saw economic development and everything like that. However, there was no question that, you know, once we went into the Canada-U.S. Free Trade Agreement in 1988 and then later on NAFTA in 1994, that we got access to the U.S. economy. It allowed a lot of our companies to achieve. economies of scale, you know, cheaper production because they could have a much bigger market to service. And of course, you know, the world changes a lot. You know, 1988, you know, we're talking about almost, well, almost 40 years ago, 45 years ago. So it's, you know, the world has also changed a lot. And we have different kinds of businesses today than

we would have thought about back in the 1980s. How does this impact Canadian standard of living? This is one of my primary concerns. What do you think that's going to look like if this continues? Well, I think the tariffs, you know, did have a negative impact. It's negative impact for everybody. I am a believer in the value of free trade. Unfortunately, I think the world is shifting away from that.

We're getting a much more nationalistic world than we've seen years ago. And we have to remember the 1980s was the time of, you know, the Reagan Revolution and the Thatcher Revolution in the UK and, you know, at that time, many countries believed in trying to open up their markets and try to get more free trade. We also seen at that time deregulation and tax reforms taking place, including in this country. And so there was a whole package of what you might call liberal type economics, a shift more to the free market than we had seen previously. And so that was a very different time today,

especially starting, in my view, after the financial crisis in 2008-9, we started seeing a very different kind of world develop, where governments have taken on a bigger role in the economy. The idea of governments getting out of the way has now become governments should be in the way and industrial policies in vogue now. The idea of having terrorists has now, you know, become more and more common across countries. And so we've had these kinds of changes that I think have happened that are that are a bit unfortunate, I think, in terms of the way the world is evolving, but this is not

the first time we've seen these kinds of cycles. I've been reading a lot of things lately that's kind of interesting, but it's a book by a very good historian at Yale. His last name is Westad. And he's sort of drawing a parallel between now what we're seeing around the world to the late 1980s, which we have to remember led to eventually the First World War. Not a very pretty picture, to be honest. And one that's very concerning, if this is the kind of direction that we're now going into

in the coming number of years. I guess one of my concerns, to be honest with you, is that while it may impact all Canadians, it will impact Canadians very differently. And I don't know if you saw Premier Doug Ford's comments saying that he has a lot of real estate and that Donald Trump can kiss his ass. I think that plays well with,

like his numbers went up after some polling in response to that. my fear is that of course premier dug forward mark carney they're not going to feel the very real impact of this trade war the same way a single mother is going to feel who lives in poverty trying to raise her family and i just felt like that was a bit tone deaf from my personal perspective because it's not reading the like if we are going down this path the ramifications we're already our economy's not in great shape and so we're going we don't know how long this is going to go. Mark Carney chose to bring back our team back from the U.S. And that's going to have implications for very vulnerable people. And I often don't see, like I understand Mark Carney's come out and

said, we're going to do things to support people through this and businesses. But rarely, Mr. Minst, have I seen that really impact vulnerable populations, people in real poverty, whenever government comes out with supports? What are your thoughts on how we make sure we support those most vulnerable. You know, first of all, we have really had a bad decade coming into this trade war. You know, economic growth has not been particularly good. In fact, we've been one of the slowest growing UECD countries, not negative. I mean, it has been a recession, although, you know, the pandemic was a very tough time

for a number of people. But the trade war is going to hurt our growth. I mean, it's not going to be devastating. I mean, it's not going to cause a depression in my few. in terms of what's happening right now. But pockets of the economy are going to be hurt. And I think Ontario is the one in Quebec that I think are going to take the biggest front. And that's because the United States, and there's very subjectives that they have.

I know, you know, it's pretty easy to, you know, to criticize Trump and everything else. But if you go back, what are the three major objectives they have? I think it's very important to understand what your opponent is trying to do. And one part of it has been to reindustrialize the heartland of the United States. And of course, Canada has not been the problem. And that's the part that I think we probably resent most, is we're getting pushed hard now by the U.S., especially for the auto sector and other parts of manufacturing, such as the steel industry, aluminum, etc.

But that has been the objective. And a big part of that has been China in terms of what it has done internationally, where it's used its subsidies and its developing status when it came in the World Trade Organization that's been able to, in a sense, use their status at that time to grow very quickly. And they've overinvested in capacity in order to really grab large parts of the world. market share. And that has been a, you know, that has been something which at first everybody thought was great. We're seeing this, you know, reduction in world inequality as a result because of the huge growth that happened in Asia and particularly China. But of course, now we're finding that pockets are really hurt. And so this trade war, which Trump is now using, and we're now getting particularly hit, I think, in the manufacturing sector, is going to, is going to

be very bad for for for for for Ontario and of course there are going to be people that are going to be hurt you know you look at the auto sector for example you could have you know people who have been you know have had good jobs relatively good paying jobs and then all of a sudden they're not going to have a job anymore um in fact we've already seen a loss of jobs in ontario and in Quebec uh as a result of uh of the trade war and this this is very you know very difficult for people that all of a sudden, you know, they have families and, and everything else. And, and, and I can understand in a way, you know, the Premier of Ontario being very upset, you know, if he, if he's really thinking about, I'm sure he has a bit like this, if he, if he sees it,

you know, there's going to be people really hurt as a result. But I, but I do actually have a fear that we don't know what the end game we want out of this. I think there's a real contradiction in terms of what we're trying to do as a country in terms of our trade relations. Either we want to have some sort of continuing access to the United States, which is going to have to look at some aspects of that. We can go into more detail after this, if you want. But either we want to have Fortress North America, which the prime minister is said, you know, he's in favor of as long as we can get to kind of like more like zero tariffs,

between United States and Canada, which I can understand that argument. Or we're going to be diversifying our trade and moving away from the United States. Those are two different things. And a good example of that has been the issue over China and Chinese EVs coming into Canada and also the transshipment of manufactured goods from China going through Canada into the U.S. That is something which the Americans have been particularly, egged about. And in fact, that's been one of the issues involved with this latest breakdown with the trade negotiations, where United States said basically to their partners, including Mexico,

we want more like a common tariff, which is going to stop this transshipment of Chinese goods coming into North American supply chains. Because, for example, Chinese steel gets mixed with Canadian steel, the auto companies are having trouble knowing where the source is from ultimately. And so, you know, unless they get identified. And so therefore, you end up getting some very, the Americans are getting, you know, are getting quite upset about that. And in fact, they put out a whole long document, which I got the other day, but I haven't had chance to read it in its entirety. But it is an issue. And that's what happens when you have a, a fortune North America. In fact, you know, one of the ways that you might think of having fortress

North America is to have a customs union where we have a common tariff around North America. And, but part of that would be no tariffs within North America, which I think would be a good place to move to. And I don't think that's where Trump is. I think Trump is wanting to try to get auto trade production that's in Canada as well still and aluminum. and shifting that into the United States. And that puts us in a very difficult position. And not surprising, it's going to force us to probably look for more partners abroad. If after Trump comes, the United States, or leaves that I should say, in a couple years' time, he'll be gone,

then the question is what's going to happen after that? And what kind of regimes are going to see? and I doubt very much that we're going to see a big shift away from terrorists necessarily, but although maybe future regimes will be much more willing to work with Canada than what we're seeing Trump doing right now. You had named kind of one of the primary objectives. Are you able to share those other two objectives from the U.S.? Yeah, I'm glad you reminded me of them.

So one has been the deindustrialization of the heartland, and so it's really protecting manufacturing. But, you know, as Trump has said himself, but some of the other people in the United States, you know, you can't, you know, if you don't have auto manufacturing, how are you going to make jeeps and, you know, other things for military spending?

And then, of course, they also have, they raise issues around semiconductors and et cetera, et cetera. So that's part of it. The second objective, which is an important one, by the way, is revenue. And in fact, I think that's actually one of the reasons why we won't see tariffs disappear in the future, because the U.S. government is now becoming very dependent on revenue. It's roughly $200 billion a year, two trillion dollars

over 10 years' time, which goes, which is very important for the deficit of a country that already has a huge deficit. And so I can see that, you know, those revenues are going to be very important to any future government, not just the current government in the United States. and will be very difficult to undo for that reason. In fact, I went to a Washington conference a year and a half ago. In fact, I was the only Canadian invited. It was very interesting group, a very high-level individuals, including some people from the Trump administration

and some very top academics there and things like that and others from various think tanks and parts of the administration and things like that. But the question they wanted that I was asked to discuss is, is it better to raise corporate taxes? This is what the Democrats have wanted to do when Biden was in power. Or is it better to raise tariffs? And that's a public finance question. That's not a trade issue. And in fact, we forget that there are many countries around the world that have terrorists, at least to some degree.

And some are very dependent on terrorists. In fact, I have a nice little diagram that shows the percentage of revenue, the government raises, is what are called international trade taxes. It could be export taxes or tariffs. And, of course, as you might expect, a lot of less developed countries have very high numbers. You know, in the 20% of the revenues could come from trade taxes. And in the case of Bahamas, which is a relatively, you know, middle-income country that believes in not having any income tax, 20% of their revenues come from trade taxes. And so, you know, it just shows you that some people make decisions on a public finance basis and is really quite different than, you know, other countries.

But you can make an argument that the corporate tax, for example, raises a cost. of exporting and goods coming into a country are tax exempt from the corporate tax. So from a trade perspective, corporate taxes are actually hurt an economy. They're like having an export tax with no import duties. That's, you know, in that sense, which is kind of surprising. But if you move to a tariff, you're putting a tax on imports and you're exempting exports, which, by the way, is what we do under the value-wide tax. that we have

that actually over 150 countries have around the world today. And the third one. And the third one. And the third one, which the cell comes from very early on

over a year and a half ago. The third argument that the Trump people had at the time before they just, after they just got elected in November of 2024, was the United States

provides a defense umbrella to the Western world, plus a reserve currency. And so these are like two public goods. And so government feels that they should have a, you know, some sort of tariffs in order to pay for those things. But they also link it to the trade deficit, you know, the argument that, you know, the trade deficit has been unfair. You know, of course, for an economist like myself, to me, this is a bogus argument

on the trade deficit. And of course, we haven't seen much change in the trade deficit for United States despite all the tariffs that come in. But that has been an argument made as well. But also that there are countries of trying to take advantage of the United States through their own various tariffs and subsidies and things like that. And therefore, the U.S. would like to see that getting corrected where they feel they've been disadvantaged by those countries. I noticed that in your explanation of those three reasons, you didn't add a moral judgment or a value judgment on them. What are your thoughts on those three objectives? Well, I'm not really in favor of trade production, although I do understand that if you have a country like China that is heavily subsidizing, and I've gone into this in some detail, subsidizing its companies in order to acquire market share and,

export into countries, you know, to really take advantage of that. Sometimes you have to do things to counter that, that I can understand. But generally, I'm in favor of free trade. I'd like to see countries not have tariffs. I'd like to have countries not have subsidies. And to, because I think there's a lot of value to free trade, because if you don't have free trade, then the cost of your own goods are going to go up. Your standard living declines, which is what you mentioned earlier on.

you know, and it has some very negative repercussions for a country. And if a country is not growing, it also means it's not going to have the money and the taxes in order to provide the kind of social services you want to help low-income people with. So I've been a very, I've always had big concern about making sure that we have some economic growth happening in order to that we can feed a population and have a stable society. So I'm not very much in favor of the first reason for having trade that the U.S. government is having. I don't blame them for trying to correct some of the negative things that other countries are doing. But this is where I think, you know, Canada, we do a few dumb things, I could say, in terms of protecting our own industries.

But I don't think we were a serious player. or hurt the U.S., as you've seen in the case of China. So I think it's a totally different story. In the case of the revenue issue, I think that's a difficult one. You know, value-wited taxes, which does put a tax on imports and exempts your imports, but it also taxes your domestic production at the same time. It's meant to be a consumption tax. And in fact, my view, the United States, rather than having terrorists, would be better to have

value-added taxes and really try to draw some of the taxes that do hurt in exporting and hurts competitiveness for the economy. But if they don't have a value-ed-tax, I'm not sure that tariffs at a low level, not a high level, that blocks trade entirely, but used for revenue purposes is such a bad thing, you know, at least from a moral point of view. And this is because I'm looking at it from a very different perspective. I'm not looking at it from an international trade perspective with a lot of international trade economists will talk about. But I'm looking at it from a point of view, probably finance questions.

What's your best type of tax structure to have? And then as far as the third one goes, I think the United States has benefited in terms of exerting its power internationally by having a reserve currency. and providing that defense support. And I think the idea that they need to have other people pay for it is wrong. And I think that, you know, I think because it's working in alliance, so you're trying to get cooperation by everybody. But I think that the argument that trade deficits are terrible is also because, you know,

your balance of payments also depend on capital flows coming into the country. and just because you may have a trade deficit when it comes to your merchandise trade doesn't mean that you have a bad situation if you're if you're able to import capital which the United States has done quite successfully. So to me that every country is either going to be in a trade surplus position or a trade deficit position, one or the other, but it doesn't mean that you're better off or worse off at all. it's a number of factors that may cause that. But it's not, it's, I don't think it's a, it's something that should be an objective for governments.

That's the mercantilist point of view of the world going back to hundreds of years ago, where, you know, governments wanted to protect their manufacturing sector. In fact, we did in Canada. We keep forgetting that. Going back to even at the time of, you know, when, when we became a confederation, the national policy of John A. MacDonald included having tariffs in order to protect the manufacturing sector in Ontario and Quebec. And so we've had that objective, too, in the past. In fact, in some ways, we still do.

And I can go into that at length in terms of corporate taxation. But that's actually that I don't think that's an objective that I think is helpful when governments are trying to protect various industries. I think it's more important that if an industry is not doing well, let's see the shift of resources to things that are doing well. And just to give you an example, it just ran a very good, or an interesting article on Germany, where they've had a very,

their manufacturing auto sector is having a very tough time too. They're laying off people and they can't compete against the Chinese. Of course, they do allow the Chinese vehicles into Germany. But what's happening now is that the auto company, are starting to move entire the sectors, whether it's robotics, defense, you know, a number of things, and shifting other bottles.

And so you might see eventually not the full demise of the auto sector in Germany, but certainly a much smaller auto sector than they've had, which has been a big driver of their economic growth since the Second World War. May I ask, just bringing it back? You mentioned the conference you were invited to and you were one of the only Canadians invited.

Why do you think that was? I was the only non-American there, actually. Yeah. Yeah. Why do you think that was? Oh, I think it was just, it was, the title of the conference was on tariffs and other destination-based taxes. It was meant to be very much on tax policy.

And it was organized by Georgetown University and PWC. And I was quite surprised to be. the only one outside the United States to be invited, but it was really an excellent day. I thought a lot of very interesting arguments were given about where the U.S. was going on trade policy, the whole issue around tariffs, et cetera. And of course, you know, it was, I think it was well worth attending the day. But particularly, it was struck by some of the comments that I heard from some very serious representatives of the Trump administration. the reason I ask is because I spoke to a member of parliament Ellis Ross and one of his comments

in taking negotiation courses for his he was a former chief counselor for Heisla nation one of his points was that he thinks that Canadians have a real hard time putting themselves in the shoes of Americans and understanding where they're coming from and they view everything that's happening right now as an attack on Canada. And perhaps rightfully so, maybe you agree that it's an attack. What I've heard, and I try and follow some conservative commentators just to try and put myself in their shoes. Like, what are they thinking? And one of the comments I heard from an individual named Segar and Jetty was that during NAFTA, the US made certain concessions because they just didn't realize that deindustrialization was going to be such a big issue

20 years later. And so when they crafted NAFTA, the Canadians asked for a bunch of things. to support our auto sector. And the Americans were like, sure, it's not, it's nothing to us and it's everything to you. Why not? And so now that they have deindustrialized and they are trying to reinstitute that base, they're like, no, we actually have to take all of that back now. And the way I see our politicians behaving, the way I see some of our political commentary class, it's very anti-American.

It's not anti-American government. It's not just anti-Trump. It kind of is going deeper than that to an anger towards America. And I think in any healthy negotiation, as Ellis Ross pointed out, you need to put yourself in their shoes. If we're going to have productive conversations, if we're going to get anywhere. And I find that you were the only one invited to this conference just kind of echoes this feeling that like you don't want a bunch of Canadians there because maybe they're not going to be as mindful of that the Americans are trying to focus on their interests. And you're able to kind of walk that ground without conceding that they're correct, but not get emotionally invested the way I see so many of our political. commentators get emotionally invested in this conversation.

It doesn't mean don't care. It just means stay grounded in the facts and the objectives that they're laying out as their arguments as to why. Well, I agree very much. If you want to succeed, you have to understand what your, you know,

what your other side is looking for. And that's why I, when Trump got elected, there was this paper that came up that Stephen Moran was the main author of, but I'm sure, it had a number of people that were involved in writing it. But it made very clear why Trump was moving into a world of trade tariffs and a much different approach. And you can argue some of it is good and some of it is bad, et cetera, et cetera.

But at least you would understand what their objective. So when I went through the three things, the revenue argument, the, you know, the deindustrialization argument and the trade deficit, you know, public good argument. that these, you know, at least you can understand where they're coming from. In the case, is it an attack on Canada? Not particularly. I don't think it has to be an attack on Canada. Because I look at what Mexico is doing. I mean, we're not seeing the same confrontation happening with Mexico and the United States.

In fact, what people don't realize is that since January of 2025, Mexican exports to United States have gone up by 24% during all these issues around trade and tariffs and things like that because they've been hit too with some tariffs. But what's happening is that Mexico, first of all, being a low-cost country because of lower wages, there is a lot of third parties that are going to Mexico in order to get access to the U.S. market that way.

and the transcript shipment argument of the Americans is also against Mexico. It's not just against Canada. But we're not getting Mexico coming out and, you know, telling, you know, a president of the United States to kiss my ass. And, you know, and that, you know, we're going to ban with middle powers and now there's a rupture. This won't be going, you know, we're not going to be going back, et cetera, et cetera. all that does is just further aggravate, I think, what potential could be done. And so it comes back to me, and this goes back to the point that I said earlier on, what is our end strategic goal in all else?

Is it to basically drop any free trade agreement with the United States? And we'll just go on our own, let's say, try to have a more competitive economy, try to trade with other countries, stop or really cut back our relationship with the U.S. and dependency on it, which is more than just economic, of course. It's also defense and other things we have to remember. Is that the goal? Is the goal what I would let's say call Fortress North America, where you have a defense security and an economic pack that was really part of the goals

later on, or is it maybe to have a new Kuzma relationship? There may be tariffs involved, but maybe other things that we can get that can be cooperative. My view, I'd like to see the third happen. I don't want to see it. I think the U.S. is the most dynamic economy in the world today. It is, you know, and being right next door, having the same culture, and we're already, many of us still are very tied into what happens in the United States. We watch the same television programs.

We see the same movies. We go down to football games in the United States, you know, et cetera, et cetera. You know, culturally, we have a lot of attachment to you. Plus, a lot of people have their kids that live in the United States or families that are living in the United States. So it's, you know, it's a very, you know, to tear that apart, I think is something very difficult. So I don't think the first option is a very good option. I think there's a huge amount of costs associated with it. It's kind of like Alberta trying to separate, you know, or Quebec trying to separate.

There's very big costs associated with that. And trying to give up access to the American market and our relationship with the U.S. I think would be a huge error. So that leaves Fortears America or North America or having some sort of trade relationship that's comfortable enough for us to give some benefits. I think those to me are the best options that are available to us. And I think for now, given the way the U.S. administration is working, I think the second option of Fortress and North America is very difficult.

So we have to tread through what we can at this point. My understanding from Mr. Greer's comments to Rosemary Barton in a CBC interview is he basically said, we were at the negotiation table, we were having these conversations. Prime Minister Mark Carney pulled his team from the negotiation table and walked away. There are theories that Prime Minister Mark Carney didn't want a deal, and that's why it took so long to start having serious conversations. I don't know where you land on that. But broadly speaking, do you think it was a good idea for the Canadians to walk away from the negotiation table?

Well, I think it may have not been wrong at this point. It was a very good article in the New York Times yesterday, which I read, which I think the value of it had talked to both sides, both American and Canadian negotiators, to get a fuller picture of what happened. And it seemed to me that, you know, I actually think there could have been a deal. So the problem, I think the biggest issue was the fact that there was an agreement to reduce the auto-terrorism, and aluminum and steel tariffs as well. And then the pressures came from the protected industries. And this is a problem when you start doing these sorts of things. You bring in policies to protected industry, and then all of a sudden they start fighting very hard to keep it.

And we know this ourselves. We have that with supply management. This dominance policy ever adopted in Canada, 40, 50 years ago, and we're still stuck with it, and nobody wants to get rid of it. And yet we know it raises milk prices and eggs and poultry prices for Canadians

and hurts low-income people and has heard of export industries, et cetera, et cetera. So this is what happens. And so in that trade, so I think the shift to basically take large automobiles out if this is true. I mean, I wasn't there, so I don't know exactly what the terms were. Nobody really knows.

But if this happened, I can understand why the Keynes would walk away on that. I think it's somewhat boalous over the French issue. I don't think that was the appropriate argument. In fact, the Americans for a long time. In fact, I even had calls from streaming companies in the United States to look at these issues. But there was a proposal, there's this 5% tax that was going to apply to streaming revenues

and with the revenues being given to the CRTC for our Canadian films and et cetera, et cetera, we can debate whether that's a good or bad thing, because I'm not exactly, I don't like that policy at all, to be honest, for me neither. reasons. But I do think that,

and they also, Canada, wanted to have streamers give prominence to Canadian and, you know, Canadian films, etc., including the French-Canadian ones. And the United States was resistant to that because, from what I read, because they don't feel it's right for governments to tell

businesses how to run themselves. And so I think there was, you know, that kind of objection to it. I think that issue could have easily gone away and I don't, you know, didn't have to be dealt with the way it did. We already gave up the digital services tax. So I think the streaming thing could have been handled because that issue has been around now for a couple of years. And then, you know, the other issue, I think, is over the trade agreement issue, where the United States, actually people forget that under Kuzma, under the current agreement,

there's a provision that if one of the countries, one of the three countries, had a trade agreement with a non-market economy. Ooh, guess who is the non-market economy? Anyway, it starts with a C, that name. Anyway, they basically would get the agreement, the Tuscma would no longer apply to them and there will be just a bilateral agreement between the other two partners. Actually, that's what it stays. In that case, that limitation was specifically related to more comprehensive trade agreements. But the U.S. wants to apply this to a larger set of agreements, you know, trade partnerships,

things like that. And there's no question that Canada's deal with China, I think, was, had irritated the Americans, but I think the bigger issue is over transshipments. And that's why the Americans said, we want to have the right to, you know, to have a, you know, we would like, we want to have similar tariffs. So this goes back to the Fortress American argument. And I think we're, again, this is where a deal could have been made. And I think that could have been made. I think that could have been dealt with by pushing hard to get reductions in tariffs internally with the idea of moving towards some sort of customs agreement. And I do remember at the time of the Canada-US agreement,

there were issues around U.S. wanting to dictate policy to, you know, especially NAFTA, I should say. You know, but Canada and Mexico being much smaller than the United States, of course, U.S. carries the big weight. But I think there were, you know, certain panels that were going to be allowed to, you know, certainly to have a certain amount of consultations. So the U.S. just simply can't unilaterally force everybody else to adopt exactly the same, you know, a certain custom tariff rate. It would have to be done by, you know, by negotiation and discussion.

So I think we could have tried to push for these things, if this is correct. But I have to admit, I wasn't at the table. So I'm, you know, outside of reading some of the things, are being said, I have no better information than what we know publicly. When you look at our previous election and the platform Prime Minister Mark Carney ran on, how do you think he's performing as a negotiator with the U.S. from the promises he made? Obviously, we're getting to kind of extreme views. There's people who think he is so invested in Brookfield that he is doing everything in the

interest of Brookfield and not Canadians. And Pierre Polyev has put this argument forward that if you look at Brookfield's growth versus Canada's growth, Brookfield is outperforming Canada in terms of their growth. And then you have people who are like, well, Mark Carney's standing up to the Americans. He's standing our ground. He's elbows up. How are you kind of reading the actions and decisions and strategy of Prime Minister Mark Carney? Well, first of all, I think the Brookfield stuff is, you know, I think it's a bit of a red herring. Brookfield is, but I have to admit, I was on the board of Brookfield at one time for 10 years. So it's a very fine company run by very excellent people, and it has done extremely well over the past 20, 25 years.

And so, hats off to them. And, you know, the only question I think comes up is whether the prime minister has sufficiently guarded himself. from, you know, from potential conflicts of interest. He has taken his wealth and he says he's put it into, you know, you know, some, you know, arrangements where he's not controlling investment decisions, but he knows what's in there. So, you know, that's where the accusation comes. But I think it's a bit unfair.

I don't criticize them for that. In fact, if we can look at every politician that way, then we won't ever, you know, we may lose out some very high quality leadership for that reason. I think the more general question, which is the one that you're getting at, which is the, you know, how would you rate the performance so far of the government since it's got elected a year ago last April? And on the trade side,

there was a promise we're going to have a trade agreement by July 2025, while we're not even close to that so far. And I know it's hard because you have a very mercurial president on the other side. And so I'm not fully blaming government for not getting a trade agreement. But I do feel, I do feel, though, that I think it's been unfortunate. This current stoppage to the negotiation has been unfortunate. Canada was very slow and dragging its feet to negotiate. And in fact, the American criticism was that Canada would meet, but then they had no, they were making no offers.

It was just, you know, just a discussion about which areas to cover, which is a lot different than coming in with a true offer. And that only happened recently where the Americans started getting offers. There's been quite different than the Mexicans that have been negotiating over for some time now with the U.S. and Shyambaum, the Mexican president, even said a couple of days ago, you know, we're looking forward to having an agreement with the United States,

which would be really quite something if she ends up getting one, and we're still not even talking to the Americans. So I think, I think this is a real concern on my part, actually, in terms of where we're going. So I think on all this, I just, so far,

the results have not been very good. And so whatever strategy, Canada's following, it's not working at all. In fact, it's, things are just getting worse with even higher and higher tariffs being put on us. So I think, I think it's been very unfortunate. The other set of issues is the idea that we're going to get the Canadian economy to grow more. And so there has been some real significant improvement, and it's certainly a big change in attitude with the current liberal government compared to the Trudeau government, where it's instead of always just doing, thinking about redistribution of incomes in society, there is

and identity politics and everything else that we've seen during the past decade, we're seeing right now a government that at least has a focused on economic issues and not just strictly social and distributive issues. And so, although they still haven't undone some of the other things that were earlier on, But at least there has been that. But the problem I find, and this is my view, and it goes back to what we were talking about earlier on, I like governments if you're going to try to get more economic growth, try to remove those policies that are hurting economic growth. And that's why I'm a big fan, regulatory reforms and tax reforms.

Currently, the approach of the government is to be a partner with the private sector and to create funds that are going to be subsidized. the private sector. And to have a regulatory system doesn't undo the problems with the regulations, but instead has a process which overrides regulations, but for only those projects that are picked by the government. And to me, to me, this is, I know some people may like this as a way of proceeding, but for me, this is not the way I would like to see, you know, see how the, how the, how the economy should be run.

And so I think so far we're not getting many results there either, as there's been hardly any projects that have actually started up, except for the ones that, you know, would have happened anyway in Canada. So, and we're still taking very long time getting, get things going. So I don't feel we're getting that success yet. And that's what I've heard from economist Trevor Toombe and economist Joseph Steinberg, is that when Mark Carney was coming in, he said, we need to do two things at once. We need to negotiate with the US and we need to do things to reduce policy barriers and see more trade amongst the provinces and reduce any barriers there. We haven't really seen big action on that. There was a lot of talk at the beginning of the trade war that we were going to remove all of it. And that hasn't really taken place. There was talk about. taking other steps to start to strengthen our own economy. And the whole idea of the major projects office when it came about was we're going to put this in

as an in-term solution and then we're going to address the deeper issues around what's going on, why are projects taking so long and actually improve that process. We see the interim solution being utilized and things going to the major projects office. But for one, we actually haven't seen anything proceed based on that. And two, we haven't seen any reform. to the internal regulatory process. So there is some more certainty on those potential projects. And then I think the third one that economist Trevor Toome mentioned,

and I'm sure you and I can talk about now, is taxes and reforming our tax code to make ourselves more competitive. Could you talk to us about that? Why should workers trust another corporate tax cut? Well, I think that's often an argument made against corporate tax. taxation, but I always, you know, I've worked around the world with the World Bank, the IMF, OECD, and in a lot of countries. And so I know that the taxes could be a very powerful mechanism in terms of creating more jobs

and attracting more investment. And I know that I often use Ireland as the best example, but I actually have a history. What happens if you kind of doubt some of the story about Ireland, because I had a conference once where I got really raked over the coals where by the Irish about how successful their tax policy has been. If you look at Ireland, it's a very good example. It was a poor cousin of a year for centuries and still pretty poor going just after the Second World War, compared to Great Britain and other countries around the OECD. But the Army started after the 1960s to undertake kind of three or four very important policies.

One was to educate the population. A lot of people didn't even have high school education, never mind tertiary education, post-secondary education. And so they really try to push hard students get through their high school education, and then even with free tuition, try to get people into post-secondary education, which they did. So they were building up a skill labor force. That was part of their objective.

The second one was eventually opened up themselves to trade by joining the European Union in early 1990s. But that was also very important in terms of having more access to the larger market. And the third thing was their corporate tax policy. And the corporate tax policy where the first had a very high rate, close to 40%, or whatever the number was back in the 1960s, they said, you know what, we're going to try to attract manufacturing and financial service firms. So they dropped their rate on their income to 10% lower than anybody else at that time.

Like it was such a unique thing to do. But it aggravated the European Union later on after they'd just. joined the European Union. And they told Ireland, look, you got to do something where you can't have this big differential where initially it was like 36, 38% versus 10%. And so the Irish, they did drop their top rate for a bit. And then in 1999, they said, okay, we won't do state aid anymore. We'll get all companies 12% lower than any other country in the OECD.

But by that point, they were attracting a huge number of multinationals coming to Ireland to set up shop. Manufacturing. In fact, still today, manufacturing is like 20% of their GDP. And Canada is less than 10%. That's the difference. And instead of having people that were leaving the country, emigration, where they were going to Europe, UK, Europe, and United States and Canada, they started reversing. people were actually moving back into Ireland after that point. And so there was a very significant change that occurred where Ireland was growing very quickly

over the past 30 years, let's say, 40 years. And except for the financial crisis where they had bad financial regulation, got hit very hard by it in the late 2000. and they were able to have become one of the richest OEC countries in the world. And I like to use what's called gross national income with GDP to measure. GDP is your measure of all the goods and services you're producing in the economy. But it could be production could be owned by foreigners. Gross national income, what you do is you subtract out the payments that go to foreigners.

And you add back the payments that residents in your country get from abroad. That's gross national income. I think it's a little better measure of standard of living than GDP for that reason. But even, and of course, Arlen has a lot of payments that they make to foreign countries, or the United States particularly. So they, you know, Arlen is, a gross domestic product is much bigger than their gross national income. But even on a gross national income basis, they're far richer than Canada and many countries. They're still one of the richest in the OECD, except for Luxembourg in a couple of cases.

So this is the corporate tax policy was an amazing, amazing success in Ireland. And it just shows you how powerful that can be. And some of the other work that I've done, I can give you another example, which was Bulgaria. This was work that I did with the IMF and the World Bank because it was back at the end of the early end of the 1990s. Bulgaria was in a very tough, very tough position. And it went through a very large devaluation in its currency. It had extremely high deficits. Its economic growth was shattered.

Its population, you know, was poor. but I think it was getting poorer and the worst part and I'll just give you an example. The first day that I went to Sophia to work, I was with colleagues, we were sitting in a McDonald's and we were watching a kid that may have been like eight years of age, scrumbing through the garbage, pulling out paper and glass. And this was quite common where kids weren't going to school because they had to go and to find money, some way to support their family. And that's how, you know, that's what it was like in Sofia.

You saw people, very poor kids in the street and poor people and things like that. And it was terrible. Anyway, Bulgaria, I won't go through all the things they did, but they did link up more strongly with the European Union. In fact, at first they dollarized, they adopted the European Euro. as their currency for a while. Well, they didn't adopt it. What they did is they fixed their currency to the euro.

They really opened up trade, but again, they undertook a big tax reform. And I recommended trying to get out of these tax holidays, which were a very bad tax incentive, very costly and doesn't get you that much investment as you think you do. That's why I used to do a lot of work with the World Bank, the IMF, was over the issue of tax holidays. around countries. And I had a suggestion for the government to how to get out of them,

which they ended up taking up. But I recommended dropping their corporate rate from like 39% at that time, down to 21, 22%. In fact, they liked it so much, they went to 15%. Like Arnold. Anyway, but the combination of getting their deficits down, their currency, stabilized, their tax reform started driving foreign direct investment into Bulgaria, and they started having a significant improvement to their economy after that point.

So it's another example about how a combination of very smart policies put them together and you start seeing better results. And of course, for all Bulgarians, they started benefiting, I think, from having a government that was much more fiscally responsible, but also at the same time being able to, you know, generate the revenues that could support better social services in the country as well. And so I think it's a second example, but I can go through several others where taxes do.

Can I ask you about Canada? Because in 2005, you and a colleague, and correct me if I'm mistaken, estimated that proposed corporate tax reductions would generate around 56 billion in new capital investment, raise annual GDP by $5 billion and create around 340,000 jobs. You describe the tax cuts as a policy slam dunk. Corporate rates subsequently fell substantially, yet Canadian business investment remained weak.

I'm just wondering, how do you reflect on that journey? No, that's not true. Actually, if you look at the numbers, investment was very weak for a number of reasons prior to 2000. And then the corporate tax rates started being reduced after. 2000. In fact, we have the highest corporate income tax rate amongst all OECD countries in the year 2009, the highest one, 39%. And by bringing down our corporate rate, plus getting rid of some of the incentives, we actually started getting a lot more investment

during the 2000 decade. And of course, things changed in 2008-9. And there's been a number of studies that has shown that once you take into account all the factors that influence investment, taxes did have a positive impact. It was a very good study done by an economist now who's at the Alberta Treasury branches, but was at finance, but he and the colleague were together a really good analysis of the corporate rate reductions that took place between the year 2000 to 2005. Now, the numbers that I did, of course, is based on modeling. And, you know, the trouble is it's only predictive.

And there's various things that influence investors. it's not just taxation. There's other things. That was an estimate of assuming nothing else changed. That would be the impact. But of course, and by the way, I tend to take conservative estimates of behavioral effects in my modeling. But you could, but there was actually a much bigger improvement. Manufacturing didn't do as well during that period.

But of course, manufacturing, we've been throwing incentives at manufacturing. You know, manufacturing is the least taxed sector in the Canadian economy. Since 1972, we keep throwing investment tax credits at it, accelerated depreciation, all sorts of tax benefits to that industry. But it hasn't arrested its decline. And that's not to say that taxation doesn't matter. Maybe the decline would have been worse if we didn't do that. But we're the only OECD country that has such a bias towards manufacturing.

All the others don't. Not United States, not any of the European countries, etc. It's, you know, only Canada is really remarkable. You could see this in the publications that we put out about how manufacturing is so incentivized. And yet it hasn't improved manufacturing, The value-witted share, manufacturing as a share of value-added in Canada has dropped over the years. It was close to 20% back in the 1970s, I think. And now it's less than 10% as around 9%.

Employment as a share of total employment has dropped. And this is not to say that taxes don't work. This is to say other factors were happening. Because we also saw in many other countries a reduction in employment, you know, the importance of manufacturing. Why? Because we've seen this huge growth in Chinese manufacturing and Asian manufacturing that has, and that, you know, had taken much bigger share of the world market, which goes back to our whole discussion about trade, because that's one of the things that the U.S. policy has been reacting to now.

And how did China do it? Substitization. So it doesn't tell you that this doesn't, isn't a story that taxation doesn't matter. or subsidies. They can matter. But it's also... But I think one of the great values of dropping the corporate tax is that everybody benefits.

And we're not picking which sectors are going to win. All the sectors benefit. Does anybody lose? From corporate rate reductions? Yes. Yes. If you're a company that gets very fast right-offs

for capital, such as effectively you have negative effective tax rates at the margin on your marginal projects, then dropping the corporate rate actually might increase your effect, it's actually not reduce it. But that's because you're creating a more neutral system, where the accelerated appreciation has less meaning when you drop the corporate rate. My last question for you, and thank you so much for your time.

I've just been thinking a lot about, I don't know if you know of Emily Lowen, she's the leader of the BC Green Party. I had her on. And she, she's a follower and a fan of, like, people like Zoran Mundamni and others who are arguing that we need to tax the rich. That,

and I think it's correct, and you can correct me if I'm mistaken, that we have seen a growth in income inequality, that the rich are getting richer at a higher rate than the median household income is growing up. And so there's a felt sense that individuals, young people in particular are starting to fall behind. They can't buy a house.

Groceries are continuing to go up year over year. And yet people in older generations are likely going to benefit from their Canada pension plan and other services. So you effectively have a wealth transfer from the poor population to the rich population. Relatively speaking, obviously, if you're retiring, you might not be, you might not feel rich, but much in a better position than young people who can't afford a house. What are your thoughts on do we tax the rich? How do we address the income inequality we're seeing in Canada? Okay, so there's a lot to that.

So first of all, let's talk about has income inequality increased or not. So if you look at what economist's measure is the genie coefficient, which is a measure of the degree of inequality in the economy, it did increase a lot in the early 90s and 80s. But actually, if you look at the numbers post-2000, there's been hardly going to change. In fact, it's kind of gone down slightly. Also, the question is,

which genie coefficient are we talking about? Are we talking about the genie coefficient that is based on market incomes? Or are we talking about the genie coefficient that's based on what your market income is, plus the government transfers you receive, minus the taxes you pay. And the genie coefficient,

when you take in account, government transfers and taxes, is much lower, meaning much more equality than without it. So taxes and transfers in the cane system does reduce inequality quite substantially. In fact, it does so,

much more so than what's the you find in the United States, for example, and we're very similar to a lot of other countries. So we don't have this kind of problem that's, you know, that's being said, you know, that, you know, our tax transfer system doesn't lead to more inequality. It does. And in the past 20 years, we actually haven't had that much reduction. In fact, there's been some numbers that Phil Cross has put together that I've seen where he's

measured, for example, the top 1% in terms of their share of income. the story in Canada has been not the same as the story in the United States. So there's a question there in the first place. Then secondly, the question is, do the rich not pay enough tax? Well, if you look at income taxes, they certainly do pay a lot more. In fact, the top 10% of taxpayers in Canada, the top 10% cover over 50% of income tax. that are paid in Canada. There's a lot of people at the lower end that don't even pay income taxes at all.

So the idea that somehow the rich are getting away without paying taxes is not true. In fact, the rich do pay a lot of taxes. But the ones that do get a lot of breaks are often because governments are throwing breaks at them. And in fact, that's one of the concerns I have right now of all these incentives that go to things like film tax credits that lines the pocket of Hollywood producers. we're now having subsidies for this green thing or that type of investment, et cetera, et cetera. And what does that do? That just generates more wealth for owners of capital. And so I'm very much in favor of getting rid of business subsidies as much as possible.

And I'm very much in favor of making sure that we do have a fair tax system. on the personal side by getting rid of some of the special incentives that we throw into it in the guise of industrial policy. So I kind of question these things. And the other thing is that we have to remember people do move.

And if you tax rich people too much, then that could end up pausing in incomes. Thank you, Mr. Mintz. Would you mind telling people how they can follow your work? Well, I write every week in the National Post for quite a while. In fact, my article coming out tomorrow is going to be on gambling taxation,

which sort of came out of, I went to a conference last April of Munich on gambling, and I was asked to give out paper on taxation issues, which was the first time I really got into them. It's kind of interesting in itself. and so that's that's what I've been you can find a lot of the things I've written also I do have a number of papers

that I write for publication but they come out at various places some are published by the school in public policy I'll be having an interesting one coming out in mining taxation in the near future I'll be I've done a lot of work with the Inter-American Development Bank There was a major paper that came out a couple of years ago.

Plus, C.D. Howe I have a major paper that came out in income tax reform or on tax reform in general, which people can read too. So I show up in a lot of different places, but those are some of the, that's where you can find. Thank you, Dr. Mintz, for joining us today and walking us through some of this. I found your tone to be very calm and able to examine both perspectives, which I think is really important. because the political temperature right now on this issue is incredibly high. And I think the more thoughtful information we can have as voters, as citizens, is going to be more and more important as we try and navigate this because we don't know how long it's going to go on for. And I think our government has a vested interest in us being more fearful. And I think that's when we need to start looking at the data points, looking at the information and looking critically at what our options are and trying to help them make better decisions.

by giving them our perspectives. So thank you so much for joining us today. That's my pleasure. Thank you.