The Ben Mulroney Show - Did Canada's "elbows up" hurt US businesses?

Episode Date: July 3, 2025

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Instant access to your sales, plus the funding you need to go even bigger. And real-time insights so you know what's working, what's not, and what's next. Because when you're doing big things, your tools should too. Visit square.ca to get started. Welcome back to the Ben Mulroney show. We are going to talk a little bit about Canada's relationship with the United States as it relates to the tariffs that Donald Trump introduced into that dynamic that saw us put our elbows up. Now, I hate that expression because it's deeply political and there it means different things to different people.

It means different things to the same person on different days, depending on what our government is doing. For some people, everything that this government does is an indication of elbows up, no matter how contradictory the evidence is. But over the course of months, there was a bi-Canadian impulse in this country. And we were hoping to move the needle and hurt the Americans to show them that their tariffs were

a bridge too far. Well, Trevor Toome, who's the director of fiscal and economic policy at the School of Public Policy at the University of Calgary, has done a deep dive into that movement to see what sort of impact we had both at home and on our American neighbors. And so to drill down into it, we welcome to the show Trevor Toome. Trevor, thanks so much for joining us.

Great to be here. Thanks for having me on. Okay. So what is the sort of the big takeaway? We can drill down to the numbers after, but what's your big takeaway after looking at the numbers and what numbers specifically did you look at? Well, Stackhand reports trade flows between us and the United States every single month.

In fact, we got an updated set of numbers just this morning that I haven't had a chance to look into, but they provide these updated snapshots of how much we buy from the Americans and of what product in a very detailed way. And so we've been now able to look at the months of March and April, you know, April was a big month that liberation day announcement early in that month, and we can then see whether or not Canadian buying patterns have changed

over the past couple of months. And I think one big one stands out and that's the items that we put tariffs on in retaliation against the United States from their tariffs. We've seen a 43% drop in how much of those items we buy compared to the same time last year, whereas only a very modest drop in items that we didn't put a retaliatory tariff on. So tariffs are effective. I think that's that's that's a that is a takeaway. If you put a tariff on something people will it will significantly alter whether or not people buy that thing or not. Absolutely.

We're talking about a 25% tax on imports of about 1,800 items that we buy from the United States and so 25% increase in the price that we pay that's pretty big and so people would naturally look to the substitutes or alternatives and you know that's kind of the goal in some cases of what tariffs are to try and get people to import less that's certainly what the Americans view their tariffs for we kind of view them as a way to impose an economic cost on the US. We buy less from them that's gonna hurt their economy.

Okay so there in lies the next question because if we've seen a 43% reduction in Canadians purchasing those tariff products, the next obvious question is how much of an effect did that have on our next door neighbors, whose economy is larger than ours by a massive amount, I mean, well over 10 times the size of our economy? So what impact did that have on their economy? That's right. Well, in April, the drop in the amount we bought, those items we put tariffs on add up I estimate to about $3.8 billion less than we would have bought.

Okay. Had we not had the tariffs. Okay. That might sound like a big number, but the US economy is $41 trillion in size. So we're talking about- Can you put a percentage on that? Yeah, about 0.1% off of the US economy. 0.1%.

Okay, so, all right, so it is what it is, right? When we heard from politicians who said, our tariff policy is designed to inflict maximum damage on the Americans. I don't know that they were hoping for a 0.01% effect, but it is what it is. And I guess we gotta ask ourselves, so okay, so that's one side of the coin, but on the other side of the coin is, as you said, changing Canadians' behavior and having us

perhaps prioritize Canadian products over Americans, which I think is a net benefit. I think we should be supporting Canadian almost by default if we can. And so do the numbers indicate the sort of the benefits to the those Canadian industries? That's a great question. And the potential for these consumer buying patterns shifting to more local suppliers is potentially much bigger than the tariffs. But we're only seeing it in a couple of products and one stands out and that's wine.

This is perhaps not consumer choices as many provinces just took it off the shelf, removed all American wine. And we saw wine imports fall off a cliff reaching nearly, but not quite, nearly zero in March and April. Where we're seeing a drop in Canadian purchases on things that we have in tariffs or provinces haven't taken off the shelf is in things like cereals and meat. But very little else. So at the moment, there's not a lot of evidence that the consumer boycotts have added up to much in total to actually show up in the data. Well, there's also, you know, I remember having a conversation during a television interview about having having to be very careful

about what by Canadian even means. Like, does it mean buying something that is entirely produced by a Canadian company in Canada? Or does it mean that it could be a multinational corporation, but that employs a number of Canadians at its manufacturing plant? Does it mean that it could be a multinational corporation but that employs a number of Canadians at its manufacturing plant? Does it mean Canadian ingredients? Does it mean like just one aspect of it that is in Canada?

So a lot of those, we didn't know what it meant in sort of the benchmark for me was, does that company support a number of Canadian jobs? Because I don't wanna put those Canadian jobs at risk. Is there any data to answer those questions? Not yet. And those are the right questions. First it might take consumers time to kind of learn what is and what is not Canadian

in the sense that you put it. Maybe in March or even April, it hadn't quite got there yet. Also, businesses changing the inputs that they buy, that's most of what trade is, and that might take time as well. And then third, inventories. There are warehouses full of items, and if consumers change their buying behavior, it doesn't immediately affect trade it. And so we just might not have seen yet the full effect. So I don't want to hang my hat on these numbers. It's just that the early indications are that the consumer boycott haven't amounted to very much, but they might in time. Yeah. And I think for me, I really want to look at the more positive, I want to find

the most positive way to look at this. I mean, I think we demonstrated, the numbers demonstrate just how, how impactless we can be against the behemoth of the American economy. But if maybe what it should have been is since the beginning, instead of, instead of we want to inflict damage on the Americans is we want to do everything to support those who are trying to build a Canadian economy at home. Because in that way, there's a lot of data that suggests that we can have an impact, especially if this government is true to their word and lowers, if not eliminates all interprovincial trade barriers.

Then those numbers that you indicated about wine could really be supercharged. I know for a fact it's practically impossible to sell wine in between jurisdictions in Canada if we can find a way to make the wine free flow from province to province. Who knows how much money that those industries can generate? Yeah I think that's exactly right. You know we're smaller countries in the US by a pretty wide margin. And so our ability to harm them is very limited, but our ability to strengthen our own economy

with any number of measures, inter-provincial trade, I completely agree with you, is one big one. That's very meaningful and potentially very large. Well, Trevor Toombs, thank you so much for breaking down the numbers for us. We appreciate it and we hope you have a great week. You as well. Thank you. Hey, so what did you want to talk about? Well, I want to tell you about Wagovie. Wagovie? Yeah, Wagovie.

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