The Ben Mulroney Show - Donald Trump goes to war with Canada's Auto industry, saying Canada stole it from the U.S.

Episode Date: February 11, 2025

Guests and Topics: -Donald Trump goes to war with Canada's Auto industry, saying Canada stole it from the U.S. with Guest: Flavio Volpe, president of the Automotive Parts Manufacturers Association -How devastating will Steel and Aluminum tariffs be? with Guest: Vivek Astvansh, Associate professor of quantitative marketing and analytics at McGill University  If you enjoyed the podcast, tell a friend! For more of the Ben Mulroney Show, subscribe to the podcast! https://globalnews.ca/national/program/the-ben-mulroney-show Follow Ben on Twitter/X at https://x.com/BenMulroney Enjoy Learn more about your ad choices. Visit megaphone.fm/adchoices

Welcome back to the Ben Mulroney show and we're ending this show as we began it. I was talking about Trump tariffs specifically on steel and aluminum. Trump said, so the earlier in the show, I spoke with an expert who suggested that this is a blanket approach for everyone who imports steel and aluminum into the United States. And whoever plays ball with Donald Trump is going to get a better deal. Whoever decides that they are going to invest in his country or put a quota on how much they send into his country might see their their share of these tariffs reduced, which

would then give them a competitive advantage over their competition. Here to talk about that with me is Flavio Volpe, president of the Automotive's Part Manufacturers Association. Flavio, great to have you back on the show. Hey, my pleasure. That sounds like we're dealing with Don Corleone rather than the president of the United States. Yeah, well, listen, you have been an advocate

for measured calm, let's not chase every headline, let's deal with him as it comes, let's not worry about threats, let's worry chase every every headline. Let's let's deal with him as it comes. Let's not worry about threats. Let's let's worry about things when they come. Well, it seems like these things are coming. So what's your take today? So I read the executive order, which is one of the pieces of advice I tell everybody read what they write. And this is March 4. So same implementation date that he was threatening on everything

else. It's steel tariffs on everybody. He's relying on advice that he got in his first presidency. He talked about a report on national security for imports on steel, and then he mentioned Canada and Mexico, and he said, uh, in one piece of, uh, steel, uh, reinforcement bars, uh, the Canadian, uh, import surge has been 564%. So he's cherry picking to make the arguments. Um, I think, uh, of course he's trying to, uh, to tell people that he wants

to have investment in the U. But anybody who's been in the steel business or, you know, take a drive on the undergarter and go take a look from the Burlington scabry what Hamilton looks like and think for yourself, how long would it take to build up extra capacity? That's a long time. Well, that's what I was gonna ask because he said, he said, he said, yes, there might be short-term pain for Americans, but ultimately, it's gonna lead to lower prices. And I started my show by saying, the key word there is ultimately,

how long would it take for that tide to turn before that pain turned into gain for the United States? And you're suggesting it take quite a long time. Well, he did this last time in 2018 and 2019. He did it for nine months. It was a lot of pain, meaning everybody paid more for steel and steel goods. And all of the other importers into the U.S., whether it was Korean steel or Chinese steel, well, they raised their price by 24%, just under the 25% tariff he was charging on Canadian stuff. And they didn't get any extra

steel built there. This is his move to look like a strongman and to cause not just pain but political confusion. I think what he's ultimately looking at here is he's sending a message to somebody maybe that's domestic maybe it's China but he would like to get us Canada back to the table to renegotiate the USMCA and I think I think it plays well in the U S because it's admirable for the leader of your country to say, we got to go back to the golden days when everybody had a good job that paid for a mortgage and put food on the table. Um, uh, and we got to do something for those flyover states, those heartland

states, but ultimately, um ultimately his exact same move didn't work the last time and the Canada is not a threat you know especially in products made out of steel which are cars there's been there's probably a 25% drop in the imports into the US since he signed the USMCA. I think we have to look for signs when he drops off ramps too. I know we spent a lot of time thinking about him, but they spend no time thinking about us. Over there, the executive branch is challenging

the authority of the judicial branch. They're in a full-blown constitutional crisis. So we have to be patient here. And I wish we had a government that had runway. You and I have had this conversation a long time. It's easier to forward plan patients into the summer, into the fall, into the winter, when you know who you're gonna be dealing with.

We're gonna be dealing with the next prime minister's next prime minister right now. And it's hard to do that part. I'm speaking with Flavio Volpe, the president of the Automotive Part Manufacturers Association. You just brought up the car sector. Here's what Donald Trump said about, well, this is how he conceives of the entire thing. I don't want those cars. We can make those cars right here. You know, if you look at Canada, Canada has a very big car industry. They stole it from us.

They stole it because our people were asleep at the wheel. So what happens is Canada is going to have our cars that we're going to take the car industry. If we don't make a deal with Canada, we're going to put a big tariff on cars could be a 50 or 100% because we don't want their cars. We want to make the cars in Detroit. What's he not understanding here, Flavio? Math and history. I tell you, look, on one hand, he's an effective communicator, right?

Everybody who heard that goes, wow, they did that, didn't they? Well, half of the cars made here are made by Japanese companies that arrived directly from Japan in the 80s. Toyota and Honda, who are the two biggest individual manufacturers here, make their decisions in Tokyo and Nagoya. It's got nothing to do with Detroit and the Americans. I wish we were we were strong enough to steal things from the Americans. Ford invested in Walkerville which is now Windsor in 1904 and so I don't know what scrolls of

history he's reading from. This was the number one export market for the US as companies like Ford in their infancy started to grow. We are a really big part of the success of Ford and we're humble about it. And General Motors started in Oshawa in 1908. I mean, this isn't something that happened when the American industry declined in the 80s and 90s. They've been by that time, they were here for 90 years. It part of me thinks you're right. He's a storyteller,

right? And this is this is him laying the groundwork for some sort of renegotiation, where he can then turn around and say, I didn't have to tariff those cars, because I got these other things that are so great for America. But he's he's setting up he's setting up the the the prerequisites for a renegotiation on a massive scale so that he can claim wins later on. Yeah, there's two types of presidents that we've encountered this one that we've never seen before who will bluff with a bad hand.

And then there's another one that your father worked very close with Ronald Reagan, who would say, we need Canada. They're an integral part of our security and our prosperity, but we want a better deal. Um, we're just all used to that. Yeah. That period, the Ronald Reagan, Brian Mulroney years are over. Uh, and, uh, uh, Donald Trump is not going to change and he's not going away.

And we got to figure out quick how to play poker with a guy who's sitting on a two on a seven and an eight and goes all in. I just I gotta ask you, how do you stay so calm? I mean, you represent these people who's, you know, this this chaos cannot be good for your business and for the people you you work with and represent. How are you able to telegraph such calm in the face of this looming storm? I don't know, I get paid for peace, but I'm built for war. Yeah, don't test me because I don't need to sleep.

Now you're still part of the Prime Minister's Canada US, what is it, an organization? Is it a? Yeah, it's a it's a council. It's a council. And how often are you meeting right now? Well, we're probably speaking a couple of times a week and meeting in person or virtually once a week. And, and, you know, there's a lot of good people on that board who are giving a lot of great advice, including that Canada US summit last week. The one Achilles heel is, okay, you give advice that's anything more than the short-term,

who's going to follow through in the mid to long-term. And I don't know, no one can make that assurance because we don't know who the next prime minister is and we don't know when the next election is. And so a lot of the value that we have has to be, or the value in the advice we can give has to be, or the value and the advice we can give has to be immediate term and short term. Flavio Volpe, thank you so much for joining us. I really appreciate the insights and hope to have you back soon.

Anytime, Ben. So a couple of weeks ago, Mark Carney did something he rarely does. He spoke to a member of the Canadian press corps. And he gave an interview and he talked about, well, it was almost prescient because he talked then about what we are talking about now, aluminum and steel. And let's listen to what Mark Carney thinks

about how much steel we use. What we're going to do is make sure not that the government pays, not that we as taxpayers pay, but the large polluters pay. And so what happens does not ultimately trickle down? No, because the what what the big companies are producing, by and large are not products that we are consuming. There's some element of that. But by and large, you know, a steel

company, how much how much steel using these days taught? I mean, not as much not as much as how much steel are you really using? That's a good question. How much steel are we really using? So let's invite Vivek Ashtavans, associate professor of quantitative marketing and analytics at McGill University into the conversation. Professor, thank you so much for being here. Hi, Ben, thank you for inviting me and hello to all your

listeners. So I'll put it right to you. How much steel do we as a country actually use? I don't have the numbers, but the important insight is that we consume much less than what we produce. And that exactly explains why we have to export a larger part of our produce to the United States and other countries. Well, so Canada is the biggest supplier of steel and aluminum to the US. So we provide close to a quarter of its steel imports and almost 60% of its aluminum.

So that's a lot that we ship down there. We've been through tariffs with Donald Trump before on these key points and we're enduring it again. How bad was it in 2018? It was less bad because the tariffs were announced in March 2018 and Canada and Mexico were not a part of those tariffs. But if I remember correctly, in June of 2018, Canada became a part of those tariffs and that is when the Trudeau administration imposed a retaliatory

tariffs and then the two leaders started negotiating and they called it a truce in May of 2019, 11 months of tariffs we had and that led to a significant impact on the economy as well as the workforce in both countries. So it's a short period at that point in time, 11 months. Now, Donald Trump has said these tariffs are going to go in across the board for every single country that sells aluminum and steel into the United States. He says ultimately, this will lead to lower prices because all of these companies will move to the United States. And at the top of my show, I said, I guess it depends on what ultimately really means.

Let's assume for a moment that his logic is sound. How long would it take for his tariff policy to translate into companies just up and deciding to leave wherever they are, decamp from,, South Korea, or Brazil, or Canada, and move to the United States because they want to avoid those tariffs. Oh, I think it will take several years. Yeah, I think what he wants from these foreign producers is a promise or an initial investment in the United States, which assures him and the domestic producers of aluminum and iron and steel in the United States that this production is going to happen in America.

Though I looked at the data of aluminum and steel production in the United States, and it is forecasted to steadily decline over the next few years. And that is perhaps what is triggering America to impose these tariffs. And I assume that Trump wants a reassurance from the large exporters in these foreign countries to tell Trump that we are going to make

initial investments in America. And in the next three to five years, we will move our manufacturing facilities and plants in the United States. And this is very consistent with other industries such as automotive, battery, semiconductor, wherever America thinks that they're losing their edge in manufacturing. I'm speaking with Vivek Ashtavansh, the Associate

Professor of Quantitative Marketing and Analytics at McGill University. And we are talking tariffs on steel and aluminum. Professor, I was very surprised to learn that roughly 90% of Canada's steel and aluminum exports go to the United States. That's according to data from Statistica. And why are we so beholden to the United States? This is unlike our LNG or our oil. We don't need a pipeline to get it down there. We could put this on a train and get it on a boat and send it anywhere in the world.

Why have we handcuffed ourselves to the United States in such a way? I guess there are historical reasons. We've always been very friendly and have very strong trade relations and agreements with the United States and what happened in 2018-19 and what is recurring this year has been unprecedented. Unfortunately, in my opinion, Canada does not seem to have learned from what happened in 2018-2019 because a sane person will say that you should have diversified your exports to other countries so that your dependence on America would have decreased.

But that doesn't seem to have happened. Yeah, and like I said, I understand how hard it is to build a pipeline, especially given this government's allergy to building pipelines. But steel and aluminum, that's universally portable. We could be selling it anywhere. And yet we've, it seems like we've deepened our relationship with the United States to the tune of 90%.

That to me is shocking given the fact, as you said, we've already been tariffed by this man once before. We should have learned our lesson. Yes, and this pattern holds in other industries as well. So overall, if you see 76% of all our exports go to the United States across all product categories. And this number hasn't decreased in the last six to eight years. And you could ask the same question, that why have we not learned from what happened in 1819?

And at least decrease our dependence overall and also in specific industries. I think it's just inertia and lack of leadership in at federal and provincial and territorial governments so that they could work together, see the vulnerabilities and decrease our dependence or reliance on America. Vivek, I've got to ask you,

the fact that he is terrifying every single importer into the United States of steel and aluminum, it seems like, yes, it's going to hurt, but it's going to hurt the Americans more than it's going to hurt us, because if every one of them tariffs in a retaliatory fashion, and the fact that we're all getting tariffed at the exact same rate means nobody is getting a competitive disadvantage in the United States market. Everyone's products are going to go up at the same rate. Yes and no. No, because we are looking at the initial announcement

of 25% on all countries. And this will come into effect on March 4th. What will likely happen is that leaders of say, Brazil, South Korea, Vietnam, China, Canada, Mexico will dial Trump and ask him, what can we do so that you decrease the tariff percentage from 25 to say 10%, they will strike a deal. And then some countries will be less negatively impacted

than other countries. What might also happen is that some countries may negotiate that instead of a percentage tariff, then you give us a cap. And cap means that there would be 10% tariff or 0% tariff provided this country exports to America no more than X pounds or X kilograms of steel or aluminum. And this has happened in 2018- 19, when some countries were able to negotiate less unfavorable deals. So you're saying he's slapping everybody with this tariff and then it's gonna be a race to see

who gives Donald Trump the best deal, either with a direct investment into his country or a cap on imports, or rather exports, or some form of win that he can then telegraph to his base. And then that 25% could get turned into a 10% tariff. And all of a sudden that person's at a competitive advantage. Exactly. Yeah, this is a start of a negotiation.

And then you'll see until March 4, this 25% flat tariff will change. Some countries will have less, some countries would have more, other countries will replace the percentage tariffs with a cap to tariffs. So, so, so the idea that if we initiate retaliatory tariffs and other countries don't, then we run the risk of keeping the 25% tariff and everybody else might have a chance to skate and get lower tariffs. Yes, and retaliatory tariffs are going to harm the businesses and consumers on both sides. Just because someone slaps you does not necessarily mean that you have to slap the other party. Professor, we're going to have to leave it there, but I thank you so much for your insights. Sure, thanks very much for having me.

This is Carry the Fire. I'm your host, Lisa LaFlamme. Carry the Fire, a podcast by the Princess Margaret Cancer Foundation featuring inspiring personal stories about what happens when world leading doctors, nurses, researchers, and their patients come together to ignite breakthroughs. Carry the Fire launches Monday, January 27th. Wherever you get your podcasts.