The Ben Mulroney Show - Is it time we start getting serious about renegotiating the USMCA?

Episode Date: April 3, 2025

Guests and Topics: -Is it time we start getting serious about renegotiating the USMCA? with Guest: Ian Lee, Associate Professor At Carleton University At The Sprott School Of Business 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 you know, yesterday I was joking when I was at the airport coming down to Washington. People were saying, why are you going down to Washington? I said, I'm going down to solve this whole Trump tariff thing. Obviously, nobody's going to solve it. This Donald Trump has it in his head, in his heart, in his mind that he is going to rebuild the world in his own image. Of course, to rebuild it, he's going to have to burn it down.

At least that's what it looks like if you look at the public markets in the in the wake of liberation day, as he called it. And to discuss all of this and so much more. I'm joined by Ian Lee, associate professor at Carleton University, and the Sprott School of Business. Professor, thank you so much for joining us. My pleasure, Ben. So yeah, a lot of us had we we had no idea what to expect yesterday. I think probably because up until yesterday, there was a big chunk of the administration that didn't know what was coming.

What did you make of the pageantry, the theatrics, the big signs, and the fact that Canada was not on those lists, that list of countries that were going to be subjected to reciprocal tariffs? Yes, yes. I mean, it was classical Trumpian pageantry, as you put it. That's a nice way of putting it. You know, the Rose Garden, you know, with the props and so forth. I did think it was clever. I mean, he had union guys there from the auto industry. Of course, they've been devastated by over the last 10, 15 years, that that's there from the Rust Belt states.

And so I thought it was, it was clever subliminally, because what he's saying to all the critics who are mostly, you know, people like me, you know, professors and, you know, from that segment of society, shall we say, you know, he's saying, you want to criticize these guys? That's what he had them there for. You really want to go after these people that have lost their jobs in the Rust Belt and beat up on them?

Because, you know, they're not as privileged as you are? Because it is the privileged class, the upper, you know, the chattering classes they're sometimes called that are attacking him. I'm not here to defend Donald Trump because I disagree with him on tariffs, but I thought it was very clever. But to your question, Ben, very quickly,

on Canada, I was not at all surprised not because I was clairvoyant or clever or anything just look at the COSMA agreement and about 97 or 98 percent of the goods pass tariff free under our free trade agreement and we are there are many other countries in the world there have much more egregious protectionism against the U.S. corporations than we do. And so I thought, you know, and I read the paper, the Stephen Marin paper, the chief economist, and he said, we're going to put the highest tariffs on those countries that

are the worst. And he said he specifically in that paper said China, and he said, how about 60%? Well, guess what the number came in yesterday at 58% against China. So that paper turned out to be quite prescient in forecasting what was happening. He said the different countries will be hit differently. The more they protect against US companies, the bigger the tariff retaliation. And that's basically what we saw yesterday. But given the fact that at least

symbolically, Donald Trump has been punching us in the face over the course of the last few months, has he normalized the battery that has become an everyday occurrence that when we avoid getting hit in the face for a day, we consider ourselves lucky? I'm going to put it to you a little bit differently than that. I mean, there's no question he's been doing what he's done. We all know that, you know, calling the prime minister governor and that sort of thing. And of course, the tariffs, that's much more critical. I think he is softening us up for the negotiations that he knows are going to come, partly because Cosmo requires that there would be a new treaty in 2026 because the old one sunsets. And so I think, and he's very clear on what he wants us to do, and Stephen Marin talked about that again in this paper, and so I think what he's been doing is hitting us

hard, yep, and but he, I believe, I believe this, I know a lot of Canadians don't because I get emails, but I believe he knows, I believe this, I know a lot of Canadians don't, cause I get emails, but I believe he knows this is gonna end up at the negotiating table. That's how you end wars and military wars and trade wars. You don't throw more, you know, don't end a trade war by doing yet more retaliatory tariffs. You go to the negotiating table to end it all.

And then- Sure, and I take your point. I think a lot of people are expecting that's what's gonna happen. In fact, Kira Poliev yesterday essentially said, if under a Poliev government, I'm going one of the first things he was,

he's gonna do is call up the president and say, let's get back to the negotiating table right now. But first, what I want is a sign of good faith where we drop all the tariffs. So, if that's his goal, great, but there's, I mean, it's still five weeks until until the Canadian election. And Canada is not only means he's taking on the world right now and the markets are are are in shambles. Yes, you

have how much how much runway does he have? You can't separate the politics from the economics here. So we have to ask the question, how long can can can the the the world economic system be be thrown into chaos before he gets what he ultimately wants? Yep, yeah, then absolutely correct. That is the strategic issues facing him. I'm going to put forward my own sort of take on this. I don't believe it's one size fits all in terms of the solutions. The smaller the country and I'm talking GDP, I'm using that as my proxy for power and size

and influence, the smaller the country, the more quickly they will cave in, to be blunt. And they will, he'll be able to do little side deals all across, and he's doing it. He's doing bilaterals, because he had targeted tariffs for each separate country. So he's going to, through his trade office and his secretary of state, are going to do car votes for each of these countries, one by one by one. And the smallest ones will cave the first, I predict, because they have the least amount of power. The ones that are going to be much more difficult to resolve are going to be China, because it's the second largest economy in the world at $19 trillion, expressed in

U.S. dollars, and Europe, which is $18 trillion. So they're going to be a tougher road to hoe. I do think, though, to your point, that all of this, or most of this is going to be wrapped up at the end of this year. And the reason why is, again, the politics. Next year is the off-year elections. And the Republicans only have a small advantage in both the House. I think it's five seats in the feet from the federal might be the way around

and of course both houses typically historically go the other way and an off-year election that president at the presidency that that the power and power at the the party that's it at the white house loses the congress typically so he has to get deals done and get the economy going again i would say by the end of this year or sooner so that he can be out campaigning next year and saying, look at what I did.

I solved these problems with Canada. I solved these problems with China and so on. So yes, it is going to be painful. You're absolutely right. And five weeks is a long time when you're paying these tariffs. But I think he's going to do the smaller ones. I think we're gonna be one of the first up. And there's strong willingness for us to do it.

I mean, for the for the for the hope in the automotive sector is that that that comes to pass. I mean, you're already hearing stories of two week layoffs and closures of factories for a couple of weeks, it's really hard to turn those things back on once you turn them off. And and and so but but the, the pain that we're going to feel here, they are absolutely going to feel there because of the integration of that industry. You're right. But the one big difference is that scale thing I

keep talking about, you know, they're $30 trillion, we're 2.5 trillion. So anything we do, as a percentage of their economy is vastly smaller than a percentage of our economy. To put it another way, they've got a lot more runaway, and they can take a lot more hits. Yeah, we know they can take a lot more hits, but he needs Michigan. I keep going back to that. Like, we as a nation are prepared. We have we have made peace with our maker that this is gonna hurt. He has done no such thing. He promised sunny days and sunny ways and that's not happening. So he's gonna have to explain to the voters of Michigan why he hollowed out the automotive

sector and they voted for him. I'm in agreement. He said the other day, I don't know how sincere he was, but he said, I don't care if the prices go up or they lose business and some than the business of some plants in michigan he said the short-term because he said the long-term i don't know i've got the right plan so i think he's he's gambling he is playing a high-stakes a gamble that he is going to a cause most of these countries to cave in and that he's going to have agreement that he can then go to the voters next

year at the big one to get the Congress, about one third of the Senate, and the entire House of Reps are up for re-election. So he's got basically, I think he's looking at he's got till the end of this year, maybe early first quarter of 2026. And so he's, he doesn't have to really face it. Professor, we got to leave it there, my friend. Thank you so much. Live in Washington trying to get some questions answered by people in the know. What was yesterday about? Why were we spared the reciprocal tariffs? What is to come in the next few weeks? What is Donald Trump's endgame? My hope is that by the time I come home, I have made contact with a number of people who can add to the discussion that we are having at home to the benefit of the listeners

and the audience of the Ben Mulroney show. But yeah, yesterday was a heck of a thing. You know, you had the big charts and the list of every country that has done wrong to the United States and how Donald Trump was going to make it right. There are a lot of people on the right side of the political equation that disagree with this policy. But the one thing they all agree on is Donald Trump truly believes that this is the path forward. All right. So if he does, then guess what? It's the path we're all on together. But we were not on his list of countries subject to 10% baseline tariffs. We still have the call them the fentanyl tariffs in there's the 25% tariff on the automotive industry.

We still have the tariffs on aluminum, we still have the tariffs on steel. There's another side conversation we need to have about the Chinese tariffs on canola. That's a pretty devastating to a massive Canadian industry. But the question I want to ask you, our listeners, is it wasn't the hammer. Yesterday was not the hammer that we expected. And so we're living in an election campaign. He matters. Donald Trump changed the dynamic of the election.

He became the only thing that any, not the only thing, became the thing that the liberals truly wanted to talk about because he was the guy without, he's the boogeyman that only the liberals could slay. And that argument has found purchase in a number of voters. But now that he has sort of turned down the volume on us, and perhaps maybe less, maybe it's less about that, maybe what he's done is he's spread his focus

around the world, right? So he's not just focused on Canada and Mexico, he's looking everywhere. So he doesn't have his eye on Canada as much as he used to. If he's sort of, if he's being pulled in a lot of directions, is it now time or will Canadians accept that it's time to look at the lay of the land in Canada again? Instead of looking forward towards Trump, can we possibly maybe take a look at what the last 10 years have been like?

I want to hear from you, our listeners. Are you I know a lot of you have been focused on what Pierre Poliev is calling the lost liberal decade. But it has been hard to wonder like, yeah, but what is the future going to be like under Donald Trump? Well, now he's sort of given us a sense. Now we sort of kind of know. It's not great.

It's pretty bad. A lot of sectors are going to get battered. The economists that I've been talking to say that there is a recession coming. Some are saying a depression coming. But there is clarity now in terms of what the next few weeks, months and years are going to look like. And so rather than focus on who is there best to deal with Donald Trump? Maybe the question is, who is best to build the economy that can that we can that we can fight through the next few years with? We

can arm ourselves with the healthiest, most robust economy that we build here at home, with this being the backdrop. Now, everyone also knows that Donald Trump can change his mind tomorrow. But I don't know, do we think it's going to get worse for Canada? Do we think it's going to get better for Canada in the eyes of Donald Trump? I don't know. But one thing is for sure, I never bought the argument that Donald Trump was the end-all be-all, the boogeyman, the only thing that mattered. I think that what we have seen is that there are certain politicians that most definitely want us to be focusing on that. Because if we focus on that we're not focused on the last 10 years. And so, yeah, this is this is this is the question, have we have we reached a pivot point? Oh, we've got some calls lined up. Let's go to our first call. Let's go to our first. Who do we have?

Hello. Hey, Mark, welcome to the show. Wow, I'm honored here to be first up. Listen, I really appreciate the work that you're doing on your show. We have the reality is this is we have 10 years of leadership. And my children, I'm 49, my children, I have two children that can vote. My grandparents are still alive, my parents and everything else. And as a family, they ask me like, you know, what are your thoughts? And I say this, I say, regardless of the party

that's in power today, regardless of the party, if you have 10 years to right the wrong and fix the problems and you have not fixed them, then you are not the party to be reelected. You had your chance and your track record is not only have you not fixed them, you've made them worse. And so what we have right now is a president Trump who, like you said, he took it easy on us yesterday. And if and if I'm an American, I like what he is

doing to the to the auto sector to try and protect jobs in my country, drive the economy in my country. Well, that's what we have. I've got a lot of calls to get to and I thank you look him saying that that's what he's doing versus what is actually happening. I think are two different things. I I appreciate that you're giving him the benefit of the doubt. But there was a rubber is meeting the road and the reality

is far different than what he promised. Frank, welcome to the Ben Mulroney show. Good morning, Ben. What I think is going on right now, I think Trump before he deals with Canada, he's going to want to see what the global responses, because there is going to be retaliatory tariffs. Uh, and I think Canada should also wait to see what the global response is. The reason I say that, uh, Ben is because I think there are a lot of countries around the world that have done business with the United States are going to

start making deals and joining forces with other countries to deal with other countries. That may mean ultimately down the road that the exports from the US to traditional countries that they business with is going to decline. That in turn will reduce the GDP. So I think Canada should wait to see what happens because they can leverage themselves at that point because Canada is the biggest trading partner for the United States. And if these global countries come together to reduce American exports, the United States

is going to rely on Canada and probably give it a break in terms of the tariffs that are available. Well, listen, that is, that is the, I guess that is one way to look at it. I think he's been strategic in a smart way, if this is his plan, of dealing with everyone bilaterally, which makes it harder to create a block of countries like a global response, because he's not treating us as a global problem. He's going line item by line item. But again, I have no I've never seen anything like this in my life. I don't know what is to come. Ian, welcome to the show.

What what do you think of, of where we're at? And do you think it's time to turn our attention away from Trump and focus on other things in this election? Well, I think we should be focusing on our own country during our own election, but I think what Professor Lee said towards the end of your discussion was, Trump is gambling.

He's playing a game of poker, and he's hoping that the world will fold. I say we hold our cards and let the American people call them because they're going to call them in about two months as this goes very south for them. So I wouldn't even put reciprocal tariffs on American goods. Why charge us more money? If they want to charge Americans more for our oil, we'll go buy heavy oil somewhere else. I hear Venezuela has some.

Hey, thank you so much. And he's right. I mean, life is about to get a lot more expensive. And if we talk about scale, the scale of the tariffs that the Americans imposed on themselves here, the cost to the Canadian, the American consumer, everything is going up because everything that they bring into the country is now more expensive. And so we're dealing with American and Chinese tariffs. He's dealing with tariffs from all over the world. So we'll have to wait and see we got time for one more call. And that caller is Alex. Alex,

thanks for calling into the Ben Mulroney show. And thank you for having me love your show. Thank you. Listen, Canada has been known and we're taking punches left, right and center economically. And I think what Canada needs to do now is get a leader that's going to stand up and start throwing back punches, haymakers with oil, natural gas, minerals, and show the world what we can do

and show the states down there, maybe we don't need them as much as I think we do. And you know, I'm going to take a stab in the dark. I know who I, I know who I pick to be that leader, but it's up to each and every one of us to make that determination on our own. And Alex, thank you very much for the call. I really appreciate it. And thanks to everybody who participated in this conversation. I do think it's time though, that we turn away from Trump and start looking inward at how we can build the best Canada possible. one winner. Tune in to Renovation Resort every Sunday and look for the codeword during the show. Then enter at homenetwork.ca watch and win for your chance to win big. Amazing! The small details are the difference between winning

and losing. Watch and win with Renovation Resort on Home Network.