The Ben Mulroney Show - Trump tariffs suffer staggering setback in U.S. court. Can Canada take advantage?

Episode Date: May 29, 2025

Guests and Topics: -Trump tariffs suffer staggering setback in U.S. court. Can Canada take advantage? with Guest: Ian Lee, Associate Professor At Carleton University At The Sprott School Of Business -Economic Stories with Guest: Dr. Eric Kam, Economics Professor at Toronto Metropolitan 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

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It was big stick ideology where Donald Trump has his own big stick energy where he speaks very loudly and wields a huge stick in the form of tariffs. He's been able to scare the ever-loving bejesus out of the global economy trying to get them to bend to his will with the threat of tariffing the heck out of anything that comes into his country. Well now now there is, he's got a huge setback because there's a court in New York made up of three judges that said, that's not your power to yield, to wield. That's not yours. You've been abusing of that power

and you've got 10 days to reverse course on most of the tariffs that you have been applying around the world. Unfortunately for Canada, the aluminum and steel are still gonna be tariffed, but 10 days from now, we can see the lifting of most of the tariffs that have been hampering our, our economy and hampering our ability to do business

across the border for far too long. So discuss this and the Canada Post situation as well. We're joined by Ian Lee, associate professor at Carleton University at the Sprott School of Business. Ian, thanks so much for being here. My pleasure, Ben. Thank you. Yes. So this is this has been a tool in his toolkit. He was chomping at the bit to unleash tariffs on the world prior to coming into office. And now he's got some judges telling him yet that that's just not your power to wield. You're right. And this is I think it's good news the checks and balances that exist in the

US and Canadian system a lot of people are dismissing these checks and balances they've always been there courts opposition leaders media you know protesters and so forth so there's tons of checks and balances this is one very powerful check and balance yeah I don't want to get too ahead of this because this was a trade court. It's a specialized court and they ruled that those tariffs imposed under one specific act, some emergency legislation are invalid. He didn't justify or invoke that same act for all of his tariffs, but yes, a good chunk

of them. But the first thing is the White House has already said they're going to appeal this. And so- Yeah, but Ian, just to be clear for our listeners, he absolutely has the right to appeal, but in the interim, the terrorists have to come off within 10 days. If they apply, and I'm not a lawyer,

but my understanding is they can apply to a higher court for a stay of that order. So yet to be determined. I'm not certain he may go to a superior court and say, we want you to postpone that order to rescind the tariffs until it's been dejudicated by a higher court. So they might disappear in 10 days or more likely they'll find a work around. So this is so central to everything that Donald Trump wants to accomplish. The ability to

declare tariffs and levy tariffs and threaten with tariffs. I don't know where he goes or what he does. I don't know what this administration does without that power. I don't think they've thought that they wouldn't have the power. I agree because it's been at the centerpiece of everything that he has said and done, not only just in the last 90 days. I mean, you go all the way back to 2016 when he was elected the first time.

It was the centerpiece then. So he's a one trick pony. Yeah. You know, he doesn't have another trick up his sleeve, so to speak. And so this, there's no question that this is going to throw a big wrench into the machinery and it's really going to slow him down and make him rethink. People need to remember that traditionally the right to tariff, the ability to tariff

is the exclusive domain of Congress and it can be taken by the president under certain circumstances, most notably national emergencies. And in this case, we were told both the fentanyl cover that he claimed was a national emergency, as well as this idea that a trade deficits unto themselves constitute a national emergency, don't hold

water. Exactly. And this is I mean, again, I just think this is wonderful news, because there are checks and balances. And it's not just you know, people writing op eds and the you know, in the New York Times, it there's protesters across the country. My sister is an American citizen living in Arizona She says you it's not getting reported in the national media She says there's a lot of protests out there in different cities about his his terror So and then of course, there's apparently there's just court actions being launched left right and center across the US

So one of them is gonna stick sooner or later one of them is gonna stick and what later. One of them is gonna stick. And what we could witness if this judgment holds and he is told in no uncertain terms and after he exhausts every legal recourse that there is no, you do not have this power, Mr. President. What that is gonna do to the dynamic between leaders, our prime minister and this president,

I think there is going to be a re-realignment because all of a sudden the force and the weight of his office is lessened in significant ways. Exactly. And which is going to ironically drive him back to a trade agreement, I believe, because a trade agreement is within his purvey. Now, it'll have to be ratified by Congress for sure, but he can propose a trade agreement with tariffs in it, whatever he can get Canada to agree to. I'm not saying I know what that is, but my point is a trade agreement at least is going

to make it legal. It's going to codify it. And so he may, ironically, the man who's been famous for being so dismissive of trade agreements, maybe forced back to a trade agreement because of the courts not allowing him to go to the tariff room. it did and the implications of this decision will be felt at Canon Asciss in the next couple of weeks when the leaders of the G7 unite for that meeting. But I want to turn our attention to Canada Post. You know, we went through that work stoppage at the end of last year. There was the threat of one just a few days ago. It did not come to pass. They are in a strike position, the workers, but they've chosen just to throttle back on overtime. And now Canada Post has offered what they say is their best and final offer to the employees of Canada Post. Tell me, tell me what you make of

the offer. The offer is really, it's not about wages. Yes, wages are on the table. Of course, they are, they always are in any negotiation, but that's not the main show. That's not the, that's a side show the main show is are they going to restructure so they can deliver parcels on the weekends when a lot of the action of parcel delivery occurs and become competitive which they're not now with private couriers and I do have the data I promise you okay so they're trying to do is trying to do some incremental structural reforms that

won't be uh... the total solution they still got a lot of government to you know and don't want to live with the twenty five percent canada duke that cost half a billion more a year they got it and the five day a week delivery to every at red address in canada could run up a mile volumes but if they can if the government can do that side and they, Canada post management can get cup w to agree to reforms on the, on the, on the parcel side on the weekends, then they will at least be still in the game. They, in other words, they're not out of the woods at all because they're losing money like crazy. They're still going to have $1.3 billion in operating losses last year.

That's a, that's a heck of a nut. Yes. And just so everybody understands, within the end of this year, they've already said, Canada Post has said, we're going to run out of the last bailout of a billion. They'll be back to the government to get a new, the government's not calling it a bailout, but that's what it is. And they'll be back to pick up because they have no reserves left. They've said so in the report, the Audit Denny report.

They said, we burned through all our cash reserves. So whatever loss they lose has to be picked up by Canada Post by, excuse me, by the government of Canada, because they're the taxpayer. They're the they're the owner of the post office. So we, the taxpayers are going to be on the hook for funding this company until it gets, if it ever does get back to profitability. And I get so many packages delivered to my home from Canada post. Why aren't they? And we only about a minute left. So if you can let me know in about a minute, why aren't they in your words competitive with private industry? Because I'm like I said, they're always at my house.

Yeah, it's it's partly the inflexibility. They have to pay time and a half sometimes double time on the weekends. It's partly they are paid more than the private firms but I think that could be dealt with if you have higher productivity you can pay workers more money. But their problem is their current structure is too rigid and in in parcel business you got to be much more dynamic and fluid and willing to change on a dime and the gigs are killing them because they're flexible, they're innovative and Canada Post isn't. So what they're trying to do is do some incremental structural reform through the collective agreement with the threat I think in the

background of the government saying well we're gonna do something much worse to you if you guys don't get your act together so I think that's the threat link hanging over their head of both Cup W and Canada Post get your act together because you may not like what the government of canada will do to you if you can't get your act together in the really appreciate having you on for these two really important stories i think the implications for both are going to farm wide your insights were really important at least for me so thank you very much my friend thanks very much thank you

you are listening to them only showing because of that i say, I say welcome. And I say let's build this show together. Lots of stories with economic angles that are affecting so many Canadians for so many different reasons. So let's break a lot of them down now with what great friend of the show somebody who really doesn't need a reason to give us his opinion, but I'm going to elicit it. In this next segment, please welcome to show Dr. Eric Kam economics professor at Toronto Metropolitan University. Eric, thanks so much for joining us. Benedict, it is always an honor and good morning from Denver, Colorado. I can I can tell I can see the mountains in the background. I don't look like it looks like a very comfy, comfy hotel room. I hope I hope you're getting a good night's sleep. The hospitality is wonderful. And just for you, I made the bed.

Okay, well, let's talk about that the the Canada Post putting forth its final offers to the union. And this is with the backdrop of them posting a $1.3 billion operating loss last year, this is the house is on fire. And, and, and I mean, I don't know what to make of this. What's your take on the health and long term longevity of Canada Post? I can't believe the stupidity on both sides, Ben. First of all, on the part of the union, unless they're completely out to lunch or living under a rock, they know that their jobs, their livelihood are in jeopardy. And whoever runs Canada Post should really understand that by now this is a dead not outdated, a dead business model.

So you don't think that you don't think that there's a future for some version of Canada Post with a smaller, a smaller footprint, a smaller workforce, paired back hours paired back delivery dates, you don't you don't think that there's a future for them somehow? I think if you were running them and you had those ideas, then possibly. But the problem is I see no flexibility and no nimbleness

or willingness to change. Listen, there's two things that they're not responsible for. There is a massive decline in letter mail. And there is huge rising parcel competition. That's not their fault. But their high operational costs are brutal. The customer experience is terrible. Government constraints on them,

like most government constraints, are bad. And so if you wanted to present me with some model that shows that it could work with, say, weekly mail service or restricting mail service to northern communities that may not have Wi Fi like we do, maybe, but as it stands right now, it is a it is a dead company walking. All right, let's, let's move on to some data that just came out. You know, we heard a lot the especially Pierre Poliev and the conservatives for years, they were talking about choices that Canadians had to make. They had to pick between paying their rent or buying gas, feeding their kids or paying their mortgage.

And now Equifax has said that 1.4 million Canadians missed credit card payments in the first quarter of 2025. So those choices are affecting people's credit rating at this point. 25. So those choices are affecting people's credit rating at this point. People's credit rating and their livelihood. I mean, we've been saying for years, people really haven't been listening that the average savings rate in Canada is zero. And so this is a real forecast that the average savings rate is only going down, not up. And this is really a very bad foreshadow for what's coming next, Ben, because all that increasing debt levels in this country have done is they are going to positively predict bankruptcies, personal insolvencies,

people who have to walk away from their homes. This is really, really bad and this is as we were talking last week, along with the unemployment rate, if you look at the debt equity ratio just on houses, when those two statistics, when the bottom falls out of those two statistics, it doesn't matter if you think you're headed toward a recession, then you're in a recession. Yeah. Now this is, this, this to me should be an alarm bell going off somewhere in Ottawa, uh, to let people in like these, these are the bad indicators that precede something worse. Well, that's right. And that's why they're called leading variables, because when we see these go poor, we know that everything's going poor. And this is just, you know, more and more mounting

evidence, Ben, like what does it take for the people in Ottawa to realize that a capitalist economy is only solvent when it grows. And our economy hasn't grown in years, not months, years. And yet they keep running like a football game, the same play over and over again. They drop interest rates. That does nothing for housing affordability. That makes the debt crisis worse. That makes almost every crisis worse unless unless you're wealthy, and you're borrowing money. But

wealthy people don't really have to worry at most times. So they keep coming up with one solution that makes the problems we have today worse. And I wish people would wake up and see what's going on. If there's one pet peeve I have about government is when they insist on calling every aspect of spending an investment and not every not not every time you spend money is an investment. However, CIBC is reporting that Mark Carney's defense spending plan is actually an investment. If it's done properly,

it could have a knock on effect of up to $46 billion to the economy. What's your take? Well, you're right. consumption is not investment and investment is not consumption. And as we pointed out, the only growth in our economy has been playing around with the business cycle to make sure that spending stays at a significant level due to interest rates. But that's not your question. The question is, is investing in the military going to stimulate an economy? And the answer is, like all spending, it can in the military going to stimulate an economy? And the answer is, like all spending,

it can in the short run, but if it's not followed by some growth, then it's just gonna do what all spending does and become inflationary in the long run. So, you know, the PM can try to impress you with I'm gonna spend here and I'm gonna spend there, but you know, the Prime Minister's spending is no different than a household spending.

You can stimulate spending easily, right? Because the government has a Visa card or a MasterCard that doesn't have a credit limit. So they can spend and spend and spend. But is it going to do anything then increase the business cycle? No. And of course, it's going to increase the payments on the debt at the outer end. So a little bit like they tried to use immigration as a growth strategy and it failed. If they're going to use military spending as a growth strategy, it's going to fail. Well, but so, so long as, I mean, it depends on what they want to invest in. I mean, if it's, if all they're doing is going to say the UK or France to buy military equipment, then that's

that you're outlaying cash. But if, if the goal is to invest in building military procurement ability here in Canada, well, then there's all sorts of knock on effects that can come from that, then there's the entire towns that can be built around something like that. So I do see a pathway for this to be a sort of a new engine to an entire sector of the economy. But it depends on how they do it and how they pay for it. Well, you're right. And so what you're talking about in a broad stroke is saying, shouldn't we start to stimulate the supply side of our economy through efficiencies,

through research and development, through investment spending, through foreign investment spending, and trying to increase levels of competition in our country to increase output per worker? So you're 1000% right. I agree. But is there a propensity to do that in Ottawa today? I've seen nothing over the last nine and a half years. And frankly, I don't expect anything else for the next nine and a half months then Donald Trump has not had a very good couple of well a day between this terrorist being

told he doesn't have the power to levy tariffs. And then he was told that he has a new nickname or there's a new type of trade called taco trade that stands for Trump always chickens out. Let's listen. Mr. President, Wall Street analysts have coined a new term called the taco trade. They're saying Trump always chickens out on your tariff threats. And that's why markets are higher this week. What's your response to that? I kick out. Chicken out. Oh, then I chicken out. I've never heard that. You mean because I reduced China from

145% that I set down to 100 and then down to another number and I think that that was it's deliberately antagonistic of a man you probably don't want to antagonize but is there truth in this nickname? Yeah and I have to, I don't know if he's making America great again, as I sit here, but he sure is making comedy great again. Well, okay, so here's what's going on, which is, I don't care what anybody says, I don't believe that Donald J. Trump is an idiot. And I think he has also pretty smart people

around him. And he knows that what he did was put on a power play that he probably figured would gain him some economic and political capital. Well I don't know if it gained him political capital but it didn't gain him economic capital because as any textbook will tell you the more you increase tariffs which are just a tax it's gonna decrease your economic output. So he either found out the hard way or he knew all along that what he was doing was going to slow down his economy. So you know this is not the man you want to pee off Ben so I don't like to throw titles at him but I

think what he's done is updated his economic expectations and he has said I better go back to the playbook because this isn't working and even even my most safe market my bond market is is thinking. So I'd like to think that he just woke up and said, you know what? Play a didn't work. Let's go to plan B. All right, my friend. Listen, I appreciate it. Have a great time out West. Enjoy the fresh Colorado air. We'll talk to you soon. Everybody here sends their love then stay healthy.

Thank you, my friend. good and experience the lifestyle you've always dreamed of in stunning BC. We're curing cancer here. Are you in? Apply now at jobs.bccancer.bc.ca.