The Ben Mulroney Show - What is Donald Trump's endgame with Tariffs and how much will it impact Canadians?

Episode Date: March 3, 2025

Guests and Topics: Guest: Ian Lee, Associate Professor At Carleton University At The Sprott School Of Business  Guest: Perrin Beatty, Former MP and cabinet minister, and former president and CEO of the Canadian Chamber of Commerce Guest: Dan Kelly, President of The Canadian Federation of Independent 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

At Desjardins, we speak business. We speak equipment modernization. We're fluent in data digitization and expansion into foreign markets. And we can talk all day about streamlining manufacturing processes. Because at Desjardins Business, we speak the same language you do. Business. So join the more than 400,000 Canadian entrepreneurs who already count on us. And contact Desjardins today. We'd love to talk business. Tomorrow is supposed to be tariff day, right? What they're going to look like what where they're going to be applied

could be as bad as 25% on everything. It could be more targeted than that we do not know. But somebody who may be able to offer an educated guess is Ian Lee associate Professor at Carleton University at the Sprott School of Business. Professor, thank you so much for being here. My pleasure. My real pleasure to speak with you. Okay, so we've got, let's take a quick listen to Commerce Secretary Howard Lutnick, who says that some good work's been done by Canada and Mexico, but he's as in the dark as the rest of us.

We care about two things, right? The March 4th is about the border, and both Mexico and Canada have done a reasonable job on the border. They're both working hard on the border. You know, we've had the lowest crossings ever, ever under Donald Trump because of his ability to negotiate with Canada and Mexico, but the fentanyl continues to come into this country and continues to murder our people and the ingredients are made in China, they're sent to Mexico and Canada and then they come and attack our country and that's got to end. So the president's been crystal clear on those two points, they have done a lot. So he's sort of thinking about right now

how exactly he wants to play it with Mexico and Canada. And that is a fluid situation. There are going to be tariffs on Tuesday on Mexico and Canada, exactly what they are. We're going to leave that for the president and his team. I mean, it's as if every day has to end on a cliffhanger, like an episode of The Apprentice. Stay tuned, tune in tomorrow for more information on how we are going to destroy your economy.

But that's sort of the world we're living in, isn't it Professor? It is, it is. But I'm not, I know there's a lot of pessimism right now in Canada and there's people saying you know we're doomed and you know this is going to go on forever. I don't believe that. I've read the Stephen Morin paper who's now his chief economist and the comments by you just played it shows that they see the terrorists as a tool to get us to change our behavior on our policies. Some people may say I don't want to change our policies. That's a separate debate. Okay but what I'm saying

is this isn't random. I'm not here to defend Donald Trump. I don't want to change our policies that's a separate debate okay but what i'm saying is this isn't random i'm not here to defend donald trump i don't agree with tariffs i don't agree with tariffs at all what i'm trying to say is that i'm trying to understand him and i think it's what they are trying to elicit a change in our policies one of them is the border but by no means is that the only one and we can debate whether there's this many drugs going across the border or not the the larger issue instead of getting bogged down like a lot of people are, including our leaders, in the weeds, they should be saying, look, they're

concerned about the border. Let's not get into a nitpicking debate of whether it's 2% or 1% or 17%. The border has had problems, we got to fix it. He's also talked about the digital service tax on the American digital giants like Google and Meta. I mean, there were a lot of Canadians, I was one of them, it was very critical of that tax when it was put in last year by the Trudeau government. And because it was unnecessary, OECD is doing a huge study

with all the major countries of the world, 150 countries, looking at a common tax down the road and they're making good progress. So we were precipitous and jumped the gun in a process. We're in those negotiations. So there was no need for that digital service tax. So what I'm going is I think there's things we can do and we can ward off these tariffs once we sit down

and really have some conversations with him. And I'm hoping we start to negotiate a new Kuzma. Right. But these, you just mentioned a few things that could have been dealt with if we had a parliament that was sitting and yet we don't. So listen, we don't have to get into the politics of it, but this to me is almost by design by the liberals. They know that fighting Trump is good for their brand and the longer they can keep this on the front burner. I mean, they could have dealt with a lot of this stuff. Instead, they're just kicking the ball down the field so that it can be an election issue.

But that's me editorializing. Now, I have heard, Professor, that the president of Mexico has been sending up the trial balloon of mirroring the tariffs that America puts on China. So if China, if the United States puts 25 percent tariffs on China, Mexico will do the same. And apparently it's getting really good feedback in Washington. Is this something that Canada should be paying attention to and maybe possibly parroting back? Absolutely. One million percent, absolutely. Why? In that Marin paper that I keep quoting,

and the only reason I'm quoting it is not to just drop names. It's the only written document I can find anywhere that spells out the vision of the Trump administration. It's a very 41 pages. We may not agree with their vision, but there very clear and he makes it crystal clear in this paper they do not see canada as enemy number one fact they don't think that it is an enemy they even pay their now i but we want them to change some of our policies as we've already discussed they very clearly

in this paper c to keep trying out as their uh... existential threat their existential threat, their existential enemy. He's been talking about this literally since 2016 when he was campaigning for the presidency way back when. In fact, they talk about how China has been cheating what they're doing now instead of going straight into the States because they can't because of various tariffs. They're going through countries like Canada and Mexico, exporting to Canada or Mexico, to then go through their membership in NAFTA to export

to the States. So we've got to get, I believe, get on board. First off, there's a lot of people around the world that think that China's been cheating. I've been one of them. Since 2001, they've been cheating. So this is not a secret. Donald Trump did not discover this. He's articulating it. He's pushing it. But we've known since 2001 that the Chinese government is cheating. Yeah. So it's in our interest as well to do this. Because first off, it's really annoying the Americans. And secondly, we don't want them to come in and harm our economy because of the dumping that they're doing. You know, part of me thinks that the 25% blanket tariff is not going to come into effect.

What actually comes into effect, I don't know. You know, experts are saying Trump wants a quote unquote win. You know, I think he'd already claimed victory on the border, which is a, to me is a, should be a big enough win to sidestep these tariffs. But one thing I keep going back to is data that that his cabinet secretaries were tasked with going back and and and going through the data to come back and tell him what sort of impact these tariffs would have to their respective departments. And I gotta believe that the totality of that data is going to tell him that on a cost-benefit

analysis it's going to cost America more than they're going to gain by tariffing Canada? I agree that we have to be evidence-based. I've been saying that for years. I've been teaching this in my classes and I'm glad that they are doing that internal study in the Department of Commerce and they'll have their public servants, econometricians and so forth crunch the numbers and they'll come up with it whether or not it can be more harmful to our i'm i'm more skeptical to be honest because simply because of the scale the uh... symmetry problem were only two and a half trillion they're between twenty five

and thirty trillion depending on which way you measure gdp i won't get into that one and i thought i mean they're just so much larger at the same time that does not mean that there's won hurt the United States. I argue tariffs hurt everybody, everywhere in the world. This has been studied since Adam Smith, 250 years ago. Nobel Prizes have been awarded on this. But Professor, weren't they... someone was floating the idea that he wanted, you know, he wanted to reinvent the American economy in the vein of James Monroe, where he's going to get rid of all the taxes and instead it was going to be a tariff-based economy.

And indeed, right up until the beginning of the 20th century, that was the case. Tariffs were the principal source of income, you're right. And then they came up with the income tax. I know we all dislike income tax, but income tax, corporate and individual, if it's priced right and not too high to discourage effort and investment they are it's a much more efficacious tax and I've seen studies on that so you know where is the the the tariffs are they really do hurt competitiveness of a country so the point I'm getting at is I'm sure that the the CEO the former CEO of a counterville's Gerald,

who's now the Commerce Secretary, Lutnick, who's a very smart guy, by the way, I'm sure he's having conversations with Trump behind the scenes. He's never going to leak it out loud. And they're going to be, I think, much more strategic and targeted with those tariffs to make sure it doesn't hurt the Americans that much. Professor, we're going to have to leave it there, but thank you so much. I appreciate it. My great pleasure. Thanks that much. Professor, we're gonna have to leave it there, but thank you so much. I appreciate it. My great pleasure. Thanks very much.

Welcome back to the Ben Mulroney Show, and if the worst version of Donald Trump's tariffs come into effect tomorrow, if the blanket 25% tariffs on all goods crossing the border from Canada into the United States becomes a thing tomorrow, it could have devastating effects. It will have devastating effects on our economy, on small business, on your pocketbook, on inflation, like you name it, it's gonna be a bad, bad day. And so to talk a little bit more about it and to get, be a little more informed, we're joined by two people who have a stake in all of this

and who know a heck of a lot more about this than me, Perrin Beaty, former MP and cabinet minister and former president and CEO of the Canadian Chamber of Commerce. And Dan Kelly, president of the Canadian Federation of Independent Business. To both of you gentlemen, I say hello and welcome to the Ben Mulroney Show. Hi, Ben. And hi, Ben. Good morning. Good morning. Good morning. Before we start, I want to spend just a quick second listening to the U.S. Treasury Secretary. He told Bloomberg TV that Mexico has made an interesting proposal to Washington and maybe Canada should do the same. I do think one very interesting proposal that the Mexican government has made is perhaps matching the US on our China tariffs. I think it'd be a nice gesture if the Canadians did it also.

So in a way, we could have fortress North America from the flood of Chinese imports that's coming out of the most unbalanced economy in the history of modern times. Perrin Beatty, when you hear something like that, you gotta wonder how much of this is actually about fentanyl and how much of this is Trump trying to angle for a better situation for the US vis-a-vis China?

What do you think Trump's motives are here? And does he actually think tariffs are a good way to generate revenue for his country? I mean, a lot of questions there for you, but I hand the mic to you. None of us knows for sure what his motives are, but it's clear that revenue generation is a key part of it. He says that tariffs are the most lovely word in the English language, and he needs to generate hundreds of billions of dollars to pay for his tax cuts and for other election promises that he made.

The Canadian government has indicated that it's open to discussing a common approach in dealing with China, for example, but it's got to be more than a nice gesture on Canada's part. We need to know what Donald Trump's bottom line is. What in fact is he looking for here? And at this point, we simply don't know. Yeah. He changed his tune from day to day. It's very high.

He changes with the wind. We're trying to build a new relationship on shifting sands. Dan Kelly, a lot of us believe that the tariffs are coming. Trump says the tariffs are coming tomorrow, but Howard Lutnick, who's part of his administration, says they may not be 25%. What do you think they're gonna be,

and how bad do you think this is gonna be for business in Canada, and how long before we feel the brunt of it? Gosh, you know, it is so hard to know. But, you know, just more and more, I'm of the view that this uncertainty, ongoing uncertainty, is kind of the end goal. And it is in fact having, I think some of its desired effect, because it is causing Canadian businesses to kind of stand still, wait, hold off and reconsider whether they wish to expand their operations in the US rather than in Canada. So I feel like regardless of whether there is a small step, big step taken on tariffs or no step at all, which

I still think is a possibility, that we will still be living with massive amounts of uncertainty with respect to tariffs, potentially for four straight years, and that we're gonna have to sleep with one eye open. Perrin Beatty, what are the best practices here for a country like Canada? We've got these, let's assume we're living in a world where he drops, let's call it 10 to 15 percent tariffs across the board in Canada. What are best practices that we can adopt in Canada, so that we can diminish the effect in the near term on on on Canadians? First, we have to recognize the fact that Canada will have no choice but to respond. And that will also add a cost for Canadians as we do that.

But we need to focus on the fundamentals. We haven't done over the last decade is to get our economic house in order, focus on productivity, on taking down inter-provincial barriers, on making our tax system competitive, on rewarding entrepreneurship and encouraging and celebrating successful businesses

instead of disparaging them in Canada. There are all sorts of measures that we can take that will make us more resilient, stronger, and more sovereign. Yeah, if only we had a functioning parliament so that these things could get debated in and legislated. Dan, given that we're short on details, which industries do you think are most at risk in a world of tariffs? Because to me, in conversations, the automotive sector keeps popping up. Yeah, and look, a lot of attention is being paid, as it should, to Canada's major exporters,

energy producers, the auto industry, agricultural commodities, and lumber, for example. But my members are all small and medium-sized companies. I've got a hundred thousand of them as members of CFIB. 16% of them export directly to the United States, but 49% of them import directly from the United States. And what often gets forgotten, Perrin mentioned it just a second ago, but that when we retaliate as we must, it is those retaliatory tariffs that are going to have the broad side to the Canadian economy, even on a greater level for many of us, than the

export tariffs to send goods into the United States. And it's those import tariffs that I'm super worried about because they hit so many small businesses and ultimately will find their way into consumer pricing. I mean, retaliatory tariffs are absolutely necessary, but it is like chemotherapy. It's poison that we take to fight the larger battle. It's I've got to when I want to go back to essentially the beginning of our conversation, could this entire thing have always been about China? You know, when you hear that the president of Mexico is considering, um,

parroting back, mirroring tariffs on China that America places on China, and apparently it's being very well received in Washington. I mean, could this be about creating a new world order as it relates to China? We can go back to what's going on with him cozying up with Russia, looking to create a schism between Russia and Moscow and Beijing. Perrin, could it all be about that? I don't believe so, Ben. When you look at the threatened tariffs

where he was talking about 10% on China and 25% on Mexico and on Canada, it simply makes no sense. If the target was China, you would put the heavy duties on China, not on Canada or Mexico. And Canada was always open because Canada is threatened by uncompetitive trading practices by China. Canada was always open to looking at a common approach for how to deal with China. Instead, what he was talking about was whacking Canada. Yeah. My brother is very worried given his business. There's a lot of

back and forth between the United States and Canada. He sells a lot to the United States. He's very concerned for a future with tariffs. Perrin, you've been through this. You've been Uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, As Dan was mentioning, that may not be the goal. The goal may be that tariffs are the end rather than simply just a tool to use to plunge in

other countries, to bend them to the Americans' will. He needs to generate massive amounts of money to pay for his election promises, and he sees tariffs as a way of doing that. He tries to explain them as being a tax that's paid by foreigners, as opposed to being paid by Americans. It's totally untrue, but that's how he attempts to spin it. Dan, I have to assume that with your membership being subject to the whims of this president, you've probably got some data to tell you like how in danger

are some of your business some of your members in terms of how much of an existential threat is this to your membership? It is giant. And if these tariffs go into effect, even the uncertainty associated with the tariffs, it has caused one in five small businesses to question whether they have a future. That's how great this is. And we have to keep in mind, and Perrin touched on this a second ago, so we're not starting off on a great spot. We are already

super weak. The small business community has not even recovered from COVID. The average member of mine is $100,000 in debt left over from the pandemic. So these businesses, gosh, a strong wind could blow some of it down. Oh gosh, no, I don't mean to laugh because otherwise I'll just cry. Yeah. Hey, I want to thank you, Dan, Kelly and Perrin Beatty, two important voices to have on the eve of these tariffs. I want to thank you so much for taking time out of your busy days.

But tomorrow is people are we're on a razor's edge and I really appreciate you coming into the conversation. Any time. Thanks, Ben. Fingers crossed. Daniel Blanchard is no ordinary thief. His heists are ingenious. His escapes defy belief. And when he sees the dazzling diamond CC Star, he'll risk everything to steal it. His exploits set off an intercontinental manhunt. But how long can CC Star stay lucky for Daniel?

I'm Saren Jones, and this is a most audacious heist. Listen on Apple Podcasts, Spotify, Amazon Music, or wherever you get your podcasts.