The Decibel - How Canada is preparing for day one of the second Trump era

Episode Date: January 20, 2025

For months, Donald Trump has threatened economic pain on Canada, with tariffs of up to 25 per cent on imports. This could begin as early as today, when he’s inaugurated as U.S. president. Canada has said that nothing is off the table when it comes to its response — whether that’s dollar-for-dollar tariffs or blocking oil exports. But with Prime Minister Justin Trudeau announcing he will resign and a Liberal leadership campaign underway, premiers have been stepping forward to take a more prominent role in the ‘Team Canada’ approach.By day, Jeff Gray covers Ontario politics for the Globe, but in his free time, he coaches House League hockey – so he understands how delicate team dynamics can be. He’s on the show today to talk about how premiers have been filling the leadership vacuum, and how they are dealing with conflicting interests in an attempt to show a united front against Trump.Questions? Comments? Ideas? Email us at [e-mail]

As a longtime house league kids hockey coach, I'm imagining what it would be like with my team of kids if there was no coach there. Not to exaggerate the role, my role as a coach. Jeff Gray reports on Ontario politics for the Globe. Let's extend the metaphor a bit. It's a very Canadian thing. Coach is the Prime Minister. He has been a bit out of commission, not just since he announced his plans to step down, but for really weeks, months leading up to that as questions, speculation about what he was going to do mounted and his unpopularity continued to be staggering. That puts Canada in a bit of a difficult position, especially when it comes to negotiating with

the United States. We have this challenge now of the other team, Team Trump, that are coming onto the ice and are hell bent on breaking people's noses, cross-checking people from behind into the boards, and we don't have a coach on the bench. Donald Trump has said he'll put tariffs of up to 25% on imports from Canada.

This could begin today, Monday, when he's inaugurated as U.S. president. And Canada is trying to figure out the best way to respond. But it can be challenging without a coach. Who's playing defense? Who's playing offense? When do the kids... The kids would never change shifts. The players are the premiers, okay? Who's playing defense? Who's playing offense? When do the kids... The kids would never change shifts. The players are the premiers, okay?

And the captain of the premiers, who's chair of their council of the federation, is Ontario's Doug Ford. He sort of tried to become a leader of this team, but it's still... everybody has their own ideas on a hockey team like this. And sometimes, those ideas conflict. You have a floater, or a cherry picker,

we've called them to, a forward, who is hanging around center ice when the puck is in our end, and our defense is scrambling to try and get it out. And they're hanging around center ice hoping for a big pass so they can get a big breakaway and score their highlight reel goal, instead of doing what they should be doing,

which is back in our end, helping with defense. So you can see where I'm going here. real goal instead of doing what they should be doing, which is back in our end, helping with defense. So you can see where I'm going here. Alberta Premier Danielle Smith is kind of the floater at the moment. She'll be at today's inauguration too. She actually skated all the way down to Mar-a-Lago herself. I don't know how much further we can take the hockey thing, but it seems to be like what you're saying is without the coach, with the coach out of commission, the players are

on the ice, the Premiers it's it's kind of chaos yeah you've got everybody with their own agenda and the idea I think a lot of people have said this would be better if who played as a team and plays a team you need coach lots of people have said look Canada needs to have a united message and Franklin last couple days after the Premier's meeting with the Prime Minister he's come out and he has said a bunch of things that sound just like what you would hope a coach in the dressing room would say to the team. Today, Jeff is on the show to talk about how the Premier's are stepping up to represent Canada, what's at stake when they have competing interests,

and how we could retaliate against the Trump tariffs. I'm Maynika Ramen-Wilms and this is The Decibel from the Globe and Mail. Jeff, thanks for being here. Thanks for having me. So the last time Trump was president, he of course also put tariffs on certain Canadian goods. Can you just remind us, how did we as a nation, how did Canada respond to that? Right, it was called the Team Canada approach. There were two sort of challenges. One was the tariffs on steel and aluminum. And the other challenge was renegotiating what we once called

NAFTA, the North American Free Trade Agreement with the US and Mexico. And Canada's response at the time, Team Canada was the catchphrase, and you had business, you had the premiers, and you had, at that time, a federal liberal government under Justin Trudeau with a majority. All were seen to be, at least, working together and pushing the message that Canada wanted to send to the United States, that trade with Canada is a good idea, we're stronger together, all that kind of thing. And it worked out. We

did impose counter tariffs, targeted counter tariffs, but in the end, we ended up with a new trade agreement with the United States and Mexico. So we got off the ice more or less unscathed. Okay. So now let's look at the situation this time, because the federal government has been making efforts to show it's responding to these potential tariffs, right? Trudeau has been speaking about this, announced a new council on U.S.-Canada relations last week, Foreign Affairs Minister Melanie Jolie was in Washington, as well as Natural Resource Minister Jonathan Wilkinson.

So it seems like the federal government is taking action here, but why is this situation so different than the last time? Well, you certainly have I mean, lots of people have talked about a leadership vacuum, a minority government leader that even before he announced he was stepping aside, was so unpopular that the ability to kind of coach the team was really limited. And we didn't really hear much in the months leading up to this from Ottawa. And we certainly very quickly saw the premiers who basically found themselves stepping into a void. And we had the premier of Ontario on Fox News.

He's been out almost every day talking about his vision for how the US and Canada should, instead of going into a trade war, cooperate more closely on things like energy. So you had a lot of people saying, look, Ottawa is not driving the bus here. Okay, now I've lost the hockey metaphor. We've introduced a new metaphor. We're mixing metaphors.

Ottawa's not doing the dressing room speech to inspire the players that they need to be doing. And so the some of the players on the ice were doing it themselves. Okay, so this is why we're seeing some of these Premiers step up, take a bigger role here. Let's talk about this meeting that happened last week. So this is when Trudeau and Finance Minister Dominic LeBlanc and all the Premiers met. This was last Wednesday. They were talking through how to respond to these potential Trump tariffs.

What stood out to you from that meeting? You know, I've covered a number of these things over the years where the premiers have a meeting, either amongst themselves or with the Prime Minister, and usually it's about, we'd like more money, please. It's generally a snore. This was not that. I can't think of one. I guess this is the post-game press conference, really, isn't it? Really dramatic stuff that we had the premier of Alberta, who wasn't there.

She only attended the meeting via Zoom or something, then make a point of not signing the communique, which was mostly full of platitudes, but did not rule out using oil and gas as some sort of bargaining chip. And that's what's got her upset and an offside. This metaphor is key. We're stretching it. But yeah, but you know, and so that was, and they tried to put on a brave face. The rest of the premiers, for the most part, talked about how united they were and how they needed to stand up and speak with one voice and be strong against the threat coming

from the United States. But it's pretty remarkable that Alberta hadn't signed on to that. Yeah. So this communicate you're talking about, this is kind of a statement, right, that everyone signs at the end to say, yes, we're all in agreement about how we're going to approach this. And so Daniel Smith said, no, I'm not signing that. So that was a big deal.

Yeah. And you could tell that the premiers were doing their best to present the message they wanted to present, that they're all on the same side. And in fact, it was Ford leading up to this meeting. He had said lots of stuff about how the federal government hasn't done enough on the border. But then the day before that meeting with all the premiers

and the prime minister, Ford met with Dominic LeBlanc, the finance minister and intergovernmental affairs minister, the federal minister at Queens Park. And after that meeting, Ford came out and he was all of a sudden on Team Canada. Loved the border plan. Said it was phenomenal.

Said the federal government's got to get out and talk about it more. Helicopters, drones, $1.3 billion to beef up the border. The tone really switched the day before the meeting for the Premier of Ontario anyway. Let's talk a little bit more about Ford because he has been very prominent here.

He's been going on Fox News trying to get his message across to Americans. He was also sporting a unique hat last week. Can we talk about this hat? Can you describe it, Jeff, and talk about that? So Ford at the sort of opening remarks before the conference with the Prime Minister was wearing a blue baseball cap. And it said, Canada is not for sale on the front of it in bold letters. And it had 1867 on one side and the flag on the

other, you know, reminiscent of the hats that side and the flag on the other, reminiscent of the hats that Trump and his supporters, the Make America Great Again, MAGA red hats. But what does this hat tell us? He's choosing to wear this hat, why? I think with all of this stuff, there are maybe three audiences. For Ford, there's people in Ontario.

If you're a politician and you're facing this kind of incredible challenge, you need to be, even if what you're doing has no effect, uh, you need to be seen to be doing something. And, you know, smartly, uh, Ford news people knew that that picture would be, that would be the image that would be captured for sure. So it shows that he's standing up for Canada when Trump is kind of, you know, making jokes about taking over Canada. Yeah.

And it's a line that he said when he appeared on Fox News and he said the property is not for sale. And even the other premiers were joking about it. Manitoba's Wab Kanu said, does it come in orange for the NDP's color? Because of course it was in sort of a dark torii blue for the premier of Ontario. And so you mentioned, so one of his audiences, the people of Ontario, but it seems like he's also speaking to Americans, maybe a little bit. So yeah, I mean, there's the people of Ontario, so are and also for Trudeau and for the other

premiers, their own constituents. And then there's the guy in the White House who's making this decision. And then there are Americans, the public, and Ontario is running ads in the United States promoting trade with Ontario. And you also have US lawmakers, Congress people, senators, and state legislators and state governors that all the premiers have been working the phones.

They all have contacts at that level in the United States to make their case so that the Canadian case is being made by, you know, people who represent voters in American states that are very dependent on exports to Canada. Okay. So Ford does sound like he's been doing a lot to kind of get the message out here. I also want to ask you about Daniel Smith. We talked a little bit about the Alberta Premier before, Jeff, but let's look at what Smith has been doing.

She didn't sign this first minister's statement. She's also been approaching the situation kind of on her own, doing some of her own diplomacy. So what's going on there? Right. I think we use the metaphor of a floater at centre ice forward who's not back checking and helping the team playing defense. Yeah, I mean, the premier of Alberta went down to Mar-a-Lago

and was with Kevin O'Leary, who's been selling some sort of quasi union with the United States. So the premier of Alberta apparently got a few minutes with Trump and she obviously has her, like all the premiers do, to be fair, their own agenda, their own concerns. And she does not want oil to be, you know, shut off or some sort of export tax added to it as a weapon in the trade war. Obviously, that would disproportionately affect Alberta's economy. And so from what we know, she made the case about some sort of exemption for oil and gas. It's widely speculated that the

United States will not put the tariffs on oil because it would mean gas prices would go up dramatically. Yeah. So then the Canadian counter could be the potential is that then we could put tariffs on ourselves because it's leverage. And I think then you had the other problem. The complication was Ford, the Premier of Ontario was talking about, let's shut off electricity exports to the United States. Let's use that as a weapon. And you have Ford and the prime minister saying, let's not tip our hand here and show

the Americans what we're willing to do or not willing to do. So we have to say everything is on the table. And that was too much for Daniel Smith. She wanted some sort of public guarantee, I guess, that oil wouldn't be used as a weapon. There certainly are a bunch of practical considerations. And if you game that out, if you use oil, I think there is a whole bunch of problems that many people have identified that maybe it's not a great idea. I mean, that's been the criticism from a lot of people. Look, Canada is negotiating with itself.

We're seeing the divisions. Now, to what extent Mr. Trump is paying attention to that? Who knows? But that is generally critics pointed out. It's not how you want to do a negotiation and be seen to be bickering amongst yourselves. You should be focusing your efforts on the other guy. We'll be back in a moment.

Okay, so let's talk a little bit about the potential effects of these potential tariffs here, Jeff. So we know that tariffs on Canadian goods will have a huge impact on our economy as a whole, but what about how specific provinces will be affected? Do we know how that breaks down? So we don't know what the US is going to do, but the president has said 25% tariffs on all Canadian products crossing the border, which would be,

bank economists have put out various studies, put various numbers on this, but the sum it all up would be pretty catastrophic, totally flatten growth, put Canada into a recession, potentially, if it's as the president described. And the premier of Ontario has repeatedly said that, look, the worst affected province will be Ontario because a large manufacturer, the auto industry, you've got politicians always

trot this line out about how car parts and cars cross the border multiple times before they're completed. So the effect of a tariff like this on the auto industry would be terrible Ford has said about five hundred thousand jobs. Yes Explain exactly how that Estimates been arrived at 450 to 500 thousand jobs are at risk at the full We also don't know if the tariffs will be brought in slowly ratcheted up targeted to sectors His line has been look we think oil will be cut out of this. So Alberta gets a pass. Maybe some other stuff that the United States really needs might be carved out. And so Ontario is going to be hit the hardest by this. But on the other hand, if you know,

I was talking to some trade lawyer the other day, if there's a 25% tariff on oil, you don't need to shut off the exports. That'll do it. That's just going to make it too expensive. OK, so we could be facing a pretty difficult situation, it sounds like, right? What are the different options that we're discussing now in response to these tariffs?

What could Canada do? So there's a menu of likely options. There's some things that have been reported about what they're actually thinking about. But I'll walk through the kind of the high level concept. So you're faced with all these tariffs, we don't know what they are. But let's say they're significant. If you match them dollar for dollar, so 25% on our stuff, 25% on your stuff

coming to us, you are doing a whole bunch of extra economic damage to yourself. I mean, it's a bit, you are doing a whole bunch of extra economic damage to yourself. I mean, it's a bit, you know, like mutually assured destruction. You're going to make the hit that you take worse if you make everything that comes in from the United States to Canada more expensive for everybody here. Particularly if you there's factories that need stuff from the U S to make stuff. You've now made all that stuff 25% more expensive. So you're doing damage yourself.

So that's one option that has not been ruled out, but that would compound the economic damage. So the other thing you can do is you instead do sort of targeted niche tariff response, which would be some of the stuff that's already leaked, that's been on the table. So you do things that might get the attention of the president or of people around him or states that support him. For example, you put a tariff on Florida orange juice. This was kind of our tactic last time, right?

Right. Strategic tariffs. Yeah, and people talk about, you know, so bourbon, you know, this kind of thing that might get certain people's attention. CENT maybe makes a point, but actually doesn't harm us very much. Now does it harm them very much? Does President Trump care about this? I don't know.

There's also been reports that the sort of scheme under consideration would target quite a bit, uh, like $150 billion worth of tariffs of goods, and then ratchet that up if the U S ratchets their tariffs up, or if it lasts a certain long period of time and so on. So that's the tariff kind of option. So then you have the idea of, well, we could also just stop sending stuff that they really, really need all together. Well, what stuff do they need that we have? So we talked about oil already, right? But other people have said, well, what about all these critical minerals that you need for electronics and for the defense industry? And then we have a bunch of tons of minerals that are important to the United States, so we could block those or potash.

So potash you need for farming. Saskatchewan produces, you know, mother load of this stuff. 87%, I think, of US potash comes from Saskatchewan. So you shut that down. But then Saskatchewan is really upset. All these people who are in the potash industry are upset. You know. And one person I was talking to last week says, well, then on Fox News, Canada is starving the United States, ruining farmers' lives. So there are a blowback from all of these things. None of the options are really very good.

OK, so we've got some things to consider here, Jeff. But how much of an impact would these measures actually have on the US? It's really hard to say. I mean certainly cutting off potash would be pretty big move and maybe an escalation. I mean there are people including Daniel Smith who say we don't want to escalate this thing. You know Pierre Trudeau said that Canada and the United States it's like being in bed with an elephant. And he was talking about when they were friendly. The elephant is, I think the phrase that you feel every

snort and grunt or something of the elephant, right? Well, the elephant is now stirring, you know, in its sleep pretty violently. So, you know, you risk damaging yourself by doing some of these things, most of them. Yeah, it sounds like they would have some effect on the US, but actually the countermeasures would really be felt here in Canada too.

Canada is a lot more dependent on the United States. The United States is on Canada from a high level, no question. Okay, so it sounds like we are gonna be approaching a situation where there's highly likely to be negative impacts for Canadians. Did the premiers or the federal government, have we discussed anything that would help support Canadians through a difficult time like that? Ford has talked about this a number of times.

He said, I'm going to have to spend tens of billions of dollars in a sort of COVID type bailout package for businesses and workers. He said he expected Ottawa to help with that. That's also the message that's come out of the prime minister, that yes, we're going to have to spend a bunch of money to cushion the blow for people in industries affected by the tariffs. Now, of course, the intense part of the pandemic only lasted a certain period of time.

We don't know how long the tariffs are going to be in place. There's lots of people talking about whether it's a short-term thing that's meant to be a negotiating tactic as we go to renegotiate the free trade agreement. But also it could be a permanent factor of life now that the United States is going to charge tariffs if you take the president at his word. And that changes things pretty dramatically for an economy that is really, really dependent on the United States.

So there are people saying, look, we're talking about retaliation, we're talking about standing up for Canada, all that stuff. But there are maybe a lot of them are longer term complicated things that Canada could do to strengthen itself. One thing people talk about is get rid of all these inter-provincial trade barriers. We don't really have proper free trade between provinces. There's a Scotiabank study that says that costs us 4% of GDP. So if you fix some of those, maybe you cushion the blow, we become stronger. Also, Canada has been saying, lots of people have been saying for years, decades, Canada needs to have more places to sell its stuff in other countries other than the United

States. We need to diversify our economic partners. And so that would cushion the blow to find other markets for Canadian goods. That is also way easier to say than it is to do because people have been trying to do it for decades. It's way easier just to sell to the United States. Yeah. So we've talked about a lot of different measures that Canada is talking about that the premiers are talking about too, and different things that Ford and Smith have been doing to kind of court some of the American public as well and American officials. I guess I wonder, Jeff, is any of this going to make a difference to what the US decides to do? Nobody knows, I think, is this safe and honest answer.

This tariff threat is coming from one person and his advisors. They have a different way of looking at the world. This is one of those different ways. I mean, the US is becoming more, has become more protectionist even without Donald Trump, even under the Biden administration. The world is changing.

The threat of China now, you know, this move to move manufacturing away from China back to North America, that's been going on for a while now. I mean, does it change Donald Trump's mind? I mean, I don't know who can answer that question, but Canada has to do a whole bunch of different things. You know, convince Americans,

convince state governors to take this line to Washington. One sort of trade expert said to me, it's always more effective if you have Americans who you've convinced of your message, delivering that message to Washington rather than Canadians coming down there and delivering the same message to Washington. Washington is obsessed with so many other things and Canada often is an afterthought. So just very lastly here, Jeff, we started out talking about this hockey metaphor, how a team pushes forward without its coach. If we come back to that idea, I guess, is there any possible way that we could win this

game or what would count as a win for Canada? It's very hard to sort of game out what's going to happen a lot of people don't think these tariffs are going to last forever At least at 25 percent if that's what happens Maybe it's a way to get to a new trade deal that has concessions in it Which might be bad for Canada But at least you'd have some stability if we had a new trade deal and the tariffs were lower or gone. And so maybe it's like we're killing a penalty. So you've got you're down, you've got four players on the ice, they have five skaters

on the ice, two minutes. And so when you're doing that, you are trying to ice the puck, you're blocking shots, everybody's playing defense, and you're hoping that you can keep the puck out of the net and kill the penalty. Jeff, this was a really interesting conversation. Thank you so much for being here. Thanks for having me, Monica. That's it for today. I'm Monica Ramon-Wilms. Our producers are Madeleine White, Michal Stein, and Allie Graham. David Crosby edits the show. Adrian Chung is our senior producer and Matt Frainer is our managing editor. Thanks so much for

listening and I'll talk to you tomorrow.