The Decibel - Project 2025 had a tariff plan, but Trump has gone off-script

Episode Date: March 20, 2025

Project 2025 was meant to be a U.S. Republican transition bible, outlining a vast set of proposed policies for the next leader. Within its 900 pages, was a plan to use tariffs to correct a perceived imbalance in trade, and to bring manufacturing jobs back to the U.S. Once U.S. President Donald Trump took office, he endorsed this plan – but then, he went off-book.Now, other Republicans, and Wall Street, are trying to figure out what the president’s long-term strategy is, and what to do about it.Today, Tim Kiladze, one of the Globe’s financial reporters, is on the show to tell us about this Project 2025 tariff plan, how Trump suddenly changed course, and why it’s left global economies scrambling.Questions? Comments? Ideas? Email us at [e-mail]

Project 2025 is a transition Bible for a Republican president. That's Tim Collatz. He's a financial reporter and columnist at The Globe. And it was set up by the Heritage Foundation, which is kind of like a deeply conservative think tank in Washington. They're almost kind of like activist oriented is maybe the best way to think about them. And they assembled this agenda that they called something prepared by and for conservatives who will be ready on day one of the next administration to save our country. Part of the project 2025 agenda laid out a plan to use tariffs as a way of correcting

a perceived imbalance in trade. It also had the goal of bringing manufacturing jobs back to the US. President Trump started to enact that plan when he took office, but then he went off-script. And now other Republicans and Wall Street are trying to figure out what the president's long-term strategy is and what to do about it. Tim is on the show today to tell us about this Project 2025 tariff plan, how Trump suddenly changed course, and why it's left global economies scrambling.

I'm Manika Raman-Welms, and this is The Decibel from The Globe and Mail. Tim, thanks for joining us. Happy to be here. So I think most of us remember hearing about Project 2025. It came up a lot during the US presidential election campaign last year, but not really when it comes to trade and tariff policy. So what exactly does Project 2025 say in terms of tariffs? So there's actually two parts to it. So it's hard to summarize in a single

sentence, but the dominant section on trade is written by Peter Navarro. He was the one in the first Trump administration who really advocated for more aggressive tariffs or tariffs of any sort to kind of rebalance trade in favor of the US. So he came back and he wrote this piece about quote unquote fair trade. And to be frank, when you go and you read it now, it's actually pretty thoughtful in that it's not written with this ridiculous rhetoric that you hear coming out of the president's mouth. It's very much calm and measured.

And even if you disagree with it, it almost comes across like an academic argument. That's probably the best way I would describe it. If you really boil it down, there's two major things. One is reciprocal tariffs. So if someone charges us 10%, we're going to charge them 10%. And secondly, more aggressive measures on China. For a bit of context here, he actually just last year served a four month prison sentence

for defying a congressional subpoena. So he's one of these Trump characters that from the first time around kind of seemed like they just kind of were like in the shadows but also having huge influence on the president. And to some, they're viewed as kind of wing nuts. They have these kind of radical ideas that, you know, if you put a bunch of economists in a room, like 100 economists in a room, 99 out of 100 would never advocate for what he's advocating.

But yet he sells it in such a strong way that it sounds convincing. Okay. So we've got project 2025, which calls for fair trade through reciprocal tariffs and also more aggressive policies towards China. That's what the document laid out. But Tim, how have Trump's policies on tariffs diverged from that? One of the biggest examples of that, sadly for us, is Canada.

To this idea of, you know, we need to have reciprocal trade and all of that. Well, that is negotiated into the free trade agreement. And that is why these things take so long to negotiate because everybody has a side and certain things that they want to protect. And so you kind of come to this compromise is what it boils down to. And it's like he's saying the compromise can't exist anymore. It's like we have to win whatever winning looks like. And so you're seeing it now like even Fox News hosts who Trump likes and is doing interviews with like they, to my surprise, are kind of standing up for Canada and they're like, Mr.

President, why Canada though? And I think the real shift, to be honest, was the steel and aluminum tariffs, because for so many of the threats he's made so far, he would kind of back off. So remember early March, it was going to be, we're gonna do autos, autos are screwed. And then it's like, okay, we're gonna give them a one month delay until April.

But then steel and aluminum came, and it was just like, no, we are not backing down. So you could argue, if I'm trying to be like super fair minded here, that this is in project 2025, Peter Navarro does talk about needing to rebuild America's kind of manufacturing base for things like steel, so that he says we need to be able to manufacture machinery, like war machinery, basically, so that we can defend our Western allies if they are attacked, things of that sort.

So it didn't come across like like we want to screw the world. And then the second thing that is a major divergence from this kind of framework is the best way to say is that the goalposts keep changing. So it's like, okay, so you want to have reciprocal tariffs. Okay. Even if you disagree with that, which most economists do for the record, you kind of have to have a reason for that. And you know, with Canada, if you remember, it started out with, you know, they have fentanyl

flowing across the Canadian border. That's been disproven now. And there's been enough chatter about how fake that is in the U.S. that now it's changing. And now that the stock market is starting to correct and fall because investors are like, whoa, you are diverging so much. And so now the narrative is no pain, no gain, that type of idea. And starting to project this idea that is very similar to be honest to how, you know, China's leaders talk about, you know, we need to build for the future. And even if that means years of pain, you know, this will make us stronger in the

end. And so you have this crazy thing going on where it's that's not the traditional And even if that means years of pain, you know, this will make us stronger in the end. And so you have this crazy thing going on where it's, that's not the traditional American way, but it's also not necessarily wrong. It's just that Americans and investors are now just slowly coming to terms with like, well, what does this mean? Like, how is this going to impact us? So let's talk about that because last week we did see stock markets react to all of these

tariff threats, the back and forth. So how has the business community, and I guess I can ask for Wall Street as well, how have they responded to Trump's approach? It's kind of a two-part answer because there are the public comments that have been made, particularly by automakers whose manufacturing supply chains like span Canada, US, Mexico. And I think a lot of people have heard at least anecdotes about how goods fly across the boarders multiple times in the span of making a car. So you've had some people saying out loud, like, this is going to blow up the industry,

which is, you know, for context, crazy when you think about Trump's goal, you know, one of his big threats or one of his big fears is China and China's auto industry right now is killing it. Like BYD, their electric car maker is years ahead of us. So why are you going to destroy the industry in North America even more? And he doesn't seem to think about the knock on effects. To me, that is kind of one of the real problems with this whole strategy. This sounds great maybe in step one.

What about step two and step three? You know, you cannot just move on manufacturing back to the US right away. Secondly, though, in the business community, you're hearing this more and more, and this is what I kept hearing in Washington about, you know, the best way I can describe it is that the traditional conservatives and conservative business leaders, like they just don't like Trump. Like within the Republican party, there's the Republicans that you might think of as that kind of a George Bush type Republicans.

And then there's the White House and the White House is this own bubble. It's just it's chaos. It sounds like Project 2025 laid out this plan for fair trade eventually. Trump started to enact this plan. What went wrong, though, with the implementation? Like, was there a miscalculation here? Yeah, I gave a lot of thought to this because I think day to day, we're just like bombarded

with news now and trade aside, there's like crazy stuff happening every day in the US. And so it's kind of hard to kind of take a step back. But last week, what became apparent to me is one, the White House slash Trump really did not anticipate retaliatory tariffs, which is effectively what Canada has done. And I think that is why Trump is so pissed off at Canada, because if the rest of the world follows our model, it's going to cause chaos. And that has always been the underlying fear from economists that the White House would never talk about it.

They dismissed this idea that, you know, what really exacerbated the great always been the underlying fear from economists that the White House would never talk about it. They dismissed this idea that, you know, what really exacerbated the Great Depression a hundred years ago in the U.S. is the Smoot-Hawley Tariff Act. They actually erected tariff barriers and the rest of the world replied and it just everything kind of just shut down and it made the pain much worse. And for some reason, they just didn't think that other countries would do it now. So I guess that's kind of what caught the US off guard then these retaliatory tariffs that Canada and other countries are actually putting back on the US. Yeah. And if you go back to project 2025,

to my point about how it's kind of like an academic exercise, that stuff isn't in there. Or if it's in there, it's like so breathed past. And this is where you have kind of theorists and academics versus real politic or whatever you wanna call it, because the politics of it all really matter. And so somebody down there said to me, you know, the technocrat crowd have never had to sit in front of a fuming US Senator and have to explain like,

okay, you're killing my farmers in my district. Like, what are you guys doing? And so I think that you're gonna see play out more and more. But the second thing I would say in terms of what has been the miscalculation is that the White House, that circle, whatever you wanna call it, did not appreciate enough Trump's

response to retaliatory tariffs. Like when they would come in, how he would then react. Because his whole thing, and we saw this with electricity last week, is to just ratchet up the pain. Oh, oh, you're going to do electricity surcharges? Cool. We're going to double seal in aluminum to 50%. This is when Ontario Premier Doug Ford said, okay, we're going to put a surcharge on electricity

we send to the states. And then Trump said, all right, well, now your we're going to put a surcharge on electricity we send to the states. And then Trump said, all right, well, now your tariffs are going to be 50% instead of 25%. Effectively a tweet on Truth Social just says this. And so I think what you're seeing play out now is, you know, during last week, by the end of the week, the Canadian officials flew down, Doug Ford, including, you know, our finance minister, et cetera. And afterwards, like I was at the press conference at the Canadian embassy and everyone was projecting calm.

It was just like, we had a great meeting. And I think the back channel now is very much like, please guys, don't inflame him, meaning Mr. Trump, and I can work with you because if things get too inflamed, then he gets inflamed and then I, this is either Lutnick or somebody around Trump, has to kind of manage him publicly. Plus the markets are now, you know, investors are now speaking. So there's a lot, you're seeing more news coming out of Washington about the White House's

miscalculating, you know, there was a piece in Politico about how Howard Lutnick is effectively been a disaster so far. So like the knives are out. We'll be back in a minute. So Tim, you were just recently in Washington. You were talking to politicians and strategists. What did you hear from them about where this trade war might actually be headed? The worst part is no one knows.

And the big piece of feedback I got, and this is from somebody who wrote part of Project 2025, do not think that they have a plan. Like I want to caution you from thinking that there is a grand strategy, because I think a lot of investors in particular, until very recently, were thinking that for all the chaos, look through it.

Look through the noise and there's a strategy here. And this ties back to project 2025 and the idea of reciprocal tariffs. And there was also like an official White House memorandum that went out about studying these reciprocal tariffs. And on April 2nd, everybody's gonna kind of find out what their number is. That's how it's being conveyed.

So people were clinging onto that, but then more and more madness was happening. And now people are realizing like, maybe this is not like maybe there is no strategy here. Maybe Trump just really thought that everyone just backed down, you know, and then he would win. If you want to give him full credit and say, okay, totally get it. You want to bring manufacturing back. It's a worthwhile initiative. A lot of blue collar jobs have been hollowed out over the years, which again, is something Democrats used to talk about. And this is part of the argument for tariffs, right?

That want to bring manufacturing back to the states. Exactly. Um, and you can not just shift a plant in a year. So like what, what were they expecting? Like, how do they think this was going to play out? And that's what the automakers are particularly up in arms. how do they think this was gonna play out? And that's what the automakers are particularly up in arms. But at the same time, in terms of kind of theory

around it all, it gets a bit, you know, like into the weeds. But the idea of free trade really boils down to something we learned centuries ago, which is that if you've got a trading partner, both of you can benefit if you focus on what you do best. Trump is kind of throwing out every economic argument to try to give credit to the administration there. China really did exploit this for a long time and had really low cost workers and American companies were happy to ship their production over there and bit by bit, they just became this dominant force.

But I think the difference that the administration's not taking into account is China did it bit by bit. It takes a long time. This is a 20-year process. And it's like Donald Trump just wants to do it tomorrow. And that's where the chaos really stems from. So to get back to this idea of, you know, maybe there isn't a strategy here. Maybe this is just kind of a chaotic time.

Is there any point, I guess, where maybe Congress kind of takes control of that fiscal policy away from the White House? Is that being discussed? That was one of the whispers I kept hearing more and more. Whether it actually plays out, don't know. Because so far, you know, like like for instance, Republican senators have been very happy to just kind of go along with most of his plans. If you look even at just kind of the confirmation hearings and some of the more radical politicians or secretaries that have been confirmed,

they haven't stood up to him. So I think what's going to come down to is waiting for their constituents to feel pain, to then give feedback to the senators, and then they kind of feel like they have the ammo to say, Mr. President, this is not working. Okay, so if it comes down to the constituents, let's talk about the American public then, Tim. How has this all been received by people? The most jarring thing to me, to be honest,

and I'm trying to tell this to everybody I know, and now I'm telling the world, is there's an incredible difference right now between the discussions in the US versus what is happening in Canada. And so I'll lay it out like this. Before I went down, one of my colleagues here at work, we were talking, we went to Tim Hortons,

it was the most Canadian thing in a way. We went to Tim Hortons to pick up a coffee. I remember we were in the Tim Hortons line and they said to me, would you join the military if they attacked? So it's that level of conversation. And this is happening a lot. Another an editor here, her son is in university.

She just told me that her son is Astor. Like, do you think there'll be a draft? Like, this is where Canadians are. Flying to the US could feel almost like flying behind enemy lines or something. Like it was like, what's going on down here? Within like three hours, I was like, no one here is talking about Canada. Like we are whipped up into a conniption and understandably so I was part of it. But it was actually in the long run, a very good thing to experience because

it's like a classic scenario where you have two sides like speaking a different language to each other effectively. And what I've realized is like tying back to an idea of kind of Trump's miscalculations, they don't understand that because the Canadian public is so pissed off, particularly because of like the 51st state comments and things of that sort, our politicians, even if they want to be super measured, they can't be that much because then they'll go offside with the Canadian public. You know, it all kind of becomes this game.

And it just, it blows my mind that, you know, in this very digitized age where you think information is abundant, that you can still have these massive communication breakdowns. And I think that is why on Tuesday Ontario Premier Doug Ford gave this press conference which was kind of like an update saying you know there is no attack they're not coming. He's directly said something to that effect because I think they realize that we really need to tone down this

rhetoric so that we can have more kind of calm discussions. But the second major thing there that it's been like, the Canadians don't understand, is the average American, I would argue, and for context here, just so everybody knows, I am married to an American, I have American in-laws, so this is not just like, I spent a few days in Washington and I'm gonna tell you how it is. The average American does not understand tariffs. And I met one day with a very, you

know, connected Republican strategist pollster, who have a lot of sway in the US, who has some Canadian connections. I'll leave it at that just to kind of protect them. But they understood the Canadian side of things. And I just asked, like, what is it? Like, how is this happening? And just very calmly, they said back to me, superpower arrogance. They just implicitly assume that they can absorb whatever economic pain is coming. Or worse, that they'll just be immune. I actually truly believe that they're not even tuned in. Because of that assumption, they don't pay attention. And for those who voted for Donald Trump,

they're only hearing the snippets of like, you know, we're bringing manufacturing back. And they're like, okay, cool. That's what I wanted, you know? So my big takeaway from it all has been, we gotta give it time, which is so unfortunate because there's gonna be real pain in the meantime. But I keep saying, I wanna just go into a sleep chamber for six months because I don't

think anything's going to drastically change until the average American person feels some pain whether it's from higher costs, from tariffs or somehow they're tied to the auto industry and somehow their plant just closes or goes on like a six month hiatus or whatever. So you're saying the average American might not feel the effects of these tariffs and all of this chaos for another six months or something? and somehow the plant just closes or goes on like a six month hiatus or whatever, you know. So you're saying the average American might not feel the effects of these tariffs and all of this chaos for another six months or something. Yeah, because it's just how the economy works. There's been some kind of a big American companies that anticipating some of this pain have stockpiled

some goods. So maybe some auto plants already brought in a bunch of aluminum or steel, you know what I mean? Like that kind of thing. Or farmers, they wanted Canadian potash, which that kind of thing. Or farmers, they want a Canadian potash, just kind of like a fertilizer for their crops. They pre-loaded that for this year's crop, you know? So we actually won't feel the pain maybe till next year.

I don't know the exact answer. And it's also just the way the economy works. Like if a company raises prices today, consumers don't change their behavior unless it's like a drastic increase for a few months, right? So I think we're all sitting here kind of just like bitter, angry and completely understandably so waiting like, when are they going to realize what's going on? It's like, I think we all need to breathe.

Like it may not be until September, which is horrifying. Well, just lastly here, Tim, we've talked about a whole bunch of different things here, but I guess a big question I have is how long can the US economy and also the global economy, how long can they withstand this kind of unpredictability? That is the big question in Washington right now too, because with this idea of economic heft in the US and being the superpower, it is very likely that if this global trade war goes on and, you know, there's retaliatory tariffs across the board after April and you know Trump just kind of says I'm not changing so then everybody kind of lets this be. The U.S. is big enough and strong enough economically to probably come out as the winner

if this goes on as kind of an economic war of attrition. The problem is you can all still lose because there's lower economic activity in general. Like we are all so interconnected nowadays that you can't live on an island by yourself as a country. That's kind of what it boils down to. And I don't know if the White House or the president is even thinking that way. They're so focused on getting his win for his term

that they're not thinking about like, well, in 10 years from now, like, how does this look? Tim, so interesting to talk to you. Thank you for being here. Happy to. That's it for today. I'm Maynika Ramon-Wilms. This episode was produced by Tiff Lamb.

Our intern is Amber Ranssen. Our producers are Madeleine White, Michal Stein, and Ali 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 soon.