The Munk Debates Podcast - Friday Focus: Canada needs a better response to Trump's tariffs

Episode Date: January 31, 2025

Friday Focus provides listeners with a focused, half-hour masterclass on the big issues, events and trends driving the news and current events. The show features Janice Gross Stein, the founding director of the Munk School of Global Affairs and bestselling author, in conversation with Rudyard Griffiths, Chair and moderator of the Munk Debates. The following is a sample of the Munk Debates' weekly current affairs podcast, Friday Focus. Rudyard and Janice dedicate the entire Friday Focus episode to Trump's announcement of high tariffs on Canadian goods, which are set to come into effect this Saturday February 1st. How will excluding oil and gas from these taxes fracture Canada's national unity and resolve in responding to this crisis? Should we match Trump's aggressiveness with retaliatory measures of our own, or strike a more conciliatory tone? And finally, Rudyard and Janice voice their frustration at the Liberal government's proposed stimulus package to soften this blow: haven't we learned from disastrous COVID spending that throwing money at problems will just create more problems? It's time to start thinking up creative and dynamic ways to strengthen our economy and navigate the country through this crisis without writing a blank check.   To access full-length editions of the Friday Focus podcast consider becoming a donor to the Munk Debates for as little as $25 annually, or $.50 per episode. Canadian donors receive a charitable tax receipt. This podcast is a project of the Munk Debates, a Canadian charitable organization dedicated to fostering civil and substantive public dialogue. More information at www.munkdebates.com.Become a Munk Donor ($50 annually) to get 72-hour advanced access to the full length editions of Friday Focus and Munk Dialogues. Go to www.munkdebates.com to sign up. Hosted on Acast. See acast.com/privacy for more information.

The following is a complimentary excerpt of this week's edition of the Friday Focus podcast by The Monk Debates. To access full-length editions of each and every episode, along with all kinds of great additional benefits and perks, become a donor to the Monk debates. You can do that for as little as $25 a year, and you'll receive each and every year 50 Friday Focus episodes at full length. It's all available right now on our website. in just a few simple clicks. Triple W. The Monk Debates.com. Look for the Friday Focus option in our navigation bar, the top right of the website.

Make your donation, and we will send you each and every Friday a link to listen to the full-length edition of this program. Thanks in advance for your generous contribution. Welcome to Friday Focus. Rudyard Griffiths here, the chair of the Monk Debates. It's Tara Friday, and I'm joined by James. Janice Gross Stein, the founding director of the Monk School of Global Affairs. We're going to dedicate the whole show, Janice, to tariffs, the economics of it, the politics of it, what this says about Canada, our culture and identity at this moment.

But let's come to you first on the economic threats, the economic risks that we are running right now. We don't know what the ultimate decision will be, but it sounds pretty sure like something is coming this weekend. If it is the maximum 25% tariff on Canadian imports, exempting or not oil and gas, how significant would that development register in terms of, frankly, the history of Canada-U.S. relations and how we see our place in the northern half of this North American continent? You Richard, it is impossible to exaggerate the importance of this to Canada. This is in many ways a body blow to the Canadian economy, although how it rolls out will make a very big difference to the impacts that are felt. They can be felt very unequally across the country, depending on what the final decision is. is, and those decisions are being made now as we speak. It's a body blow to our identity as the best friend of the United States.

It's a body blown in North American architecture. Let's be blunt here. This would violate NAFTA 2. It is not the way tariffs can be. imposed legally under NAFTA. And I happen to be in New York right now, Rudyard. And what I'm Struckbot is the asymmetry. I am with a group of officials and academics,

and I have talked about this looming crisis four times. It gets brushed off. So what is existential for Canada receives almost no attention in the United States. Yeah, I go back, Janice, to something you said months ago. I think it was in the summertime. We were talking about the threat of a second Trump term, and you prophetically predicted for our audience

that the single two greatest countries at risk would be China and Canada. And it was Canada because of the trade threat. I just wonder, Janice, how are we to understand this that if there are indeed significant tariffs levied on Canada and Mexico this weekend, but not on China, not on Venezuela, not on Iran, not additional sanctions on Russia, what the heck does that say about Trump, this presidency, the world that we're in right now? because I'm sure for a lot of our listeners and viewers, myself included, it just seems like everything is upside down. I did not foresee, Richard. I never imagined for a moment that Trump would start his presidency

by talking about Canada as the 51st state. So this is not trade. It is also not a bargaining ploy, as some in Canada have really hoped, because if it were about the border, or if it were about fentanyl, we have done a fair amount. We've made commitments, and we've been sending Donald Trump videos of what we have been doing. So Trump could claim victory here. he coerced us to do this, do some relatively small tariff and threaten more if we didn't continue to perform. That's if it were genuinely about those two issues.

But to the best of my knowledge, that is not what is on the books for tomorrow. There is still the chance that things could change before tomorrow and huge efforts are going into that, but that is not what's on the books. So what is this about? it is about a view of the United States as getting bigger. Trump wants to make America great again, not only by generating revenue so he can pay for tax cuts, not only by reshoring manufacturing jobs in the auto sector in Michigan and Ohio,

but something much bigger, and we've talked about this before, It's this vision of America that would stretch from Panama to Greenland. It is wholly consistent with the way Gigi Ping thinks about the world, with the way Vladimir Putin thinks about the world. And it's very 19th century. And it's very alarming, frankly, for Canadians. Janice, if this is economic warfare, if the intention of this, as you said, and I do a regretful victory lap at the hub where we predicted back in December that this was not about trade.

This was about a bigger set of issues about American fiscal position, how they're enticed by tariffs as a new form of revenue generation. It was about reshoring, not simply into North America, but from Canada and Mexico into those swing states that were so important to as victory in the Midwest. So if this is not solvable through a traditional kind of trade approach, and if this is, in a worst case scenario, a piece of a larger economic campaign to destabilize Canada to create the potential for Canada or parts of Canada to join the United States in some deeper and closer kind of economic union that would result in a significant, it would result in a significant loss

of our sovereignty, what should our response be? Because on one hand, you would think that that might call for a maximal response, equally strong, maybe even more strategic tariffs, tariffs on oil and gas imports in the United States, tariffs on electricity into the northwest. That could be one scenario. The other scenario is, as you pointed out, the relationship is so asymmetrical. The percentage of U.S. GDP tied up in Canadian trade is a fraction of the amount of our GDP tied up with trade with the United States. The economic realities of this, the power imbalances, would suggest possibly a cautious approach, a kind of wait and see, an attempt to delay that worst-case scenario of an outright economic war between our two countries.

So this is a $64,000 question, for anybody in the Canadian government right now. So let me break it out for just a moment, because what is still uncertain, as you and I record, Friday focus, is whether oil and gas will, be included in the tariff package that Trump announces tomorrow on Saturday. Now, look how strategic that he is on his part. If, so just let's walk down the branches of that tree for one minute. If oil and gas is excluded, think about the consequences for the rest of Canada. It would fall disproportionately on Ontario because of the auto. sector industry.

And Gobford is not far off when he estimates that it could cost up to half a million jobs. If you look at all the suppliers. But Alberta and energy producers in East and would sail through this. So the inequalities inside Canada would grow. This would be incredibly divisive inside the country. And then here's the important point, it would spare Trump the worst of the backlash inside the United States. Backlars. Because gas is, so why not do it that way, frankly?

And that's why he's been musing in public that he will. In some ways, that would be the biggest challenge for our national unity as well as for our economic sovereignty. Yeah, and again, Janice, this goes to my point, that this has features of economic. warfare, where the policies are specifically designed to divide the country, to create a horrible thousand-inch choice in Ottawa, which would be to levy tariffs on Canadian energy exports because we know that that would cause the inflationary effect in the United States to try to get relief on what seems to be a high conviction on the part of the president that America should make its own cars, that we don't need the Canadian auto manufacturing sector.

You know, this, Janice, sets up some really, really tough choices. And I guess where do you come down on this? Because we can't, in a sense, allow them to be moving on the chess board one and two turns ahead of us, can we? Well, the problem is also on an internal Canadian one, Rudyard, as you well know.

Just for a second, let's speculate that he exempts the oil and gas industry because the politics of that really worked for him. And then you put any Canadian prime minister, it doesn't matter liberal or conservative,

in the really tough position that you're going to win oppose export controls on oil and gas from the West in order to retaliate for Trump's punishing Ontario. And to a lesser degree, you know, some of the, some of the Atlantic provinces in terms of their exports. I think that would be almost a nightmare move for Canadian private. Prime Minister, especially given the Premier of Alberta, who has said no way, no how, and in fact threatened to leave Canada over an issue like this. But this is a no way.

In Quebec, they just have to twist in the wind with ineffective, you know, countervailing duties for potentially years. You know, this Trump presidency has just begun. It's all of two, three weeks old. I mean, that's not a sustainable economic or political strategy for the country either. So he's structured a Hobson's choice here. He has found the absolute point of weakness in our national Canadian politics and is going to zero in ruthlessly and exploit that weakness.

because if we don't, if a Canadian Prime Minister doesn't include oil and gas, if they're 25% tariffs on everything else, the rest of the Canada resents Alberta. You escape the big pain point for Trump. And if there's anything, you know, really interesting, Roger, because where I am, there is a really, really accomplished. American official from the prior administration. And so, of course, I said, what would you do? And back came the answer to him and go for broke.

Responding time. This is my question of you. I mean, like, should we just go to 11 on the dial right now in cooperation on NORAD, you know, stop electricity flows from Quebec into the American North? Southeast, shut, you know, shut down our hydrocarbon exports through, you know, north-south pipelines, and just understand that we're eventually going to get backed into something maximal because that's where this is headed, unless we just agree now, and this is another option, to, in a sense, capitulate and come on bended knee and have what no doubt will be a very

very, very detrimental negotiation, at least from the perspective of our sovereignty. Who knows? I mean, there may be other benefits, frankly, that could come about through closer economic union with the United States. I don't rule that out. But the renunciation of sovereignty and national self-determination would be the prima facie cost of such a maneuver. I think we're going to have to wait and see what the package just looks like tomorrow, Rudyard, if it's anything short of 25%, that tells me there is still some runway here. So what can we choose other than oil and gas? It's got to be more than, you know.

Kentucky bourbon on the LCB, the liquor stores of bacteria, as ruminated by our great leader here, Doug Ford. No, that's not credible. I mean, that's not credible. So we have to put together a very tough package, but leave ourselves the room. Don't go to the nuclear option, either on oil and gas or on NORAD, because that would hurt us just as much as it would hurt them. Thanks for listening to this excerpt of the Friday Focus podcast. To get full-length editions of each and every episode of this program,

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