The Paul Wells Show - North America faces the Trump tariff
Episode Date: November 27, 2024What does a Trump presidency mean for trade? Paul is joined by a panel of analysts from the U.S., Canada and Mexico, to talk about what might be in store for North America during the next Trump admini...stration. The panellists are Vassy Kapelos, chief political correspondent for CTV news, Doug Palmer, senior trade reporter at Politico, and Enrique de la Madrid, author, newspaper columnist, and former member of the Mexican Chamber of Deputies. This panel was recorded at The North American Manufacturing Conference. Season 3 of The Paul Wells Show is sponsored by McGill University’s Max Bell School of Public Policy.
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The Paul Wells Show is made possible by McGill University's Max Bell School of Public Policy,
where I'm a senior fellow.
Trump's back. What's it mean for North America?
I think NAFTA is not keeping the federal government, nor even the potential next federal government, up at night right now.
I do think the threat of tariffs is, however.
Today, hot on the heels of the Trump re-election, we've got top analysts from three countries to discuss the future of North American trade.
I'm Paul Wells, the Max Bell Foundation Senior Fellow at McGill University.
Welcome to The Paul Wells Show.
This week, we've got a special episode of the podcast recorded live at the 2024 North American Manufacturing Conference. Just two weeks after the U.S. presidential election, industry executives
from Mexico, Canada, and the United States gathered at the Chateau Laurier
Hotel in Ottawa to consider what a second Trump presidency might mean for trade, and tariffs,
and NAFTA. Now we're bringing that talk to you as an episode of this podcast.
The timing could hardly be better. On Monday night, Trump said on Truth Social
that he'll launch his second presidency with a 25% tariff on all imports from Mexico and Canada.
That would be devastating for the entire Canadian economy.
There could be much more trouble where that came from.
In the campaign, Trump promised mass deportations of undocumented immigrants.
And the treaty that replaced NAFTA could be up for renegotiation in just over a year,
so the stakes are high. To discuss the implications, I was joined by three veteran observers.
From Canada, Vashi Capellos, the chief political correspondent for CTV News.
From the United States, Doug Palmer, the senior trade reporter at Politico.
And from Mexico, Enrique de la Madrid, an author, newspaper columnist,
and former member of the Mexican Chamber of Deputies. The guy on the stage before us was
Canada's industry minister, Francois-Philippe Champagne. He sure was popular with the visiting
Mexican business delegation. Other Canadian politicians might not be. Doug Ford has been
talking about kicking Mexico out of whatever we're calling NAFTA these
days. That's getting noticed. Enrique on our panel was talking about Ford before I asked.
It's going to be a stormy four years, but we got a good start on it with this panel.
I think I'm going to begin by talking about prospects for NAFTA in the next two years leading up to
the renegotiation deadline and beyond. And I think because he's closest to the epicenter of
recent events, I'm going to begin by asking Doug Palmer, the senior trade reporter for Politico.
Doug, what signs have you seen for the future of NAFTA in the months leading up to the election and in the two weeks since the election?
Well, thanks, Paul, and thanks to everyone for having me here today.
You know, last month in Detroit, President-elect Trump gave a speech where he sort of talked about the USMCA process and he sort of put people on notice if they didn't if they weren't already
Expecting it that he's going to begin the review process, you know, once he takes office and I wrote down his quote
He says oh, I'm going to have a lot of fun
so, you know, I think that's the way you guys should approach this as a fun opportunity to once again rewrite the rules of trade for North America.
Trump is very proud of the USMCA.
He talks about NAFTA as the worst agreement ever.
He refers to the USMCA as the greatest ever or words to that effect. So I think people think that he's going to use the review mechanism,
but he's not going to threaten to withdraw from an agreement that basically is his baby.
Still, there's a lot of anxiety exactly over what the review process is going to entail. It's important to remember that the UMCA is sort of a unique agreement
in that it has a 16-year term of life,
and that if nothing were to happen, it would just expire after 16 years and go away.
And so what the review process does is that once you've reached the six-year mark, countries have to affirm whether they want to renew the agreement for another 16 years.
It's kind of complicated.
But in 2026, if there's a successful review, then the agreement would be renewed for another 16 years.
So it would go until 2042 instead of going until 2036 at this point. And then you would set
the stage for another six-year review process. So, you know, in his speech, Trump specifically
mentioned, you know, his concerns about steel imports from Mexico and auto imports. So I think
that those will definitely be something that they want to talk
about. He's also concerned about Chinese investment in Mexico in particular. And there's these
outstanding disputes that haven't been resolved, you know, concerns about Mexico's energy practices,
concerns about Mexico's biotech practices. There's actually a dispute that the U.S. brought against Mexico on biotech corn.
The early reports suggest that Mexico lost that case, although the report hasn't officially been released yet.
So that could get wrapped up into the review.
There's also this auto rules of origin case that Mexico and Canada brought against the United States.
They won.
However, the U.S. has shown no interest in changing the rules of origin that was contested in that case.
So I would imagine that as part of the review, they would sort of say, Mexico and Canada, you just have to do it our way when it comes to the
rules of origin. So that's some of the issues that I think that will be part of the review.
Thanks for that comprehensive introduction, sort of setting the table for everything else we'll get
a chance to discuss in this hour. Enrique de la Madrid, you have held important roles in business, in public service, in elected politics in Mexico.
And I know you've been watching very closely the signs for the future of NAFTA.
I keep calling it NAFTA because now in its current version, the three countries have three different names for it.
So the easiest way to call it either the NAFTA or that thing.
easiest. I could call it either the NAFTA or that thing. How does the solidity of this trilateral partnership look from the Mexican perspective over the next few years?
Well, I think we're concerned. We're concerned because I think that we're facing today
protectionist winds. I think that we're probably leading some of the best times in history. The economy is growing.
The standards of living of most of the people are also growing and increasing.
But we should also recognize that many people have been left behind,
and those people left behind are asking for protection.
And that's the time of political offer that some governments are giving.
I'm going to protect you.
First, I want also to share with the public some data, because I think from time to time we also have to use numbers again,
which is Mexican exports to the U.S. has grown 10 times since NAFTA, Mexican exports to Canada 11 times,
but also U.S. exports to Mexico have grown 5 times, and Canada exports to
Mexico 10 times. So I also raise this issue because many Canadians are also selling more
goods also to Mexico and to the U.S., and that is good. Mexico is the fifth largest
importer of Canadian goods, the fifth, after the U.S., China, Japan, and the U.K.
And Mexico buys from the U.S. more than all the Eurozone.
And we also buy more than Japan, than South Korea, than Taiwan,
than Singapore and Hong Kong together.
So that's the size of the trade that we're facing.
And Mexico, just one more data, Mexico is the largest exporter market
for six states in the United States,
the second for 21 states, and the third for six states.
So this is a level of interdependency
that we have among us.
Nonetheless, we have to be much more empathetic
that many people are being left behind, and especially
in the manufacturing sector, many people are losing their jobs.
And we were talking before this meeting, why is that happening?
Because in almost any sector in the economy today, you need less people to do more things.
I remember in agriculture, this was a discussion in agriculture many years ago. And now you can produce more corn and more wheat and more soy every time with less people.
And the same thing is happening in manufacturing.
So what is happening is these sectors are demanding protection from the governments.
And many governments are saying, I'll protect you.
Because it's also the easy way to do things.
Instead of changing policies, instead'll protect you, because it's also the easy way to do things. Instead of changing
policies, instead of improving education, instead of probably supporting some other sector of the
economy, it's much easier to say, I'll put a tariff. I do not deny that there might be some
potential trade partners that do unfair trade. I do not deny that. I think that it can happen, and that should be tackled.
But I also think that it is an argument
when certain sectors are not so competitive
to start to look for protection,
and that is what worries me,
that it is the easy way out.
So, yes, we're worried.
We're worried because many of the comments
that come from the future government
are related to Mexico.
We're going to be putting taxes into your exports.
And that already happened.
And what is happening is that the U.S. government lately, or at least not in the recent administration, the previous one, starts to mix themes.
If you do not fix migration, then I will put you tariffs. Come on, it's two different
themes. But from the point of view of the US government, they will mix them. I want migration
to be controlled, so I will use trade. And so I think it's very worrisome. And I think it's always
better to be prepared for the worst and then expect the best to happen. But we're worried.
I think we're worried about this trend of using tariffs to solve inefficiencies and also to solve
other problems. Before I go to Vashti, I want to follow up, Enrique. You make a good case based on
mutual interest for continuing these trade relationships and for keeping separate files
separate.
Is that a case that Mexico is currently able to make with the incoming administration?
And will it have Washington's ear after January 20th?
Well, I don't know if we're going to be capable of making the case.
But if they want to mix things together, then we should use the same argument and say,
for example, we will not
be able to fix migration unless we have an economy that grows much more. I remember these were the
arguments of President Salinas in the 1990s, when he used to say, we rather export goods and services
than people. And that's the case. If our economy is not able to grow more, the only thing that will grow more is people
trying to get into the U.S. So I think we'd rather have each theme dealt in a separate way,
but if they want to put it together, we can deal with the theme together, because they're really
tied. Migration, the issues of drugs, our economies working together, there are issues that are really interrelated.
But, I mean, we're convinced that NAFTA, as I agree, NAFTA, the word to use,
is the best deal that we can preserve for North America to be the strongest region in the world and for the well-being of our populations.
But as Jay said, we have to know how to tell the story, because this story is not bought by everyone.
This is not bought by many regions, by many people, by the general consumer, and sometimes by our own governments.
So we should know how to tell the story.
Thanks so much, Enrique, for those remarks.
This might be one of the few rooms in Ottawa where I need to introduce Vashie Capellos because we have so many Mexican and American visitors. Our Canadian guests know that she's one of the hardest working women in the news business, that her radio show, her nightly politics show on TV and her weekend review show are all appointment listening and viewing.
listening and viewing. Vashti, we've got a complicating factor as we head into dealing with this new administration, which is that the Canadian government is not very popular with
Canadian voters and perhaps even less popular with the incoming Trump cabinet. And the prime
minister's chief rival, Pierre Poiliev, is much closer to the Trump government on some issues.
But I don't want to steal your thunder.
Ashley, what can Canadians look forward to over the next couple of years?
Well, I think I'll just start off by jumping off on that point.
I think when we're talking about how worrisome renegotiating NAFTA might be in 2026, we have to say it might not be this government doing the negotiating.
And we don't really know the posture of what a conservative government would do. NAFTA might be in 2026, we have to say it might not be this government doing the negotiating.
And we don't really know the posture of what a conservative government would do.
I think by design, Pierre Polyev and the people around him have been very quiet on Trump's win,
other than releasing a statement essentially that concludes by saying we're going to stand up for Canadian interests. I think they're a little bit hesitant to welcome the praise that many of the new cabinet nominees have directed, you know, in the past their way.
I think they're cognizant of all of that.
But we don't essentially know the kind of posture they would take in those negotiations, to what degree they would reject protectionism or embrace it.
I think all of that is a big question mark I also think though at this juncture NAFTA is not
the primary concern for the Canadian government whether it be this one or a different one and I
think tariffs are a much bigger concern and the threat of those across the board 10% tariffs
on the first point that I made there I think the reason for that is exactly what you discussed they
are completely aware of the degree to which Mexico is in the line of fire for Donald Trump and Canada is not. If you go back,
you know, over the campaign, beyond that one comment that was made in Detroit on NAFTA,
the majority of what Trump said around trade was bringing up Mexico and China. It's all about
China, obviously, by name. Canada was not mentioned hardly at all.
I went to the RNC. I interviewed Marco Rubio, Ted Cruz, asked them very specifically about the
threat of tariffs, about NAFTA. Both of them reiterated in multiple instances how much of
a friend and an ally Canada was and flipped the script almost immediately to Mexico. So
that was in July, and that was already the narrative that was emerging. At the provincial
level, politicians are already seizing on that here, right? Doug Ford and Danielle Smith, for I
think very different reasons, already saying, cut Mexico out of future negotiations. Go at it on a
bilateral basis. Yesterday, the prime minister in Brazil was asked, are you going to do that?
A couple of times. He wouldn't explicitly say no. He you know that if you if you parsed apart what he said it was like we don't really want to we still
have talked to Mexico we still you know we think it's good the way it is we
think they are a valuable partner but he wasn't like no way we're not doing this
and my understanding is there's a lot of communication between Doug Ford's office
in the Prime Minister's office and though Daniel Smith's asked me have been
generated out of a different motivation,
I think there is some good cop, bad cop going on there.
So I think NAFTA, to be totally frank,
is not keeping the federal government,
nor even the potential next federal government,
up at night right now.
I do think the threat of tariffs is, however.
And the thing I'm primarily watching
when it comes to the imposition of those, which I think is a guarantee because of the language
Trump used throughout the campaign, is whether or not energy is exempt and how the federal
government navigates that with its rhetoric around climate, its rhetoric around emissions caps,
it's all of that stuff in some from a domestic point of view, how that informs how they go about what happens with energy and if that sector ends
up being exempt from those tariffs. And just a really quick final point on NAFTA. I think the
big story for us will be if Trump explicitly tides defense spending to making a deal with Canada,
which I 100% expect him to do. His chief surrogate to Canada was Kelly
Kraft. I've interviewed her twice in the past month. She has been explicit that he will do that.
She's very close to him and the people around him. So I take her at her word.
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This is starting to sound a little bit like one of my favorite jokes, which ends with the one
camper saying to the other, I don't need to outrun the bear, I just need to outrun you.
the one camper saying to the other, I don't need to outrun the bear, I just need to outrun you.
And I know, Enrique, that a lot of the signals from the Canadian provinces are being heard in Mexico. How do you respond to the possibility that NAFTA's future might start to look pretty asymmetrical?
Well, first, I think I love economics, I love politics, but also politics has its positive way of saying it,
and also it has its negative. I think those statements are politics in the negative sense,
it's just politics. Those are words for the public, but I think it's the wrong perception.
I remember also in the 90s, let me see if I'm right, but if not, at least it's my belief.
Sometimes Canadians and Mexicans, we share a common feeling with respect to how we feel with respect to the U.S.
The U.S. is just too big.
It is too big.
So I remember in those days that just by sharing that feeling, that makes us closer in a way.
And I think it's something good for us to keep together, to analyze. We're not
the same. We're in different situations. We do not have the same challenges, but we have some of the
same risk, some of the same feeling. In the case of Mexico, it's only 15 times bigger in terms of
our economic size. So I think it's wrong for someone to start to believe that they can strengthen their political or
the negotiation skills just by saying you and me are gonna negotiate well that
makes you much weaker I think sometimes in life when you start just by you know
by giving in you're weaker just by doing that so I don't I don't think it's the
right way I think I'll give you an example. Many years ago, I was in a dinner,
and the CEO of Audi, he made a comment.
He might be right or wrong,
but what he said is,
the U.S. automobile industry is competitive because of Mexico.
If that is still right, if that is still the case,
then this is an issue of the industry.
In this case, of the North American industry. If that is still the case, then this is an issue of the industry, in this case of the North American
industry. If that is still the case, then what is at stake is not NAFTA. It's an industry,
or many industries. And I think that the issue is how do we become competitive, taking advantage
of our different competitive advantages. If that is still true, we need ourselves. We need
ourselves, yes, because we
have different labor skills and different labor prices, but we have different regulations.
We are now this region, probably the only self-sufficient energy region in the world.
So if we really need each other, we have to work together with the same ideas. Let me give you,
again, some numbers when people say, well, you you know NAFTA is really terrible and what is happening to our economy. Well in
the case of the manufacturing output of the US it has doubled from 1997 to 2024
the manufacturing output doubled. Nonetheless its participation of GDP has decreased from 16% to close to
10%. And also the people hired in the manufacturing sector peaked in 1980 with
20 million people and now from what I heard from this presentation now it's
only 14. The case of Canada is not the same.
In the case of Canada, it seems that the manufacturing output peaked in the year 2012.
Also, its participation of GDP has also decreased to 9%,
and I suppose, I do not have the numbers, the number of people has decreased.
But that is not trade.
That is productivity.
That is digitalization.
That is automatization.
So what I want to say is this sector is tremendously strong for all of our economies,
but it is the rule of law that every day we want to be using less people to produce more goods.
That's a fact. And that is not trade to be using less people to produce more goods. That's a fact.
And that is not trade to be blamed.
So what we need to do in our economies,
and this sector has to do it,
we have to tell the story.
Because again, it's going to be very easy
to blame the manufacturing sector for reducing people.
One more comment.
I cannot just escape from saying this.
I do not have the numbers,
but if there is a risk of putting some tariffs with respect to certain imports of Mexican goods
coming from Mexico, are they going to be importing, putting tariffs into Mexico, or they're going to
be putting tariffs into U.S. companies trying to bring goods into the US? That's a question.
I've heard, I do not know,
and if I knew I wouldn't say the name,
but I know that some automobile industries in the US,
half of their cars or a significant numbers of their cars
are made in China,
and then they just put the brand of the American company.
If they put tariffs into those Chinese goods, are they really putting taxes into China,
or they're putting taxes into the American goods?
Those are things that should be told to the U.S. government,
because I suppose that many of those things are not even known.
Let's pivot to tariffs.
Doug Palmer, as he says, the tariffs are the real game.
There's all kinds of reasons why that would be the case.
No country needs to negotiate their tariffs with anyone else.
They can implement them in agile and preferential fashion.
And the crucial question for Canada for the last decade is,
will Canada be inside or outside of a fortress America built around tariffs?
What, Doug, are you hearing about the incoming administration's potential tariff policy?
Well, I mean, I think, honestly, there's a lot of uncertainty over what the Trump administration is going to do.
I mean, obviously, President-elect Trump talked a lot about tariffs on the campaign trail.
He talked about a universal baseline tariff of like 10 or 20 percent. The exact figure
would vary depending on the day. He talked about putting a tariff of up to 60 percent on China. He
talked about putting thousand percent tariffs on electric vehicles from Mexico. So, you know, he
throws around a lot of numbers. But, you know, it's still not really clear what exactly he's going to do
and whether he's going to try to do this unilaterally.
Probably, if he goes ahead and does it, he would use this authority called the International Economic Emergencies Power Act,
which hasn't ever really been used to impose across the board tariffs, but people think
that's the authority that he would use to do that. But even then, it's like, okay, does he
immediately oppose a 20% tariff on all $3 trillion worth of U.S. imports from every country in the
world? Or does he sort of say like, well, you know, this is my intention.
We're going to study it for the next 90 days and then gradually move towards doing that,
you know, sort of allowing the opportunity for countries to come in and say,
please, Mr. President, put tariffs on another guy, but not us. And here's what we're willing
to do. I mean, he loves tariffs, but he loves to make deals too.
So you have both of those impulses going on there.
But, you know, they're also talking about using tariffs as an offset
because they want to renew these Trump tax cuts from 2017 that expire next year.
So people look at tariffs as a potential revenue source there. And there's
all sorts of implications around that because, you know, if the tariffs are part of the law,
they're arguably harder to remove than if they're part of an executive order. I mean, I said that I
don't think that Trump wants to withdraw from the USMCA. I mean, he could violate it because he's never said
that we're going to, you know, carve out a tariff exemption for free trade partners like Canada
and Mexico. And if he does kind of like use this threat to pressure Mexico on migration,
you know, by threatening them with a 25% or 50% or 75%
tariff, I mean, that would obviously be a violation of the USMCA itself. So, you know,
he says a lot of stuff, take him seriously and, you know, prepare for that possibility. And
if you don't think tariffs are a good idea, you know, gather your arguments and make the best case you can to the administration. But I would
just say there's still a great deal of uncertainty over what exactly is going to happen.
If I had to make a prediction, it would be that that uncertainty is going to persist,
because I can't imagine any tariff regime staying consistent over the long term. You
get tough at the beginning to get everyone's attention, to check off an election promise,
and then various rebuttal policies, other countries hiking their tariffs against American
imports, findings of having contravened treaties that he would adjust as he goes, based, I
think, in many cases on what he sees in the morning on Fox and Friends.
Am I close?
Well, I mean, he is sort of responsive to pressure.
And there are concerns that a universal baseline tariff would be inflationary.
I mean, they have arguments against that, why they think that that won't be the case.
They point to the previous tariffs and say, you know, the ones that they imposed on China and the ones they imposed on steel and aluminum and said, you know, all the concerns about those driving inflation didn't materialize.
But, you know, that affected like $300 to $400 billion worth of goods.
You know, we're talking about tariffs on $3 trillion worth of goods. So it would probably have a bigger impact. And then the threat of retaliation,
which means that U.S. exporters would lose sales. You know, companies would be facing higher costs.
They wouldn't have as many opportunities to export overseas. I would think that there
would be some blowback to all that, which would have an impact on him.
Can I jump in for a second?
Vashti, go.
My argument is that I don't think that the blowback matters nearly as much to Trump this
time as it would have the last time around. The success of Team Canada was essentially
presenting what we know to be the logical and factual argument at the congressional level,
the Senate level, the governor level, the state level, beyond just the governors, the business councils in other neighboring states.
And they collectively, in the aggregate, then made the argument to Robert Lighthizer,
who essentially was able to convince Donald Trump to back down on steel and aluminum tariffs at the
time, which were the only thing we were dealing with in addition to NAFTA. He doesn't have to care about that stuff
anymore. This is not the same win in 2016. He has the Senate, he has the House. Governors are
tiptoeing around a lot of things. I just don't think that they will have the same amount of sway.
And if you listen to how he described tariffs during the campaign, they're beautiful. They are,
you know, if you don't understand them,
you're dumb. Like that's the exact, I listened to it on the car right here. That's the exact
vernacular that, that he employed. Like, I think they're coming at us one way or the other. And I
think our opportunity to convince him otherwise is deflated relative to the last time around. I
don't, I think some key things to look for are whether or not Lighthizer is back in that role,
chiefly, primarily.
Funny, in 2016, when it happened, we were all,
you know, the federal government was like,
oh my God, this protectionist, oh no,
and now he's looked at as the potential savior
for Canada going forward, like how the times have changed.
I think the appointment of Lutnick to the,
or the nomination to the Commerce Secretary
is also another reinforcement
of the potential employment of tariffs.
He has given multiple interviews
talking about the beauty of them as well.
Like, he's picking people who subscribe to that ideology.
So I think sort of in the vein of what my colleagues were saying,
prepare for the worst.
Like, I would be getting ready for that.
And based on my conversations with people
who are in the government,
A, they're shocked at what happened,
so they aren't really prepared yet for it, but they are seized with the idea that they have to be.
So we've already seen the Canadian playbook. It's immediate reciprocal tariffs.
Minister Champagne is the good cop and the finance and trade ministers is the bad cops.
What you're saying is that it won't have the dissuasive effect that it might have had in 2018, 2019. It might, but remember even before the threat of employing that,
there was all this sort of diplomacy that was done through Team Canada to get all of these
people on side with our argument that it's not just going to make things worse for us,
it's going to make things worse for them. Ultimately, that combined with a threat of
retaliation worked. I just don't know if it's
going to have the same impact. Doug, can I ask a broad question?
How much does Trump 2 look like Trump 1? And where would you identify differences, if any, so far?
Well, I mean, he has the experience of his first term and so he's learned from
that.
I think he knows better how government functions than before and I think that he, you know,
is more cognizant of the need of getting people who agree with him as part of his cabinet
rather than folks that are going to
be arguing with him and trying to stop him from doing what he's doing. That said, I mean, people
I talk to from the former administration says that, you know, he likes to hear a variety of
viewpoints. And that's why he had people from, you know, representing, you know, sort of the Wall
Street wing of the Republican Party in his administration the first time around. And that's
why everybody is watching so closely to see who he picks for Treasury Secretary, whether he's going
to choose somebody that has more of a free trade market orientation, that's going to make these
arguments against tariffs and tell him why he needs to be careful. And if you go too far, you know, you're going to kill the goose that lays
the golden egg or whatever. Enrique, I might as well just ask pointedly, it looks like Mexico's
relations with China are viewed as problematic, certainly by Canadian partners. Premier of
Ontario has said, if Mexico is going to become a portal through which China can flood the North American auto market, we don't want any.
Thank you.
How wedded do you think Mexico is to a robust and growing commercial relationship with China, given that North American context?
Well, first, what I'm going to say is my personal opinion.
I do not represent the Mexican government.
But what I think we should say is that, first of all, we're absolutely committed to North America.
We believe that North America is our best bet.
And that, for sure, is what we should do because that is in the benefit of our Mexicans and, of course, of our region.
Having said that, this is my personal opinion,
I think that we should have to have a very honest conversation with the U.S.
and say what is absolutely impossible for you to accept.
Which are the strategic sectors where we cannot have anything to say with the Chinese?
And of course, if it's possible, explain why.
And explain. Please explain.
Security, yes. Economic security, yes.
But that is a complicated concept.
In Mexico today, our actual government and last government has used the argument of security
to get military involved in the construction of ports, trains, airports, whatever.
So security is too broad of a concept.
Having said that, we would like to
have some kind of relationship with China. Why not? I will not reveal the name, but someone,
my neighbor yesterday from a local state of Mexico, he told me, you know that many of the
suppliers that have come into our state from China, they have been suggested or presented by U.S. firms for them to come into
Mexico. Tesla, for example, has told us this is our supplier that we would like you to have in Mexico.
So it becomes a complicated conversation when so many of those suppliers are suppliers that have been
working for good reasons with the US companies. Let me just share with you
something that I learned yesterday from ChatGPT. Well, and I ask
precisely this question. Give me a recent historic example where protectionist
measures were implemented, taxes on imports
were raised, and that that had started a trade war and where the consequences were the reduction
of the economy and more unemployment?
That was a question to Judge G.P.T.
And you know it takes a lot of time, like five seconds.
And the answer was Smooth Holy Tariff Act 1930s.
It is believed to have contributed to the Great Depression.
In those days, the sector was not manufacturing.
In those days, the sector was agriculture.
In the US Congress, they imposed taxes
to 20,000 imported goods.
A very solid partner of the US inS. in those days, Canada,
raised tariffs against the U.S.
Of course, there was retaliation.
The reduction of U.S. exports were 61%
from 1929 to 1933.
So history is only 100 days back.
And I don't know if it happens to you,
but I have the impression that we're leaving the 1920s again
in so many things, in the lack of democracy,
in the lack of respect for human rights,
in the lack of respect of the rule of law.
So for me, I'd rather prepare for the worst,
expecting the best to happen.
Vashti, while we're talking politics, as you and I both know, rather prepare for the worst, expecting the best to happen.
Vashi, while we're talking politics, as you and I both know, some liberals have been kind of half-hoping all year that Donald Trump would get elected, because then they could
run against Trump while they're running against Pierre Poiliev in the federal election next
year.
How do you think that is working out?
That's a loaded question.
I mean, they've stopped doing that, so that tells you what you need to know about how well it was working out. I think it's an incredibly dangerous
strategy to employ at this point with so much on the line. And I think that's why we've seen,
so they primarily employed it during the debate around a free trade deal with Ukraine,
in which the conservatives said they would vote against it because of its language around a carbon tax or a price on carbon. And then that really
prompted the Liberals in particular to go after them saying, well, that's a MAGA way of looking
at things. You're doing this actually because of the MAGA opposition to Ukraine. And that's the
only blip the Conservatives have ever had in any polling in the last year. It was a tiny blip,
though. And since then, there's barely been any discussion about it. And they stopped. Ever since
they formed Team Canada in January at their cabinet retreat in Montreal, they stopped doing as much of
it. It's going to be interesting to see whether that changes in the campaign environment. I think
if it does, it's a sign that they're kind of grasping at straws. I don't know if it necessarily is a net benefit to them, because it will depend on how Trump
governs, what he says, how he acts.
If they are comparing Polyev to him, and I think in some circles that works in Canada,
but if they're invoking that comparison and it's not accurate and Polyev isn't Trump and he isn't using
the same language and he isn't saying the same kinds of things, then I think it becomes perhaps
a net negative for them. So I don't know, the jury's out on it, but they've definitely stopped
using it, which I think speaks to its effectiveness or lack thereof. What a fantastic conversation
we've had here this morning. And I know that you'll all be carrying on with these
themes for the rest of your meeting here. Vashti Capellos, Doug Palmer, and Enrique de la Madrid.
Have a great morning.
Thanks for listening to The Paul Wells Show.
The Paul Wells Show is produced by Antica and supported by McGill University's
Max Bell School of Public Policy.
I want to give special thanks this week
to Canadian manufacturers and exporters
who invited me to run this panel
at the North American Manufacturing Conference.
My producer is Kevin Sexton.
Our executive producer is Stuart Cox.
Laura Reguerre is Antica's head of audio.
Kevin Bright wrote the theme music
and Andy Milne arranged Kevin's tune
for the closing theme.
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