Canada tests the limits of Trump’s power

0:00This BBC podcast is supported by ads outside the UK. Get more with BBC Podcasts wherever you listen. Be the first to listen to your favourite shows like Evil Genius, Good Bad Billionaire and You're Dead to Me with a subscription to BBC Podcasts Premium on Apple Podcasts. You can also enjoy a range of our podcasts ad-free with an Amazon Music subscription. The relationship between the US and Canada is nearing breaking point. The two countries are locked in a trade war, and for now, neither appears to be backing down. It is a huge test for the Canadian Prime Minister, Mark Carney. Instead of striking a deal with the president, like other U.S.

0:42allies have, he's instead chosen to walk away from Donald Trump's demands. But there's so much on the line for both men. It's also a test of American power and Donald Trump's ability to get what he wants on the global stage. Welcome to AmeriCast. americast americast from bbc news you hear that sound oh i think when i hear that sound it reminds me of money we didn't start this war but under president trump we are finishing it this is a big cover-up and this administration is engaged in it this guy has trump arrangement syndrome i have four words for you turn the volume up

1:26Hello, it's Anthony here in Washington, D.C. And it's Sumi sitting alongside Anthony in our Washington, D.C. Bureau. Anthony, it's Wednesday around 10 a.m. here in Washington. And boy, this trade war between the U.S. and Canada does not seem to be, let's say, cooling down at all at the moment. Yeah, it has spiked. It's been simmering for a while, I think. And we had bits and pieces. There was a lot of feuding between Canada and the U.S. last year, even before Trump came back to office, where he was talking about the 51st state and picking fights with Justin Trudeau, who is a former prime minister.

2:02But here we are now, a new prime minister. And this is as hot as I think it's ever gotten. Yeah. So if we just go through it, Canada has chosen to retaliate. It has announced tariffs of up to 50 percent on hundreds of American goods. And starting in September, Canada will double tariffs on American steel and aluminum. That's really critical from 25 percent to 50 percent. Looking at some of the other items here, they're going to impose tariffs from 15 to 50 percent on hundreds of other products. So food, plastics, appliances, agriculture, equipment, motorcycles. Think about that. That's, you know, quintessentially American.

2:41Electronics as well. This all comes in response to those trade talks breaking down and President Trump announcing steep tariffs, 50 percent tariffs on Canadian goods, including whiskey, dairy products, toys, clothing, hockey sticks, of course, and threats to increase. He's now threatened to increase Canadian car tariffs and trucks up to 50 percent starting January of next year. So all of those numbers tell us this is just ratcheting up, escalating further and further. Right. And those Canadian tariffs that you mentioned, they kick in in about two weeks. So there's a little bit of wiggle room here.

3:16And those big auto tariffs don't kick in, as you said, till the first year. That gives them a little space to try to negotiate something. But they've been negotiating now for quite some time. If you remember in Trump's first term, they renegotiated the North America Free Trade Agreement, changed it to the U.S.-Mexico-Canada Agreement, USMCA. Although the Canadians call it CUSMCA, I believe. So many letters. And that was Trump negotiating it. And then coming back in again, he renegotiated that renegotiation, tried to get a better deal, which is one of the reasons why I think there's some hard feelings on the Canadian side.

3:51They feel like they keep negotiating deals with the U.S. and Trump keeps changing the terms. And when Mark Carney announced that he was pulling his negotiators back on Saturday morning, that was one of the things he said. He said that it seems like trade agreements with the United States are written in pencil, not pen. And yes, there is a bit of time to negotiate. But if you listen to the words that are being expressed on both sides, they certainly don't sound like they're willing to come back to the table. We have a clip of Ontario Premier Doug Ford, who is quite boisterous and obviously really entertaining to listen to.

4:23He hit out at President Trump during a speech on Monday. He says he doesn't need Canada. I'd love to see, he wants to take our auto sector. I'd love to see him run cars without any oil. I'd love to see, you know, him try to grow vegetables and fruit and everything without the potash. You know, your own people, President Trump, don't even like you. And they're going to speak loud and clear when it comes to the midterms. And if I was allowed to, I'd be down there door knocking. He also said that Donald Trump could kiss his ass. Can we say that on the podcast? I hope so. If Doug Ford says it, we can say it.

5:00Okay, I was just wondering, you sound a little more subdued than you did this morning on the radio when you said Donald Trump could kiss your ass. Did the prime minister ask you to tone it down a bit? No, he didn't. I'm going to comment, but he wasn't against that. And I have a lot of real estate on my ass, so he has a lot of room to kiss my ass. I mean, it's very much a bigger than life personality and the kind of guy who can go toe to toe with Donald Trump in a way that Mark Carney doesn't. He's very genteel. He's a financier before becoming a politician. And it was Ford, according to reports in The New York Times and elsewhere, who told Carney, this isn't a good deal.

5:37Don't take it and refuse to agree to put American whiskey and other distilled drinks back onto the shelves in Canada, which is one of the things that the Americans were putting on. for in these negotiations. And this derailed on a number of different levels. There were a lot of big issues that they just didn't seem to be able to come to an agreement on. The U.S. was asking for more access to streaming services and bypassing these foreign language requirements or French language requirements that are very big in Quebec. They were talking about auto tariffs. Canadians wanted them lower on the cars they were manufacturing in Canada that are being sent back down to the U.S.

6:21So it doesn't seem like there's an easy resolution to this. There's still a lot of work to be done, as you say. And the way this rhetoric has gotten and how heated it has become makes it seem like it's not just something that can be smoothed over by diplomats. This is a significant break. Yeah. You know, the American side, the Trump administration says, we offered them the best possible deal, the best deal anyone could get and they walked away, indicating it's Canada's fault. One other point I thought that was interesting, Anthony, is the Canadians say that the U.S. was demanding that Washington could dictate trade terms that Canada had with other countries as well.

6:57And Mark Carney is basically saying any sovereign country cannot sign up to that kind of agreement. We can't allow that to happen. If you listen to President Trump, he keeps accusing Canada of freeloading, kind of acting like it's a state and getting the benefits of a state, but being a sovereign country and that that has to end. He has continuously, repeatedly accused Canada of ripping off the U.S., not only on some of those trade levels, so how much dairy, how much U.S. dairy can come into Canada, for example, but also he says, you know, also militarily that Canada has been depending on the U.S.

7:33for security. And we've heard that echoed across the administration from the transportation secretary, from the trade representative, Jameson Greer. But you really get the sense that there's not a lot of trust right now. And then we saw President Trump escalated one step further where he said he wants to rename Lake Ontario as Lake America. I grew up on Lake Ontario in Rochester, New York. So it's a lake that's very familiar to me and crossing over to Canada. I don't think many people in that area would love to see that. I mean, the name is derived from the Native American tribe there. So it's not even really Canadian.

8:08It's just both the Canadian province of Ontario, where Toronto is, and the lake both have the same roots. But, you know, this is Trump. And he's also said that Canada is ripping off the U.S. to reflect what the American perspective is on those tariffs that they want Canada to impose on third parties. They worry that they're going to strike a deal with China, for instance, and bring in electric cars, and then those cars will come down to the U.S. or bring in Chinese steel and it'll get around the tariffs that the United States has put up. I wrote about this on the website today, and I spoke with some experts who have been paying a lot of attention to this.

8:46One of the interesting points they made was that the United States is negotiating with both Canada and Mexico. This was the North America free trade zone. In one way, Mexico is moving towards more close integration with the U.S. economy. They're accepting some sacrifices of sovereignty in order to get closer to the United States economically. And the Canadians are taking a different choice. They don't want to sacrifice their sovereignty in order to have economic security. I think in the Americans' view, they would create some sort of a fortress America where everyone has the same tariffs all around the outside, Mexico, the U.S., and Canada.

9:23They would trade freely within, but they would be able to present a kind of united front to the rest of the world, both on the economy, on trade, on national security. All of this goes back to issues we've discussed frequently on this show, which is American foreign policy, looking at the Western hemisphere and North America in particular as this sphere of influence and America's backyard. And we're going to secure that. And then what happens that the rest of the world will deal with from a distance. Yeah. And Canada has clearly said, we're not necessarily happy with those terms and conditions that would make that fortress.

10:00It's also a bit of a test of President Trump's strategy here. If you look at other allies until now, when they have been staring down the threat of steep tariffs from President Trump, they have chosen to negotiate, not necessarily a comprehensive deal, but around the edges to lower tariffs on one product or the other. If you listen to what the Trump administration has been saying, they point out that the only countries that have retaliated are China and Canada, putting them essentially in the same boat. Why is Mark Carney doing that, the prime minister? Well, for one, as we said, he feels these are simply terms that Canada cannot agree to that would be too punitive for Canada.

10:40But also, I think that this is a bit of a gamble, isn't it, Mark Carney, to say, we stand up to Trump, let's see what happens. Yeah, it's a test case. China, obviously, the United States cannot push around. It is too big. And it has too many ways of retaliating and having a very real impact on the U.S. And we've already seen some of this with their decision not to buy as much agricultural exports and their restrictions they had on critical minerals. All of these things make it very difficult for the United States to dictate terms to China. I think the American negotiators look at Canada differently.

11:11And Trump himself has said this. We have all the power. We're the big economic power. They are very small. They need us. We don't need them. what Carney is saying is actually you do. We have means of exerting pain, putting economic pressure on you that may be are not the same as what you can do to us, but it's enough that it'll have an impact. And he might be serving as an example to all of these U.S. allies in Europe and Asia as an example of how you can stand up to the U.S. and you don't have to fold and make concessions and just to be able to keep access to the U.S. market. Yeah, it will mean on that word pain, some pain in Canada as well.

11:53And Michelle sent us a question on this on Discord asking, if tariffs are a bad thing and are not paid by the country they're imposed on, what is the point of Canada imposing reciprocal tariffs except to increase the cost of importing stuff into your own domestic market? Yeah, and it does. It's going to hurt Canada. Costs are going to, prices are going to go up in Canada on a lot of different things that these tariffs are on, the same way that prices for American consumers are going to go up if you want to buy Canadian whiskey at the liquor store. It also hurts domestic industries, the exporting countries' industries.

12:30And that is what these tariffs are designed to do, designed to hurt key segments of the United States in places that are near and dear to Donald Trump, whether it be Kentucky distillers or Iowa farmers or Michigan and Ohio auto manufacturers and auto parts manufacturers. Yeah, I was interviewing the premier of Nova Scotia on one of our programs, and I was asking him about this question of putting pain on some American states versus the pain that his own province might face with some of these tariffs. And he said it's a fine line to walk, because on the one hand, they do want to be able to at some point come back to the negotiating table and agree to some sort of deal that would walk down these tariffs.

13:13But at the same time, they're well aware of the fact that in order to get there, they have to put that pressure on the U.S. And he said it is the U.S. alcohol in particular that seems to really get under the skin of the Americans. So those are the tariffs that we are going to keep in place. And he said also, you know, interestingly, even if those tariffs were to be wiped away at some point, Once American liquor, alcohol is back on Canadian shelves, people don't forget. It doesn't mean that they're going to go back and buy that American whiskey again, because they're not going to forget just what America was willing to do to its neighbor and its partner.

13:47So the long lasting effects of this are really interesting. And I mean, to your point, Anthony, about the pressure on states that are politically sensitive to Donald Trump, think about the midterms, the real impact here. Yeah, yeah. We're midterms for what now, only two months away. And voting is going to start even earlier than that in a lot of these states. And the ones that we just mentioned, Michigan, Ohio, and throughout there, Maine also, Alaska, Iowa, these are going to be key battleground states that will determine which party controls Congress, not just the House of Representatives, which looks like the Democrats have a very good chance of taking back, but the United States Senate, which seemed like a heavy lift for Democrats a few months ago.

14:29Now, maybe not so much. So I think the Canadians see those midterms. They can read the BBC, our political analysis. They can read the New York Times. They know that Donald Trump is facing an uphill fight in these midterms. And they might be willing to sit back and wait and either have Donald Trump back away because he knows he's got to try to address this before the midterms or after the midterms. His political strength would be notably weakened if he loses control of Congress and they might be able to get better terms for this. So American politics definitely is going to play a factor in this.

15:08And it's interesting, Canadian politics, I think, when we talk to Canadian officeholders and people who are analyzing this, they think that Canada is much more united on this. They feel aggrieved. They're sticking together. You mentioned not buying American liquor, but also I saw a picture of a fruit stand and it showed all these apples and one section gone. And then one section where there were just all the apples, no one's touched them. And the caption was, guess which one are American apples? The Canadians are paying attention and they're not coming here to the U.S., not spending their tourist dollars.

15:40They're not crossing over to Maine or to Michigan to go on holiday and they're not buying American exports. So at least domestically right now, Carney seems to be on more solid footing than Trump. I mean, Carney is as popular as you can get in a democratic country for a prime minister at the moment. It seems that his gamble for now is one that's supported by the majority of Canadians. Polling here in the U.S., though, shows that most Americans do not support a trade war with Canada. And if you listen to some of the comments from senators in those really sensitive, politically sensitive states, like Susan Collins has been saying, I don't support a trade war with Canada.

16:17You look at, you know, you were mentioning Florida, I found it interesting that Senator Rick Scott had written that tourism to Florida is down. He was saying this in relation to Byron Donalds, who's running to be governor, saying that Byron Donalds will solve this. But my parents are what you call snowbirds, they moved down to Florida to escape the cold weather in New York State. And they are surrounded usually by Canadians, because there are so many Canadians, particularly from Ontario, who go down to Florida either for half the year or a few months, whatever it may be. And if that starts to dry up, that does have a real impact.

16:49Yeah. Politicians on the ground, ones who are going to have their names on the ballot in November are feeling this. John Damous, who is a Michigan state legislator, here he is talking about the negative impacts on his state from this trade war. You know, you talk about anybody in the automobile industry and these parts and vehicles move back and forth across the border multiple times. And depending on how these tariffs are structured, sometimes the same part is getting hit over and over again with tariffs. You know, and it even has a secondary impact. I was actually disappointed talking to somebody who I know quite well yesterday who is in an industry where they make plywood.

17:27And it's all U.S. plywood, okay? So they were actually happy about these tariffs because plywood is getting caught up, and now they can charge that much more money and still be competitive. And I was just thinking, we have a crisis in housing in the United States, especially in northern Michigan here, and this just makes it even more expensive for people to be able to build their own home. Sault Ste. Marie, Ontario and Sault Ste. Marie, Michigan, it's a really unique dynamic there where we have families who are split by this tiny little river. I mean, you can't throw a stone, but it's pretty close between the two countries.

18:00And we have all sorts of people, especially health care professionals who live in Canada and work in Michigan and vice versa. It's a real problem. It's very personal. It's a real problem. And that is not a Democrat saying that. That's a Republican. That's a member of Donald Trump's own party. So I think that shows exactly how potent a political issue this might become. And yet the president and his administration are not backing down on this. despite the, let's say, frustration among some Republicans. And as you mentioned that Republican in Michigan, and we mentioned some of the national figures as well, like Susan Collins, who are in these states that really do benefit from cross-border trade, who actually have families across the border as well.

18:42They are going to see a real impact. And despite that, I found it interesting that J.D. Vance was kind of out there on the campaign trail, if you will, ahead of the midterms talking about this. And he was doubling down on the administration's position on Canada. Canada and China have been the two worst countries when it come to trade policy anywhere in the world. What a shame that is. China, you of course expect. They're our biggest economic competitor. I would expect that from China. I would not expect that from Canada. We have to remember, Canada is a state. Sorry, Freudian slip. That was actually an accident.

19:22Canada is a country that has underinvested in its military that quite literally would get invaded by a foreign country were it not for the umbrella of protection provided by the United States of America. And so how does Canada actually respond to that by treating the people of Maine fairly? No. They apply ridiculous tariffs and other non-tariff duties on Maine products coming into Canada, and they don't expect Maine or anybody else to fight back. We're sick of that. So there's a sitting vice president of the U.S. giving a speech in Maine. And interestingly enough, Susan Collins, who you mentioned, is running for re-election there in a state that Democrats have carried in presidential elections since the 90s.

20:09And she didn't show up. She wasn't there. So I think that kind of tells you a little bit about the pressure that she's under and her desire to distance herself from this administration's policies, even with J.D. Vance trying to defend him there to the audience. And I think some of the messaging we heard from J.D. Vance reminds me a lot of what we heard President Trump say about NATO allies when he was talking about their contribution to the war in Afghanistan, saying they weren't on the front lines and how deeply painful that was for NATO allied countries, including the UK, of course, that contributed and lost soldiers in that war.

20:43And it is the same for Canada. If you look back at World War II, or if you look at after 9-11 as well, Canada's military contribution for many Canadians, they find that clearly offensive. Now, of course, the US military dwarfs the Canadian military. There's no question there. And that's something J.D. Vance might be pointing to. But the fact is, I wonder in a state like Maine, even though we heard some applause there, how much a message like that will resonate because they do have such a close relationship with Canada. And most Americans are, as we said, not in favor of a trade war with Canada.

21:16And I imagine kind of the neighborly battle here is not going to go down well with a lot of people. And that's something that, you know, I wonder how the administration is going to kind of deal with that. Yeah, I mean, there's certain industries that are happy with these tariffs or this trade war. The dairy industry would love to have access to Canada. There's been restrictions on that that are protecting the domestic Canadian dairy industry. Three aluminum manufacturers here in the United States, a few of them there are, very happy about the fact that they don't have to compete against Canadian aluminum, or at least they're higher tariffs on that.

21:51But by and large, you're right, the American public, they're focused on affordability, as we heard from that Michigan Republican. They're caring about prices in the grocery store. They're caring about housing prices, houses built with natural resources, timber and such that come from Canada. And I thought it was interesting, J.D. Vance, that were public remarks he made this week. Last week, there was a leaked audio of him at a fundraiser in New York on Wednesday night where he was kind of demeaning Carney a little bit. He called him a very sweet guy, but then when he comes to the negotiating table, he puffs out his chest and thinks he's going to out-tough Donald Trump.

22:28But ultimately, he climbs down. I don't know if that was one of the reasons why Carney ended up backing away from these talks, but it certainly didn't help. No, and to be fair, we should say that Mark Carney may be pretty popular right now in taking a stand against the U.S., but once those tariffs start to hit, what will happen then? I was speaking to a former foreign affairs minister in Canada who was pointing out that this will mean a massive rescue effort, more or less, from the Canadian government to ensure that the businesses that are affected by the U.S. tariffs can still stay afloat, that families who are impacted by these tariffs can kind of stay afloat.

23:08of not feel the impact as much as they might do. And that will involve things like bailouts, subsidies, so on and so forth. And so the impact could be pretty severe for Canada. Right now, they're saying, elbows up, we're going to stick together and we can ride this out. But the question is for how long? Yeah. In a war, innocent people suffer. Whether it's a shooting war or it's a trade war, people are going to suffer from this. And that's one of the sad side effects of this. I mean, let's step back a little bit because we talk about war and Carney actually said, we've been attacked. This is a war you're attacked.

23:44We've been attacked. Comparing this to a war. There's another war that Donald Trump is currently fighting of his own choice. And that's the one with Iran. It's not a shooting war necessarily right now, but it's still an economic sanctions war. And it has been an actual military conflict since February. In both cases, I think you can draw parallels between Iran and Canada and the way they have found means to stand up to the all powerful United States. They have found pressure points that they can use. Donald Trump uses power, economic power, military power in a way that few modern American presidents have.

24:26He is willing to use it. He was willing to go to war with Iran. He's been willing to use American economic muscle to pressure Canada. But now these not as powerful countries have been able to respond, whether it's Iran using the Strait of Hormuz and their proximity to it to disrupt the global economy, to bring pain, economic pain to Americans. And now I think you're seeing Mark Carney and the Canadians start to test where they have pressure points, whether it is these targeted tariffs. but also there's been discussion about limiting the export of critical minerals into the United States, limiting the export of power, generated power into U.S.