In short
CBC Washington correspondents discuss how Canada and the U.S. fell into an “all out” trade war after the U.S. extended a tariff deadline, then Canada walked away; they examine why talks broke down, what could happen next, and Canada’s retaliatory strategy.
Guests (hosts/correspondents)
Katie Simpson (CBC Washington correspondent; sources in negotiations), Willie Lowry (CBC Washington correspondent; reporting from London), Paul Hunter (CBC Washington correspondent; joins as co-host).
Key claims
The U.S. “changed the goalposts” during negotiations; Howard Lutnick’s involvement altered the dynamics; Canada feared tariff precedents harming autos/steel/aluminum and wanted a KUSMA/CUSMA renewal off-ramp. Public support for Mark Carney’s walk-away is strong in Canada; U.S. reaction splits by party and election incentives.
Notable examples
Trump/Vance rhetoric; Michigan auto-state concerns; Canada’s dollar-for-dollar counter-tariffs announced by François-Philippe Champagne (effective Sept. 8); past “surgical” Canadian retaliation (e.g., bourbon in Kentucky, orange juice in Florida).
Written by AI. May contain mistakes. Listen to the episode to check what was said.
Chapters
Tap a time to open that second in VOOverview of the Trade War
1:12 to 3:19
Discussion on the recent trade war declaration and its implications.
“We've got a lot to talk about after taking a one week break with the podcast, namely in terms of things to talk about.”
Negotiation Breakdown
3:19 to 5:42
Exploration of the failed negotiations and shifting terms.
“We're CBC's Washington Correspondents, most of the time, two blocks from the White House.”
Key Players and Strategies
5:42 to 8:08
Insight into the roles of key individuals and their strategies in the trade talks.
“That was the day that Donald Trump was going to impose those new 50 percent tariffs.”
Consequences of Tariffs
8:08 to 8:44
Discussion on the potential economic impact of tariffs on Canadian industries.
Public Sentiment in Canada
8:44 to 11:12
Examination of Canadian public opinion regarding the trade negotiations.
“hardship and heartache for a lot of families across all of Canada.”
US Political Reactions
11:12 to 14:00
Analysis of the reactions from US politicians regarding the trade war.
“So that's another big thing that the Canadians and the Americans are going to have to deal with at some point.”
Political Ramifications of Trade Policies
14:00 to 16:52
This segment discusses the political reactions to trade policies from both Republicans and Democrats, focusing on their implications for various regions, especially Michigan.
“deal, it falls along those Republicans who have chosen not to seek reelection.”
Media Coverage and Public Perception
17:27 to 21:39
Discussion about the media's portrayal of Canada during trade negotiations and the public's perception shaped by these narratives.
“I was going to say one quick random thing, if you guys don't mind.”
Canada's Strategic Tariff Responses
21:39 to 28:03
Analysis of Canada's tariff strategies in response to U.S. trade policies and their implications for Canadian industries.
“And we saw all kinds of trade deals with tariffs and all of those kinds of things happen.”
Canada's Strategic Response to US Tariffs
28:03 to 29:48
Explore how Canada is strategically responding to US tariffs and the implications for Canadian workers.
“But Canada's sort of response is strategic.”
Show all 13 chapters
The Impact of the Trade War on Canadian Businesses
29:48 to 31:54
Discuss the potential hardships Canadian businesses face due to the escalating trade war.
“Obviously, the US wields an outsized kind of – has the advantage of size and economic power.”
Long-term Consequences of Tariffs on Canada
31:54 to 33:49
Analyze the long-term effects of tariffs on Canada's economy and relationship with the US.
“And at some point, there are going to have to be conversations to sort of de-escalate here.”
Canadian Resilience in the Face of Economic Pressure
33:49 to 34:40
Examine how Canadians might respond to economic pressures and the current trade situation.
“And I think over the last 12, 18 months, much of the tariffs, much of the American economic kind of agenda against Canada has somewhat been mitigated, right?”
Transcript
Automatic transcript. May contain errors.0:00Willy Lowry:Something is happening in Dawson Creek. A wave of violence has swept over this community of just 13 ,000 people. 15 murders in the last five years. I'm Timothy Sawa and from CBC's Uncover and The Fifth Estate, an investigation into deaths and disappearances in Dawson Creek and what's behind it all. The Mile Zero Murders, available now on CBC Listen or wherever you get your podcasts. This is a CBC Podcast. Katie, Willie, great to see you. Great to be back together, if only virtually, I guess.
0:35Katie Simpson:Yeah, absolutely awesome to have the gang back together, so to speak. We are a little bit all over the place, filling in at different CBC bureaus or even perhaps on vacation.
0:45Paul Hunter:I'm on vacation technically, but I'm still plugged in and just feeding information into the system. So, you know, you get a little bit of FOMO when the file sort of, you know, develops and sort of explodes in a moment like this. But you just you just you chip in how you can.
0:59Willy Lowry:So, Katie, you're at an undisclosed location. Willie, where are you? You're London, right? Is that right? I'm in London for the week. OK, and I'm in Toronto. I'm doing as it happens while I'm in Toronto hosting temporarily. Yeah, look, happy to have you. We've got a lot to talk about after taking a one week break with the podcast, namely in terms of things to talk about. The fact that Canadians woke up last Saturday morning to discover the country is in an all out trade war.
1:25Katie Simpson:You've likely heard by now just how it all went down. In the middle of last week, U.S. President Donald Trump extended the deadline right before new 50 % tariffs on several Canadian exports were set to take effect because he thought Canada and the U.S. were close to a deal. But then at almost the stroke of midnight, Canada walked away from the table.
1:48Paul Hunter:And Prime Minister Mark Carney explained from the Canadian perspective why that happened on Saturday morning.
1:54Willy Lowry:And while we believed earlier this week that we were moving towards a mutually beneficial agreement, in recent days the United States proposed new terms that were un-economic, unfair, and undermined the net benefits for Canada and called into question the reliability of any deal. In short, they asked too much and they offered too little. Surprise, surprise. Donald Trump didn't see it that way at all. I was pulling some of his posts on Truth Social from today talking about – There were a lot. There were a lot. He was talking about a weak and ineffective prime minister, bluster from Ontario Premier Doug Ford.
2:37Willy Lowry:Key line here seems to be someone, writes Trump, someone should get these clowns to fall in line or the consequences for Canada will be far worse. And at a political event in Maine this week, Vice President J.D. Vance had this to say. I frankly thought we had a deal. I think that we should have a deal. But I think that we need to send a message loud and clear to the prime minister of Canada. Stop taking advantage of the people of Maine. Stop taking advantage of America. It's over.
3:08Katie Simpson:We expect fairness in our trade policy. And so this week, we're asking what happens next now that we're in this trade war?
3:17Willy Lowry:and how bad is it going to get?
3:19Paul Hunter:I'm Katie Simpson.
3:20Willy Lowry:I'm Willie Lowry. And I'm Paul Hunter. We're CBC's Washington Correspondents, most of the time, two blocks from the White House.
3:32Willy Lowry:All right, I guess the big question is, I mean, how did we get here? You know, the two sides seemed, suggested that they were close to a deal, and then all of a sudden, boom, nowhere near a deal, it would seem. Katie, I guess throughout last week, even while you're on vacation, you're speaking to some of the sources involved in the negotiations. What can you tell us about how this happened? Take us in the room.
3:59Paul Hunter:Well, from the Canadian perspective, it was as if the Americans were changing the goalposts as they were agreeing to things in real time. And it eventually came to the point where the Canadians said, this is not something that we can work with. But there was so much going on behind the scenes over the course of the last few weeks. And that's sort of where I want to start. And I think that to sort of bring everyone up to speed, there really hadn't been a lot of communication between the Canadian trade team and the American trade team since about last October. That's when the television ad that Ontario Premier Doug Ford ran.
4:36Paul Hunter:It was anti-tariff. It upset the president. And that really put a chill on sort of the conversation. Yes, there were some technical talks between chief negotiators, between bureaucrats, those kinds of things. But in terms of like really like substantial conversations, substantial negotiations, those really were not happening with any sort of, you know, sense of urgency until Donald Trump this summer made that new tariff threat. And so then started the intense sort of in-person negotiations. We saw Dominic LeBlanc, who is the minister in charge of all of the trade negotiations with the U.S. He was coming down to the United States more frequently, either hunkered down at the Canadian embassy in Washington, or he was over at the U.S.
5:21Paul Hunter:Trade Representative's office. That is the office of Jameson Greer. That is his American counterpart. And essentially, through these in-person meetings, we saw that there appeared to be some progress. You don't keep coming down unless you have something to talk about. And so it really illustrated that there appeared to be momentum. And then it gets closer to that August 19th deadline. That was the day that Donald Trump was going to impose those new 50 percent tariffs. And then it appears that there was a landing zone, that Canada and the U.S. could get to an agreement when it came to, OK, we can we can make some concessions in Canada.
5:55Paul Hunter:In America, they can ease some of the tariffs and those kinds of things. It appeared there was going to be a landing zone. And this is where things started to change. Howard Lutnick, who is the Secretary of Commerce, he had to get involved because Jameson Greer, while he is the main trade guy for Donald Trump, the U.S. trade representative, Howard Lutnick, as the Secretary of Commerce, he has authority over some kinds of tariffs. It sort of divvied up among cabinet members in different ways. Jameson Greer does the trade deals. Some of the tariffs, that falls on Howard Lutnick. And those are the 232 tariffs.
6:34Paul Hunter:So the things on industries in Canada, like steel, aluminum, autos, lumber, those ones. The ones that really Canada is really frustrated about and really worried about long term because it could lead to job losses, plant closures, those kinds of things. And so once Howard Lutnick got involved, the dynamic changed. That's when we started to learn that some of the asks, some of the things that Canada thought had been agreed to, they hadn't exactly been agreed to. The American perspective, they say that Canada was, they accused Canada essentially of doing similar things. But we know more about the Canadian perspective at this point, at least.
7:12Paul Hunter:And so, you know, Mark Carney spoke about this publicly, but we were learning behind the scenes before he even talked about this publicly. But, OK, what were some of the things, what were some of the changing goalposts? Well, it had to do, you know, on what sort of things would be exempt from tariffs, certain automobiles, heavy trucks, those kinds of things. And there was backlash within some of those sectors because they were concerned about some of the things that Canada was going to have to agree to. So, for example, one thing that kept coming up was that the Americans wanted Canada to impose tariffs on steel and aluminum against its other trading partners.
7:47Paul Hunter:And that would be in violation of all of Canada's existing trading agreements right now. So Canada's not going to do that. But there was concern among industry and stakeholders that Canada was going to agree to this and that they were going to land in a zone and make this deal sort of work. And there was backlash within certain Canadian industries and Canadian sectors. And so when we started getting wind that Howard Lutnick and Jameson Greer were not necessarily on the same page or that Howard Lutnick thought that, you know, Canada should be squeezed for more concessions or that America was making too many concessions, there was actually a portion of sort of some business leaders and industry leaders in Canada who heard about Howard Lutnick's intervention and were relieved about it because they thought Canada was headed down the path for a wrong decision.
8:38Paul Hunter:deal. Even though that these new 50 % tariffs are going to be awful, it's going to cause a lot of hardship and heartache for a lot of families across all of Canada. There was deep concern that a bad deal was going to make it even worse.
8:54Willy Lowry:I just want to say, interesting thing about Lutnick is, I mean, he, perhaps more than any in Trump's inner orbit, has the ear of Donald Trump, doesn't he, right? That was the whole Gordie Howe bridge near derailment began with Lutnik, as we're to understand it anyway.
9:12Katie Simpson:Correct me if I'm wrong, but a lot of the concern and anxiety from the Canadian perspectives was really accepting any tariffs on the auto industry, a belief that any tariff will essentially lead to the ultimate demise or severely hamper our auto industry. Is that accurate?
9:37Paul Hunter:Yeah. So the way it was put to me by a number of different sources, that if Canada went ahead and said, OK, we're going to agree to this trade deal and there are going to be baseline tariffs on steel, aluminum, auto, it sets a precedent that, you know, Canada is never going to sort of get out of this tariff zone. And if you accept that and say, OK, that is just it's going to put Canadian businesses and Canadian products at such a massive disadvantage that eventually you're just going to see more companies moving from Canada to the US. That is that is the perspective from one camp here. The other thing that I think the world that Canadians need to also recognize is that the Trump administration has said there are going to be tariffs.
10:19Paul Hunter:This is the new reality. So is it the Carney government trying to work within a new realm of reality versus pushback of people who say, we don't accept this reality and this is not good enough. Don't lock us into a deal where, remember, these tariffs go against the point of Kuzma, right? The line that's - Negotiations on which,
10:42Willy Lowry:renegotiations on which still haven't even begun. Sorry to jump in, Katie. Not for Canada, at least.
10:47Paul Hunter:Yeah, for Canada, that's right. Yeah, they're down the road. One of the things that Canada really wanted out of this, you know, temporary deal or whatever this deal was going to be, they wanted the Americans to come out and say alongside the Canadians, listen, we are going to sit down this fall. We are going to start our formal negotiations around the renewal of Kuzma and sort of like put down some ground rules for, okay, let's actually get this going so we can give some certainty to business. That is out the window again. So that's another big thing that the Canadians and the Americans are going to have to deal with at some point.
11:18Willy Lowry:Meanwhile, back in Canada, where I am this week, broad support, like 70 percent, I think, for Mark Carney and his team in terms of their walking away from this, both from political leaders and the public. You know, one of the things I've – you know, in the last period of time coming back to Canada every time – you know, since this all began, I was always struck by the patriotism. I think we've talked about this in the podcast, the flags you see everywhere that is just – it's really remarkable since this period began. What has struck – I've been here for the better part of a month now. I was doing some work and some vacation in Canada.
11:58Willy Lowry:The number of people who came up to me to talk about how Canada must stand up to Donald Trump, that it may will certainly be painful. But to not stand up and stand for what it means to be Canadian and what it means to be a sovereign country and what it means to determine your own sort of economic destiny is vital. And it's multiple people have come up and they want to talk about that. And I've just found it – I don't know about you guys with people you talk to up here but outside politics. I found it – I don't know. Remarkable is the word that comes to mind.
12:37Katie Simpson:I just got back from two weeks in Quebec and absolutely the same sentiments there. A deep sense of patriotism and also an overwhelming support and not just support, a sense of kind of respect and honestly admiration for the way Carney not just stood up but also eloquently articulated kind of his point. and Canada's message. You told me two years ago that I'd be having these conversations with a lot of people in Quebec. I would have told you, forget about it.
13:18Willy Lowry:Willie, I'm going to throw it back your way then for your take on what you've heard in terms of reaction to this in the US.
13:26Katie Simpson:Yeah, well, I'm not surprisingly mostly breaking along party lines, but there are a significant number of Republicans, particularly those in border states that have come out against it. Susan Collins, a longtime senator from Maine, who of course is up for reelection this fall and is in a tightly contested race, said she's against them. She has repeatedly voted against Trump's tariffs. And if you look at much of the Republican criticism of the breaking apart of this deal, it falls along those Republicans who have chosen not to seek reelection. People like Nebraska Representative Don Bacon, Mike Pence urged the two sides to get back to the table, but these are not people in the magosphere.
14:18Katie Simpson:So again, you wonder if the president is just hearing kind of what he wants to hear, hearing from, for lack of a better word, the sycophants who kind of tell him what he wants. And, you know, not to distract from the very important issues that we're talking about today, but you look and you read about how the US ended up in the war, in its war with Iran, the follies of that process. And it seems to be a lot of people telling the president what he wants to hear. What about Democrats, Willie? Democrats, not surprisingly, coming out pretty vociferously against the president. Gretchen Whitmer, the governor, Democratic governor of Michigan, slammed the president, said there's absolutely no reason to pick a fight with Canada, of course, America's closest neighbor, not just emotionally, but economically, none of it really makes sense.
15:16Willy Lowry:Our largest trading partner is Canada. And our president, for some reason, has decided he hates Canadians. I don't know who hates Canadians. They're like the in-laws that you like. You know? But the constant rhetoric, the ever-changing tariffs that are punitive and unpredictable and just are thrown out by tweet has probably hurt the Michigan economy more than any other state. People are worried that, is their job still going to be here? in six months from now or two months from now, what's the next tweet that could mean layoffs at our plant because it is just one more chilling effect.
16:02Katie Simpson:That's a sentiment you can copy and paste pretty much across the Democratic board. But Michigan's a really interesting, really important state. It's obviously a border state. It is the heart of the American auto industry. It's also a very contested, very purplish state. And there is a big Senate race there where the Democratic candidate, Abdel El-Sayed, has already slammed Trump, slammed the tariffs that he's placed on Canada. Meanwhile, Mike Rogers has pretty much been MIA on the subject, at least thus far in the last two days.
16:52Katie Simpson:Something is happening in Dawson Creek. A wave of violence has swept over this community of just 13 ,000 people.
16:59Paul Hunter:It's like the kind of stuff you only hear about on TV.
17:02Katie Simpson:Fifteen murders in the last five years. Some criminals, I put them into the category of supervillains.
17:10Willy Lowry:I'm Timothy Sawa, and from CBC's Uncover and The Fifth Estate, an investigation into deaths and disappearances in Dawson Creek and what's behind it all.
17:18Paul Hunter:I'm not saying another word. Leave me alone.
Read the full transcript
17:21Willy Lowry:The Mile Zero Murders, available now on CBC Listen or wherever you get your podcasts. I was going to say one quick random thing, if you guys don't mind. It's funny. Like I was saying, I've been in Canada for much of August. But I was in D.C., I guess, last weekend, and right after this happened. And I flipped on the newscasts, and I watched a couple of the main American newscasts. just in terms of messaging and the kind of early message that the American public was getting on this. And I'm telling you, the line in the two pieces that I saw, I don't like to criticize other journalists, but it said Canada walked away, made no mention of why or the last minute changes or any of that.
18:04Willy Lowry:It was just Canada walked away from the deal. And it kind of blew my mind. The coverage has changed since then, but so many public opinion perspectives are shaped differently. at first blush. And the first blush reporting out of this was that Canada walked away. I mean, it's this is sort of this tangential to everything we're talking about. But like I say, it kind of it floored me. Katie, I wonder, like, should we be surprised that, you know, or should the Trump administration be surprised that that Canada is standing up this way?
18:38Paul Hunter:At this point, I would probably say no. Canada has a history of pushing back with the Trump administration when it comes to this. During Trump's first administration, of course, there was another version of a tariff war when the Americans put tariffs on certain Canadian sectors and industries similar to what they've done now with those Section 232 tariffs, so steel, aluminum, those kinds of things. And it was during the renegotiation of what was then NAFTA, which became KUSMA. And it was a way that the Americans were trying to put leverage, they were trying to leverage or take advantage of Canada and put Canada in a really difficult position.
19:20Paul Hunter:And in that time, the Liberal government of Justin Trudeau, they fought back then. Mark Carney, the Prime Minister, has taken a different sort of tact since becoming Prime Minister. His critics have accused him of campaigning on elbows up and then bringing those elbows down when he dropped some of those tariffs, the retaliatory tariffs that were introduced by his predecessor. And now it's ramping back up again. One thing that has been pointed out to me a number of times by people who worked in the Prime Minister's office during Justin Trudeau's time as Prime Minister is that Canada, Mexico and China were sort of, they were the test cases, right?
20:01Paul Hunter:When Trump got reelected, all three countries were targeted almost immediately. And the rest of the world was watching as they all responded differently. So China hit back against the U.S. with counter tariffs. Canada hit back against the U.S. with counter tariffs. And then we saw the booze bans and those kinds of things. And then Mexico decided not to retaliate. And Mexico still ended up with tariffs and is still sort of in a trade war as well. But it's certainly in a different spot than it is with Canada. And the rest of the world watched what was happening. And there was some thinking at the time in then Prime Minister Justin Trudeau's sort of inner circle that the rest of the world would want to push back.
20:44Paul Hunter:The rest of the world would fight like Canada, and the rest of the world did not. So Canada sort of standing out there on an island, holding a sack of stuff, shall we say? I think I've made this analogy on this program before. And the Americans have this easy sort of slam against Canada, saying, you know, there are two countries that retaliated, Canada and China. And when you're talking about the global trading system, And when you're talking about sort of, you know, patterns, you don't ever want to be compared to China when it comes to, you know, following the rules of the rules based order, because China doesn't do that, right, as a government, it doesn't do that.
21:20Paul Hunter:And so you don't want to necessarily be compared there. And the Americans have that easy sort of slam point against Canada. But it is it is different. I think that at that time, there was some thought that the rest of the world would take the approach Canada had taken in the past and pushing back to try and see if they could get Donald Trump to retreat a bit. But then they didn't. And we saw all kinds of trade deals with tariffs and all of those kinds of things happen. And so Canada is, again, finding itself in this position where it is on this island fighting back.
21:51Willy Lowry:Willie, you're in the rest of the world from your listening post in London. You're developing a bit of an accent, I'm going to say. I know you've not been there long, but I can hear hints of it. Oh, yeah, it's there.
22:01Paul Hunter:This is cheerio. I'm going to lose it.
22:03Willy Lowry:What are you hearing about the European reaction? I mean what's the vibe over there regarding the developments here?
22:11Katie Simpson:Well, lad, no. Katie hinted to it. The UK obviously negotiated a trade deal under Starmer, broadly speaking 10 percent tariffs. The EU negotiated a deal that I think just went into effect a few weeks ago. So again, broadly speaking, 15 % tariffs. These aren't great deals. Pretty much both places would acknowledge that they're not perfect deals, but they did it. You know, what Mark Carney has done, this approach by kind of standing up, saying no, has garnered a huge amount of international applause. Headline after headline across Europe, across even the US, basically saying Mark Carney is the leader of the free world.
22:59Katie Simpson:But he can only be the leader if other countries follow, right? And that is a big asterisk at the moment. The support we're seeing, the congratulatory and flowery language that we're seeing is coming from analysts and pundits, not from world leaders. So we're in a bit of a wait and see moment. There's no question that I would say behind the scenes he's getting a lot of attaboys. But attaboys kind of don't mean anything if publicly they're not willing to take your tack.
23:36Willy Lowry:As we record this conversation, it's Tuesday afternoon. François-Philippe Champagne has just announced Canada's retaliatory measures against the U.S. Canada will match the United States tariffs dollar for dollar, rate for rate. Effective September 8, Canada will impose counter tariffs of up to 15, 25 or 50 % on 27.6 billion in imports from the United States of America. For each product, our tariff would match the American tariff on the same type of Canadian good. Our existing counter tariffs, including those on automobiles, will remain in place. Canada's remission framework will also remain available to mitigate unintended consequences for Canadian businesses.
24:29Willy Lowry:Canada's country tariffs are designed primarily to provide protection for Canadian industry impacted by U.S. tariffs and allow them to compete against U.S. products in the Canadian market. It's all about fairness. It's all about level playing field. It's all about supporting Canadian workers and Canadian businesses. Katie, what did you take away from that announcement?
24:53Paul Hunter:So there's a history here and there is strategy here. They're not just willy-nilly, randomly picking things. What they are doing is they are matching tariffs dollar for dollar, so about$27 billion worth of U.S. goods they're going to hit with tariffs. And they're taking a number of things into consideration. One, they're going to pick industries in locations and specific products to cause the most sort of political damage they can. So think Republican states. Think swing districts heading into the midterm elections. What they want to do is they want to put political pressure on the Trump administration to change course.
25:31Paul Hunter:So how do you do that? Well, you target important employers, important industries in places where Republicans really need to maintain control, need to hold on to those seats. And so the only one of the ways that Canada can do this is by, you know, going after specific industries in specific states and specific districts. Go after those swing states that that might end up causing some political damage to the president because ultimately they want the president to back off and change his mind. Canada has done this before. Back in Trump 1.0, when the Trump administration and the Trudeau government were involved in the Kuzma renegotiation or the renegotiation of NAFTA, the Americans imposed tariffs on a number of Canadian sectors.
26:17Paul Hunter:And Canada fought back, but Canada sort of fought back with very surgical and strategic tariffs. They went after powerful Republicans. So at the time, Senator Mitch McConnell was the most powerful Republican senator. So they went after bourbon producers in Kentucky and other things like that. We saw a little bit of this when the Trump administration first introduced new tariffs in this second round of Trump. Canada imposed tariffs on orange juice in Florida because Florida is a powerful Republican state, those kinds of things. The other thing to keep in mind is that the Canadian government recognizes and openly acknowledges that oftentimes tariffs end up hurting consumers, right?
27:03Paul Hunter:They end up raising prices for consumers. And so they're trying to find products that Canadians can find a Canadian alternative because they don't want Canadians to have to pay more money out of pocket. The Trump administration sort of talks about tariffs in a very different way. They don't acknowledge that. At all. They don't say that. Zero. This is the public, you know, tariffs made. Exactly. So it's, yeah, except for that. So the Canadian, we've seen this before, the Canadian government will, you know, be outlining exactly what it is specifically they're going after and why. And the only way that you can create the change you want to see is by building political pressure.
27:46Paul Hunter:Just look at the alcohol bans, right? The alcohol bans work because you have all these complaints from all these producers that put pressure on the Trump administration. Trump administration decided to escalate rather than retreat. So, again, we're in this difficult moment where there doesn't seem to be an off ramp. But Canada's sort of response is strategic. Canada's done it before. It has a history of doing this. So it's just getting out that playbook and looking for the places they can extract the most political damage.
28:16Willy Lowry:The other part of the message today from Canada is to buy Canadian. The flip side to all of this – and I was chatting with a honey farmer from Manitoba this week on As It Happens where I'm spending the rest of my week working who sells most of his honey to America. It's going to be hit hard, like extremely hard by these tariffs because that's one of the things that was targeted by the US tariffs on Canada. And he said to me, the same message that various cabinet ministers, including the finance minister, Champagne, said today, which is a part of the answer, a big part of the answer is for Canadians to buy Canadian.
28:55Willy Lowry:The power in a kind of way is in our hands is the underlying message there if people do that. And we've seen evidence that they will the last many months.
29:06Katie Simpson:I subsisted off of Ontario peaches and Quebec bleuets for the last two weeks. But, you know, Champagne was asked why they didn't go and put tariffs on electricity and potash. And I would say that Canada is viewing this through a very strategic, very measured lens. This is a war. You don't, pardon the reference, use your nuclear option out of the gate, right? So I think that they're kind of settling in for a fight and while they don't want to antagonize, they need to kind of make sure that they essentially defend Canadian workers, defend the Canadian economy. But timing is actually on their side.
29:49Katie Simpson:Obviously, the US wields an outsized kind of – has the advantage of size and economic power. But the midterms are really important here. And Trump – They're a thing. No denying it. You know, Trump's popularity is plummeting and the midterms could flip the script and really – I mean obviously we know he loves to use executive orders. But they could really limit his power. So I think the timing of these negotiations, the looming midterms has given Canada a hand that they didn't necessarily know that they would have.
30:27Willy Lowry:So crystal ball time. You know, one of the social posts I didn't read earlier was, you know, now Trump threatening to rename Lake Ontario Lake America, right? But that kind of rhetoric aside, how bad can this trade war get?
30:43Paul Hunter:The thing is, Canadians are going to have to brace for some difficult moments, right? Part of the announcement made by cabinet ministers on Tuesday relates to additional economic supports for Canadian businesses that are going to be really hurt by this, right? And the way the Americans, those 50 % tariffs, the ones that are now in effect, they too were strategic and surgical, right? People may have looked at them and thought, okay, hockey sticks and honey and all of these kinds of things. They picked very strategically and these tariffs are really going to hurt a number of small to medium-sized businesses like one employer towns and cause a lot of economic damage.
31:30Paul Hunter:So I suspect we are going to see a lot of stories about the hardship and a lot of people are going to be worrying about can they pay their mortgage? Can they, you know, what are they going to be able to feed their kids? Can their kids play hockey this year? Can their kids, are they going to be, are parents going to be able to help put their kids through post-secondary education? Those kinds of things. There are going to be some really difficult conversations across Canada over the next few weeks and possibly the next few months, because right now we don't see a path toward an off-ramp. We're in a period of escalation.
32:06Paul Hunter:And at some point, there are going to have to be conversations to sort of de-escalate here. But, you know, it's who's going to blink first. Who wants to be the one seen blinking first? the federal government may be asked to do more when it comes to, you know, social supports, when it comes to people who are who could be either laid off, lose their jobs, losing hours, whatever it's going to be. And support was announced today, to be fair.
32:35Willy Lowry:The government is starting to do that. So, yeah. But yeah, so I stuff's getting real, basically, isn't it? I mean, it's a real and upcoming, as I see it is a test of resilience as this pain, which is real, And it is happening. Who'd have thought this, as you said, Willie, earlier, a couple of years ago, that we'd be having this conversation with the greatest economic partnership, arguably, in the history of the world. And here we are.
33:02Paul Hunter:One thing I want to just, oh, sorry, one thing I want to jump in and say, as much as, you know, Canadians in this moment, we've talked about this a number of times, the patriotism that exists in Canada right now and the, you know, the urge to buy Canadian, boycott those American goods. That is something that, you know, the government is urging people, Canadian employers are urging people to do. The thing is, the longer this strides on, Canada is a nation of, what, 41 million people, 42 million people, and the United States is 350 million people. The Canadian economy needs the American economy in order to prosper, to be able to, because we just, we don't have as many people and we need to, Canada needs to sell its products to the United States.
33:40Paul Hunter:And it's the longer this goes on, the more challenging and the harder this is going to get for Canadian companies and employers to sort of endure.
33:48Katie Simpson:No, I think that's a really good point, Katie. And I think over the last 12, 18 months, much of the tariffs, much of the American economic kind of agenda against Canada has somewhat been mitigated, right? A lot of the tariffs were ultimately reduced. And while people across the country have felt them, they haven't felt them perhaps as much as anticipated.
34:12Willy Lowry:And look, let's not forget, Mark Carney has said often that the Canada-US relationship has changed. The United States has changed and he's right. Trump's gambit may be that Canadians broadly won't put up with any of this and that they'll pressure Canada, the Canadian government, into backing down. That may well be what the Americans are thinking will happen. I think it's fair to say that Mark Carney would say thus it's up to Canadians to prove him wrong. Look, that's our episode for today. Katie, great chatting with you. You can go back to your vacation now until next week I guess or whenever.
34:54Willy Lowry:And Willie, back to your duties at CBC in London. Thanks, Paul.
34:59Katie Simpson:Katie, I so felt for you all of last week and this week knowing that your vacation was probably very much – You stayed involved to your credit, Katie. I stayed involved.
35:09Paul Hunter:Like, you know, well, like, you know, when you spend so many hours working on one thing, you know, you just, what do you do? Anyway, I'm still involved. I'm still taking phone calls. But on that note. Sources, if you're listening, call me. I'll take a call.
35:22Katie Simpson:A big shout out to you and to all of the colleagues who filled in for Paul and I at the CBC Bureau in Washington. Kate McKenna.
35:29Paul Hunter:Shout out to Kate McKenna.
35:30Katie Simpson:Shout out to Kate. Phenomenal coverage, really. I was very, very impressed and proud.
35:36Paul Hunter:As always, if you have something you'd like to ask or feedback about what you're hearing, you can send an email to WashingtonPod, all one word, WashingtonPod at CBC.ca. That's WashingtonPod at CBC.ca. Or you can leave a comment for us on Spotify.
35:51Katie Simpson:And if you like what you're hearing, spread the word, tell a friend about this podcast and follow us on your favorite podcast app so you never miss an episode. All right, everyone. Great chatting.
36:02Willy Lowry:As always, see you again next week. Bye.
36:14Katie Simpson:For more CBC Podcasts, go to cbc.ca slash podcasts.
From the publisher
Days after walking away from trade talks with the U.S., Canada has hit back with dollar-for-dollar counter-tariffs on American goods. Prime Minister Mark Carney said he cut off negotiations because Washington's terms could wipe out major Canadian industries like auto, steel and aluminum. As things start to get ugly, Washington correspondents Willy Lowry, Katie Simpson and Paul Hunter dig into how bad this trade war is going to get, and what it would take to bring both sides back to the table.
