Will Canada's risky trade stance pay off?

0:00Hi, Steve Patterson here, host of The Debaters, the part stand-up, part quiz, all-Canadian comedy competition. This week we're back with a brand new episode to kick off our 21st season. We want to know when it comes to camping, which camp are you in, tent or RV? This episode really brings the tension when two of Canada's top comedians go head-to-head on their favorite way to get into the wild. So for an episode that goes off without a trailer hitch, tune in to the season premiere of The Debaters wherever you get your podcasts. This is a CBC podcast. Katie, hello.

0:33Paul Hunter:Hello. Guess who we have joining us today? I am so excited. It is my good friend and yours. All the way from Ottawa, Catherine Cullen. Hey, Catherine. Hello. No tariffs on this import for the podcast. I'll be doing my best Willie Lowry impression today. You planned that line, didn't you? You had that in your back pocket. Maybe. It's always good to be prepared. If anyone listening doesn't already know Catherine, She's the host of The House, which is a great podcast for catching up on the week in Canadian politics. And we invited her onto this show today because, A, the aforementioned Willie Lowry, regular co-host, is away.

1:10Willie's in transit on the way to Jerusalem for CBC. And B, because we want to talk about Canada's approach to dealing with Donald Trump and that thorny issue of trade. And Canada is an outlier, the only major country to outright reject a deal with the U.S. so far. And although support is high for Prime Minister Mark Carney walking away, Canadians haven't yet felt the full punch of the tariffs and the counter tariffs.

1:34Paul Hunter:And regardless of support at home, there are still big unknowns associated with where Canada goes from here. And so this week we're asking, how does Canada compare with other countries in terms of dealing with Trump? And what are the risks of Canada's approach? I'm Catherine Cullen. I'm Katie Simpson. And I'm Paul Hunter. Katie and I are CBC's Washington Correspondents, two blocks from the White House. And in the case of our friend Catherine, what do we say? I guess two blocks from Parliament Hill.

2:09Okay, Catherine, lucky me, by the way, I get to speak to the CBC's two trade experts for the next little while. And lucky you, Catherine, you get to go first. We're talking to you Tuesday lunchtime. And right now, Prime Minister Carney is hosting an investment summit in Toronto, welcoming global business leaders. And he's set to address the European Parliament on Thursday. And he's got a trip to St. Pierre and Michelin coming up as well. So we're seeing lots of action in terms of trying to diversify Canada's economy away from the United States. What's been the political reaction to this approach in Ottawa?

2:44Yeah, I mean, it's really kind of a monster week for the Prime Minister in terms of this attempt to reset after these U.S. talks falling apart. And I want to take a minute, Paul and Katie, to just zoom in on this investment summit because the prime minister made his big televised address this morning. And part of what I thought was really interesting about this, like, you know, broadly Canadians, yes, of course, are on side. We need to find new markets if things aren't working out with the United States, getting investors from all around the world, part of that pitch. But I thought it was really interesting how Carney quietly, I wouldn't maybe subtly is too strong, but carefully, in many cases, tries to use the U.S.

3:20as a foil. I mean, part of his speech today, he said Canada is a country that's predictable, reliable and principled in a world that is anything but. Right. And we know the whole turning point for Carney's Davos vision is there's been a rupture. The U.S. is putting these tariffs on the geopolitical order has changed. So part of his pitch to the world and he has to be careful because there were American investors in that room. But it is, hey, you know, right next door, things are a little bit more stable here. Doesn't Canada sound like a great place to come and do your work? But that question of the relationship with the U.S., I think it really came to the fore when the prime minister was answering a question at a sort of a fireside chat that was specifically about an interaction with Donald Trump.

4:03I went to the White House in the spring of last year. And at the end of the meeting, the president gave me, I want to give you a mark, I want to give you something really special. President Trump. President Trump, yeah. Yeah, President Trump. Want to give you something very special. So special, Mark, so special. And I opened this box and it's this big gold key. And I was like, wow, Mr. President, that's fantastic. He said, yeah, it's a key to the White House. You just bring it, they'll let you in. And then he says, maybe they'll shoot you. I was like, and that sort of sums up the relationship that we have.

4:46So, and that's kind of Canada, the U.S. You know, it's like Canada, you get the key, you're in the U.S., they might shoot. No, it was good. It was very nice. I have it both. And I'm very grateful. Donald, if you're listening, I am very grateful. It's very good gesture. He's a very good host. I mean, come on, right? Like the lying is walking here on the one hand. And he's told this story before, but not with all that stuff at the end about like, oh, he's a very good host or that this is the Canada-U.S. relationship. Last time he told it, I think he leaned into the Trump impression. even more. And this is where I think Mark Carney risks, certainly in the past when there was an obvious hot effort to try to get a trade deal, like, man, Trump is not going to like that.

5:26But you see the pivot at the end, right? Which is like, hey, Donald, you're still a great guy. You know, so he's walking this interesting line, presenting Canada as sort of another option to the world. He's trying to build these trade relationships, yes, with the investors coming to Canada, certainly by going to Europe. But the truth is, all of this stuff is going to take a very long time. The tariffs, the counter tariffs, the import bans, that stuff is going to be felt more immediately. So Mark Carney's challenge, I mean, right now, yes, he has the wind in his sails if you look at public opinion polls universally.

5:58But this is a bit of a long haul. It's so telling that we're sitting, you know, listening to that clip, and we're at a point in sort of Canada-US history, I guess, where you just don't know how the president would take that, right? Like, would he laugh along and get that he's just having fun? Or would he get supremely insulted and like double all the tariffs the next day?

6:24Paul Hunter:Does he think that he sounds like a strong man giving that key with a threat to maybe they'll shoot you? Or is it? And it's the thing is that the Americans will be paying attention to what's going on in Toronto this week. And the White House, I've been chatting with sources and in the week leading up to this, I have been told, yes, definitely people at the White House are going to be paying attention to what is going on here. But at the same time, the Trump administration has bigger fish to fry. So like, I know that this is the number one focus in Canada for Canadians. And so much of our attention is centered on that.

6:56Paul Hunter:The Trump administration will be sort of paying attention. But again, there are other things on the agenda that are more urgent and pressing. But what are some of the key things they'll be looking for? They'll be looking to see who is Canada bringing to the table here and who's giving signals that they might be interested in bringing investment to Canada. Are there investors that the United States themselves, they're trying to court in this moment as Donald Trump is trying to grow the economy? Not just in sort of a competition sort of way, but looking to see where they're from. Particularly, I want to single out China.

7:33Paul Hunter:Exactly. The investment... That is the word that is hovering over all of us. China. It is when Mark Carney decided that Canada was going to strengthen ties with China after all the strain that took place during the final years of the Trudeau government and what had happened with the two Michaels and what had happened with the ongoing concerns about trade with China and all of those things. The United States treats China as an adversary and a competitor. And it is a deeply competitive moment, particularly with all of the stuff that we've been talking about with AI in recent days. But the Americans will be acutely in tune to see whether Canada is investing any more investment from China because they, A, have national security concerns, B, have competition concerns.

8:18Paul Hunter:And C, it's really going to set off some alarms if there is investment from that corner of the world. Well, and I think there's a domestic challenge for Carney too, right, Katie? if he leans in on China, because certainly there are that that is part of who is around the table. But if you're going to say, well, we'll be less dependent on the U.S., but you see major Chinese investments in, I don't know, a critical mineral is mine. And I'm not sure that the Canadian government would let something like that happen. But let's say airport privatization. I mean, you name it, some of these projects, some of that you lose the feel good feeling of like Canada is going to take its sovereignty into its own hands.

8:52There's a certain percentage of Canadians who are going to say, oh, well, I'm not quite sure that's how I wanted that to go. A couple of things. One, just to go back to an early part of your last point, Katie, I think it's worth, you know, you can watch as we do as part of our job. You watch the news on all the channels down here all the time. Rarely does. I mean, it's not like Canada never comes up in the US trade, but it's it. It it rarely leads the newscast. It is rarely a part of the news conversation unless something specific has happened that day. It is like, yeah, it's an out there thing, but it's not the dominant thing from a U.S.

9:27perspective. And I think that plays to the point that it's about China as much as anything else. And I think it's also, you know, I think it's fair to say that what is underlying so much of this is Donald Trump slash the Trump administration's desire to seek preeminence. Like this is about, I don't want to say global domination, but it is certainly about hemispheric domination, if I can put it that way. And the way to get to that through these trade deals that have been happening with all these other countries and the one that they would like to get with Canada. Like if you look in the fine print of all of them, it's about restricting trade with third countries, which is code for China.

10:09Because the U.S. is that is the that is the target here. I think it's clear. Yeah. And the means to that end is through all these little trade deals with all these other countries. And Canada is just one of them, even though it is a massive, massive trade partner. I think it's fair to say that the real target in all of this is China. We've got all these other deals. The U.S. has all these other deals with, what is it, 19 countries now, I think. I'll put this to both of you. None have walked away from the table the way Canada has. I mean, what do we know about the degree of success that other countries have had with the U.S.

10:45on trade lately?

10:46Paul Hunter:I think we need to. What does success mean? I think that that is sort of the underlying part of that question there, because do you guys remember in the start of the Trump administration, this this second term, when President Trump, when his Commerce Secretary Howard Lutnick, when his Treasury Secretary Scott Bessett were all getting out there and they were talking about. we're going to have 90 deals in 90 days and we are just going to have world leaders coming into the White House like a revolving door. And, you know, they're they were setting these agendas with tariffs and all of these changes they were going to do and they were going to do all of these kinds of things.

11:25Paul Hunter:And after all of that sort of initial push and talk and all of those kinds of things, you know, it's we're just shy of two dozen deals roughly that have been reached. And, you know, it's it's countries are making agreements where the United States gets more favorable terms, right, where where tariffs are baked into the equation, into the equation. And restrictions on those countries' trades with third countries, a.k.a. China. And it's such a shift in what the rules have been. And it's the way that the Trump administration has pursued this agenda. It really puts this interesting question before the Carney government about this is what the new reality the Trump administration is living in, where they are going to ensure that there are tariffs baked into things, restrictions baked into things.

12:20Paul Hunter:Canada was able to reach an agreement with Trump in the first go-round of his administration with the updated version of NAFTA, what we now call KUSMA, where, you know, Canada was able to essentially protect free trade in North America the way it had been done for, you know, years and years and years before. And it is, can Canada get there again? You've got different factions in Canada trying to argue that, yes, we can get back there. You have to hold out. It's about just, you know, waiting this out. But at the same time, the Trump administration has given no signals that it's willing to sort of back off of this approach.

12:56Catherine, what's the rest of the world saying about Canada's, you know, more hard line approach? Well, I want to get to first the question of these other deals, Paul, because I will tell you that within the Canadian government, at the highest levels here, we're talking the prime minister's office and whatnot, there is a clear sense that all of these other deals were basically bad deals, that other countries regret the deals that they were signing. Right. And if you do look at some of the analysis, I mean, there there is information to back that up. I'm really cribbing here shamelessly from a paper from the University of Calgary, Carlo Dade and Alex Giordano.

13:29But let's zoom in on Japan, for instance, for a second. Japan commits more than half a trillion dollars in investments to the U.S. energy, shipbuilding, critical minerals, pharmaceuticals on and on and on and on that gives Trump input over project selection and the ability to reimpose tariffs if the commitments are not fulfilled. Now, why did Japan sign something that benefits the U.S. so enormously? Because ultimately for Japan, the much bigger deal is its security, right? It's in a region with all these nuclear powers. It relies on the United States. It's crucial to its safety. So Japan says, well, listen, this isn't great.

14:07We got to suck it up because we need this other thing more. I mean, the European Union has made agreements in terms of tariffs that don't look good for the EU, but they can, for instance, handle maybe a tough deal on car imports in a way that Canada just can't because so much of our economy is based on the trade relationship with the US. So I think it's important to acknowledge, A, on the one hand, there is some analysis suggests these other deals just really aren't that great, but also that the calculus is different for Canada, right? Because it is such a big chunk of our economy. I mean, you can argue we rely on the U.S.

14:41for security as well. But the math maths a little bit differently is, I think, how we would put that technically. But would anybody line up publicly behind Canada and say, hey, we're going to take the same approach? I don't know.

14:55Paul Hunter:Short answer, what we've seen so far, short answer is no. The United States, the Trump administration loves to point out that there are only two countries that have retaliated against the United States when it's come to its tariff agenda, and it's Canada and China. And I know we talked about this on this podcast before, but when Prime Minister Trudeau was still in office, there was an initial calculation from those around the Prime Minister that when those first initial tariffs were threatened and those tariffs came into force, that other countries, when they were faced with the same challenge, particularly whether it's Europe or other sort of like-minded allies, that they too would push back and step up.

15:35Paul Hunter:And then when, you know, Canada and Mexico took different approaches, Mexican President Claudia Sheinbaum decided, no, we're not going to retaliate. Mexico still faced tariffs, but, you know, it's a sort of a different situation there. And then we saw other countries and other sort of major trading partners. They didn't stand up the way that Canada did. And would you look at how Canada is being treated as an example of success? I think, again, I think the question of this podcast is what does success mean? Is Mark Carney doing well at home in the polls and has a lot of support among the Canadian public to stand up to the United States?

16:14Paul Hunter:At this moment, everything we've seen is yes. But the longer this drags on and the harder it hits Canadian jobs and businesses and if people can't pay their mortgages, I think that that's the long-term thing that everyone is watching. Well, let's pick up on that. You know, last week I was in Toronto for work, and one of the things I did there was I did some shooting for a piece that's going to air on the National in a little while about snowbirds. Not the kind who go to Florida, but the kind that fly in the air at the air show at the Canadian National Exhibition. And we were talking to people in the crowd, and Canadian pride came up a lot because the snowbirds are kind of being paused for a little while, and that's why we're doing the story.

16:56But then people started talking about pride in a different way without prompting and the whole elbows up thing is right at the forefront of conversations about anything to do with Canada, it seems. And so on that, you know, you referenced this, Katie, number of polls the last month or so that say, yeah, Canada is behind Carney's approach on this. The support is there. But this, as you noted, is before the real impact of the tariffs kick in, right? It's there now. But what if that starts to drop? Yeah, I mean, in many ways, it is Mark Carney's biggest political asset, right, is this huge swell of patriotism.

17:35But the question to me over and over again during Carney's time in office is what happens when the rubber hits the road? And so we talked about the idea that this investment forum, what if it leads to a significant amount of greater Chinese investment in Canada? What if it leads to a significant amount of greater American investment in Canada? There are certainly American folks around the table. What about the tariffs dragging on and what that does in people's lives? It's one thing to say elbows up. I'm with the prime minister on this. And we have to acknowledge, I mean, part of this is the work Carney did in how he framed why the talks broke down.

18:09He gave Canadians an explanation that this was about fundamental issues of sovereignty that Canadians have been willing to get behind. But do you feel differently about it if your spouse loses their job because of this? Do you feel differently about it when, you know, you think it's already such difficult times, price of groceries and whatnot, things get that much more expensive as this drags on and some of that initial sort of patriotic adrenaline. Is that a thing? It is now. You just know it. But when some of that sort of like settles down, can Carney keep this going? I do think he is advantaged by the fact that at this moment, his political opponents here in Canada are struggling for a variety of reasons.

18:53But I am wondering, like, how long will Canadians put up with this? That said, every time Donald Trump goes out there and does something wild, posts a new AI video of him, the two of them on hockey skates, and he's beating up Mark Carney, I think that helps the prime minister a lot.

19:15Hey, I'm Vanessa, and I work on Q with Tom Power. And one thing I can promise you, our podcast is made by huge nerds. We love art. We're genuinely curious about the artists we talk to.

19:27Paul Hunter:Take Laura Marling. I've loved her music for more than a decade. So when she put out a surprise album of Raffi covers, I knew there was a bigger story there. A story about getting older, letting your guard down, and letting life make you more tender. You can hear that now on Q with Tom Power, wherever you get your podcasts. I wonder if patriotic adrenaline in a sort of counterintuitive way can complicate things for Carney at the same time because it makes it harder for Canada to give up something. If you've got, let's just make up a number here, the 100 % of the Canadians support you standing up here.

20:05If you want to, in any negotiation, in a normal negotiation, there's give and take, but it makes it harder to give, doesn't it?

20:11Paul Hunter:Yeah. And the Canadians had made it clear. Because you don't want to be seen to be backing down to Donald Trump is the thing. The thing there. So the Canadians had made it clear in the lead up to the breakdown of the talks when Donald Trump made that 50 percent tariff threat on the new swath of goods in August. I believe it was he made the threat in July when the Canadians sat down with Jameson Greer, who's the U.S. trade representative. They said, look, there is going to be no political room in Canada among the public if these tariffs come into force and you want us to be able to have some sort of deal where we all make compromises and sit down.

20:48Paul Hunter:That is really sort of the message that the Canadians telegraphed. And now look what has happened where we are now. You know, behind the scenes, I think that the conversations happening from trade official to trade official, whether it's Canada's chief negotiator, Janice Charette, whether it's Dominic LeBlanc, who is the minister who's leading this effort dealing with Jameson Greer, who is the U.S. trade representative. I think the conversations that are happening privately are far obviously far different than what we're seeing publicly. That is not unusual. That should not be unexpected. And there might be a more degree, a more respectful tone happening in those conversations because everyone recognizes there are domestic politics at play on both sides of the border and everyone has a job to do.

21:36Paul Hunter:But at the end of the day, the question is, is it in the interest of both countries to get back to the negotiating table? Canada has made it very clear that Prime Minister Mark Carney has not given up that, you know, there can be some kind of deal there and there can be a pathway forward. It is, are the political calculations going to change for the Trump administration to put a sense of urgency before them to bring everyone back to the table? And Paul, I think there's a couple of things that we should be looking toward going forward that could add some urgency. One, the midterm elections. They are coming up in early November.

22:14Paul Hunter:There is a chance that the Republicans could lose control of both the House and the Senate. The calculations there are very, very different. And Paul, I know we've talked about this a lot on this podcast. Let's talk about it again. I have been, between my appearances on this podcast and my appearances on power and politics, I have been a voice of caution saying to Canadians. Yeah, you know what I'm going to say. Saying to Canadians, I know that Donald Trump's polling numbers are very bad right now at a national level. But do not underestimate the silent support that shows up for him in places.