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Tariff Turbulence Threatens Cross-Border Ties

Darrell McClain Season 1 Episode 441

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Can long-standing friendships withstand the storm of economic disputes? The U.S. and Canada are at odds as tariffs spark a trade showdown that threatens to unravel decades of cooperation. Our latest episode features an insightful conversation with a Canadian Deputy Prime Minister, who provides a passionate defense of Canada's stance. We unpack the economic consequences for both sides, from the swelling costs of gas and groceries to the potential job losses linked to retaliatory tariffs. As the Trump administration justifies these measures with claims about border security, we dissect these assertions, arming you with statistics that question their validity.

Our discussion underscores the strain these tariffs place on deeply integrated industries like the auto and agricultural sectors. Listeners will hear about the shockwaves rippling through Canadian society, including cultural manifestations of anger, such as the booing of the U.S. national anthem at sports events. The situation is a vivid reminder of the importance of recognizing allies in trade and the risks posed by policies that could fracture economic stability. While Canadians feel a profound sense of betrayal, they remain committed to preserving a peaceful partnership. Tune in to explore the potential ripple effects on international relations and the broader implications for the global economy.

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Speaker 1:

For the land of the free and the home of the brave.

Speaker 2:

Oh, Kennedy, I hope my native land.

Speaker 1:

Ten-year-old Kyra Daniels.

Speaker 3:

This really is utter madness and you know, from our perspective, the key thing here is you guys are engaged in this colossal act of self-harm. These tariffs are going to make life more expensive for Americans. You have put a tariff on the gas we sell you, so gas is going to be more expensive. You have put a tariff on the food that you are buying. That's a tax on groceries. They're going to be more expensive.

Speaker 3:

We have now the United Steelworkers, the American Farm Bureau, the Chamber of Commerce all saying this is going to hurt America. Stock futures are down. You are hurting yourselves. You are taxing regular Americans and we are going to fight back. And Canada is your biggest market. Canada is a bigger market for US exporters than China, japan, the UK and France combined. For Americans like your business, people right, the customer is always right, and your customer is really angry at you. The whole country is behind the retaliation the prime minister has announced. So now we are going to tax American exporters who are trying to sell us stuff. That means Americans are going to lose jobs. So this is really, it is self mutilation. America is hurting itself. We think that it is utterly crazy and we're also really, really angry at you.

Speaker 4:

So, madam Deputy Prime Minister, I was really struck when Prime Minister Trudeau spoke over the weekend, the sense of betrayal that he expressed that we have been there with the US. He was saying I'm paraphrasing every step of the way, even in times of need, and now this is coming out of nowhere. Elaborate on that, please, and also, just more specifically, just remind viewers just how closely linked these two nations are, particularly whether it's people or goods going back and forth across the border, sometimes multiple times a day people or goods going back and forth across the border, sometimes multiple times a day.

Speaker 3:

The prime minister has been great and I have to tell you the whole country is rallying behind him. We all feel personally hurt and that hurt is now becoming anger. You know we pride ourselves on being a polite, nice country, but at the Raptors game last night the American anthem was booed. At a Senators hockey game over the weekend, the American anthem was booed. Because we do feel like we are your friends, we're your neighbors, we are your allies and you guys are really lucky to have us on your northern border. The fact that you have this safe, secure, friendly country on your northern border is foundational to American prosperity, and now you're slapping us in the face. I mean, the tariffs against Canada are higher than the tariffs imposed against China. What's going on here, guys? It's China, what's?

Speaker 5:

going on here, guys. It's Ali Batali. I have a question for you in regards to the way that these tariffs have been put on. The Trump administration is saying that it's because they want to stem the flow of fentanyl through borders as well as illegal immigration. But in your conversations and in the conversations- that these governments are having.

Speaker 3:

Do you have a sense of what the Canadians would even have to say to get these tariffs removed and appease the administration? Well, thank you for the question, Ali, and the fact is it is. These tariffs are being imposed truly for utterly no reason. The pretext offered is the flimsiest pretext possible. The pretext offered is the flimsiest pretext possible. Less than 1% in fact, around 0.2% of the fentanyl that comes into the US comes through the Canadian border. If border security were the issue, this could be solved in five minutes. We want a secure border too. We would like to stop the illegal US guns that are smuggled into Canada and cause deaths on Canadian streets, and we are very happy to work together to not have asylum seekers cross in either direction.

Speaker 3:

The president has also directly threatened our national sovereignty. He has said over the weekend that if we were to become the 51st state, there would be no tariffs. Canadians really, really, really, are angry about that, and I do want to say we want to be your friend, we want to be your partner, we want to be your neighbor. We're good at that. We've done it for decades and decades, um, but we are proud of our country. We're really proud to be Canadian. Our sovereignty is not negotiable and if you hit us, we are going to hit back and the whole country is going to be proud to do that Well, and Canada has been Mika.

Speaker 2:

Canada has been our friends, our allies, our best trading partner and again, as Chris just said and so many Americans need to understand that, the fact that the longest peaceful, contiguous border in the world is the northern border that starts at Maine and goes all the way, all the way over to Washington state, and the fact that we don't have to have troops on that border because canada is such a good friend again, uh, this is again for for so many canadians, just shocking so also a friend, christia, who was on morning joe in the early days, um, along with all of us, uh, sharing her political analysis.

Speaker 6:

She is educated steeply, not in just Canadian values, but American values and the American Constitution. And so to your question of what's going on here, guys, christia, I ask you, imposing tariffs on a friendly border nation, what do you think is going on here? What's your assessment of what's happening here?

Speaker 3:

You're the Americans and I'm going to leave that up to you, but I do have a message for you, which is we are a great ally and partner. There is an exit ramp here. There is a win-win here. For all of our history as countries, we have been great, mutually beneficial partners and friends. Ronald Reagan famously said we're more than friends, we are kin, and he said that the Canada-US relationship is the best, the most mutually beneficial relationship between two countries in history. Ronald Reagan said that he was a smart guy. He was right.

Speaker 3:

But what I will also say is this isn't going to work. You know, this is a colossal act of self-mutilation where America is hurting itself, and please know that we think it is utter madness. We are not going to back down. We are really proud to be Canadian. We love our country so much. Canadians are rallying around this issue. We're going to stand up for ourselves and you know I used to say we do it more in sorrow than in anger. But we're moving away from the sorrow feeling towards really being angry about this because it's so unjustified and so pointless.

Speaker 7:

The dumbest trade war in history. Trump will eventually impose 25% tariffs on Canada and Mexico for no good reason. So President Trump will fire his first salvo of tariffs, supposedly on Saturday, against those notorious American adversaries, mexico and Canada. They'll get hit with a 25% border tax, while China, america's quote-unquote real adversary, will endure 10%. This reminds me of the old Bernard Lewis joke that it's risky to be America's enemy, but it can be fatal to be America's friend.

Speaker 7:

Leaving China aside, trump's justification for this economic assault on the neighbors makes no sense. White House Press Secretary Carolyn LeVette says that they're enabling illegal drugs to pour into America. But drugs have flown into the US for decades and will continue to do so as long as the American people keep using them. Neither country can stop that. Drugs may be an excuse, since Trump has made it clear his tariffs plan is basically because he likes tariffs for their own sake. We don't need the products they have. Trump said on Thursday we have all the oil you need. We have all the trees you need. Meaning lumber Trump sometimes sounds as if the US shouldn't import anything at all, that America can be perfectly closed as a closed economy, making everything at home. This is called a TARKY and it isn't the world we live in or the one we should want to live in, as Mr Trump may soon find out.

Speaker 7:

Take the US auto industry, which is really a North American industry because supply chains in three countries are highly integrated. In 2024, canada supplied almost 13 percent of US imports. Of US auto parts in Mexico, nearly 42 percent, made on the continent, goes back and forth across the border half a dozen times or more, as companies source components and add value in the most cost-effective ways, and everyone benefits. The office of the us trade representative says that in the 2023, the industry added more than 809 billion to the united states economy, or about 11.2% of the total US manufacturing output, supporting 9.7 million direct and indirect US jobs. In 2022, the US exported $75.4 billion in vehicles and parts to Canada and Mexico, vehicles and parts to Canada and Mexico. The number jumped 14% in 2023 and $86.2 billion, according to the American Automotive Policy Council.

Speaker 7:

American carmakers would be much less competitive without this trade. Regional integration is now an industry-wide manufacturing strategy, also employed in Japan, korea and Europe, aimed at using a variety of high-skilled and low-cost labor markets to source components, software and assembly. The results have been that the US industrial capacity in autos has grown alongside an increase in import motor vehicles engines and parts. From 1995 to 2019, imports of autos engines and parts rose 169%, while the US industrial capacity in autos engines and parts rose 71%. As the Cato Institute's Scott Litcom puts it, the data shows that as imports go up, us production goes up. Good-paying auto jobs in Texas, ohio, illinois and Michigan owe their competitors to this ecosystem, relying heavily on suppliers in Mexico and Canada.

Speaker 7:

Tariffs will also cause mayhem in the cross-border trade in farm goods. In the fiscal 2024, mexican food exports made up about 23 percent of the total us agriculture imports, while canada supplied some 20 percent. Many top us girls have moved to mexico because limits on legal immigration have made it hard to find workers in the us. Mexico now supplies and 90 percent of avocados sold in the us, and trump is, I guess, going to be an avocado nationalist. Then there's the prospect of retaliation, which Canada and Mexico have shown they know how to do for the maximum political impact. In 2009, the Obama administration and the congressional Democrats ended a pilot program that allowed Mexico long haul truckers into the US and stipulated in NAFTA. Mexico responded with targeted retaliation on 90 US goods to pressure industry in key congressional districts. So these included California grapes and wine, oregon Christmas trees and cherries, jams, jellies from Ohio and North Dakota and soy. When Trump imposed steel and aluminum on tariffs in 2018, mexico got results using the same tactic, putting tariffs on steel, pork products, fresh cheese and bourbon.

Speaker 7:

Canada Prime Minister, justin Trudeau has promised to respond to the US tariffs on a dollar-for-dollar basis. Canada could suffer a large GDP hit, since it's a much smaller economy, but American consumers will feel the bit and the lot as far as when it comes to the cost for some goods. Now, none of this is supposed to happen under the US-Mexico-Canada trade agreement that Trump negotiated and signed in his first tame, the US willingness to ignore the treaty obligations, even with friends, will make other countries eager to do deals. Maybe Trump will claim victory and pull back if he wins some token concessions, but if North American trade wars persist? No-transcript.

Speaker 7:

I have a show question today from the longtime Patreon Gene who says why does Elon Musk have access to the Treasury payment system? So Elon Musk vowed yesterday to unilaterally cancel hundreds of millions of dollars worth of government grants after he and his goons gained access to the Treasury Department's vast system over the weekend. Now the Treasury system disburses $5.4 trillion a year, or 88% of all federal payments, including a Social Security check. David Lindbergh, who had spent more than 36 years in government and was responsible for overseeing the payment systems, resigned abruptly Friday rather than to turn over the systems to Musk. So, in short, the world's richest man bankrolls Trump's reelection campaign to the tune of some quarter of a billion dollars and in return, trump's tasked him with running a so-called Department of Government Efficiency and allowed him to get his hands on the keys to the kingdom.

Speaker 7:

But Musk hasn't been confirmed by Congress. His department was never authorized by Congress. No one other than Trump has given Musk any authority. No one knows exactly whose Musk goons are, and they have not been vetted yet are handling some of the most sensitive personal information in the government. Not even Trump has the authority to stop social security payments, let alone Medicare or Medicaid or unemployment insurance or food stamps. And yet Musk has been given control of this, and his goon squad asserts that they're able to do so if they believe those payments are illegal.

Speaker 7:

Musk boasted on his social media site X that he was rapidly shutting down illegal payments. But who is Musk to decide if payments are illegal? Uh must, boast came in response to a post on x by mike flynn's trump's disgrace former national security advisor that contained a spreadsheet showing government payments to a number of lutheran charities, which, by the way, are doing important work and obtain the grants legally. Flynn claimed that the screenshots show there are many more organizations cashing in on our hard-earned money. But how did Flynn, who Trump pardoned in 2020 after Flynn pled guilty to lying about his contacts with Russia, obtain a screenshot of those government payments? And what else does Flynn, musk and any number of Trump insiders know about the government payments made to any group or individual? The conflicts of interest are wild. Musk's own companies are government contractors who get paid through the Treasury payment system. Other contracts compete directly with Musk's companies. Musk's goons with ties to the tech sector could benefit financially from steering federal money this way or that way. Financially from steering federal money this way or that way. And why does michael flynn have this kind of access after pleading guilty to a federal crime? Flynn has spent the last few years as a headliner for a uh reawakening america tour uh rat for short. Our traveling carnival of mega politics. Trump's prophecies, anti-vax rhetoric, covid-19 conspiracies, christian nationalist message of revenge against those who oppose Trump. A regular on a tour with Flynn was Cash Patel, trump's nominee to lead the FBI.

Speaker 7:

Other musk goons have gained access to the US Agency for International Development. Following a clash with security officials over the weekend, they effectively closed the agency. Reminder, usaid is an independent organization whose independence is codified into law. It is a coup, said a current USAID official. It was unclear if ever the agency would be up and running again. The official added.

Speaker 7:

Last week Muscoons locked career civil servants out of their computer systems at the Office of Personal Management containing personal data of millions of federal employees, including dates of birth, social security numbers, appraisals, home addresses, pay grades and left of service, home addresses, pay grades and lift of service. Senior career employees at the Office of Personal Management had their access to some of the department's data systems revoked. The actions inside the OPM make it harder for anyone outside Musk's inner circle to actually know what's going on. So, friends, this does seem like a coup. Offhand, I can think of at least eight federal laws that have been broken by Musk and his goons over the last few days, and at least true provisions of the US Constitution. Much of this occurred over the weekend. Very few in bureaucracy actually work on the weekends, so it's like the opposing team just leaves the field for two days.

Speaker 7:

Musk wrote on X on Saturday. Hello, musk, opposing team works for you, musk works for Trump and Musk, musk and his goons guard are riding roughshod over the institutions of our government, negating decisions that have been made by Congress. They're trampling on our democracy and getting information about you that they have no right to have. Democratic lawmakers, along with Republican lawmakers who still possess a shred of integrity, should immediately seek injunction from the federal courts to stop this pillage Now. Meanwhile, you may want to call your senators and representatives in Congress to tell them don't let Elon Musk mess with your social security or anything else. Now. That number is 202-224-3121. 202-224-3121. Thank you for the question Now.

Speaker 7:

Unions representing federal workers sued the Treasury Department and its head, scott Bissett, on Monday in an effort to block Musk and his team from accessing the federal payment system, saying that it amounted to an unlawful disclosure of personal and financial information of millions of people. The suit was the latest effort by unions to push back against a flurry of Trump administration directives aimed at undermining federal bureaucracy. Administration officials have made offers to most civilian federal workers to seek resignations, and dispute over federal payment system was a part of a wider effort to restrict the disbursement of money for programs approved by Congress. Musk and his lieutenants representing an outside adversary group aimed at reducing waste in federal government, the so-called Department of Government Efficiency, gained access to the Treasury Department's system late Friday. The move immediately became a key skirmish in Musk's wider war on the federal government.

Speaker 7:

The Trump administration pushed out a top Treasury Department official who refused to give Musk team access to the payment system. Must team access to the payment system and a former Treasury official said they were not aware of a political appointee ever before seeking access to its details. So Monday's lawsuit said that the system, which sends out money on behalf of the entire federal government and dispersed more than $5 trillion in fiscal year 2023, includes sensitive information needed to send payments like tax refunds, veterans benefits, salaries for workers and social security payments. Federal law heavily restricts disclosures of that data. The suit accused Musk and his team that gained access to those recordings of violating the Privacy Act and the Internal Revenue Code, laws that restrict access to taxpayers and other personal information unless the person is an employee engaged in official duties that require having access to those records. The suit also said that Mr Bessett's giving Musk's team's access to the payment system was arbitrary and capricious and exceeds his statutory substitutionary authority and exceeds his statutory uh substitutionary authority.

Speaker 7:

Now musk allies were given access to the payment systems, were made treasury employees, past government backgrounds checks and obtained the necessary security clearance.

Speaker 7:

According to two top people familiar with the situation, who requested anonymity to discuss the eternal arrangements, the scale of this intrusion into individuals' privacy is massive and unprecedented, said a 19-page suit filed in the Federal District Court in Washington. Millions of people cannot avoid engaging in financial transactions with the federal government and therefore cannot avoid having their sensitive personal and financial information maintained in government records. It continued that Secretary Bissett's actions granting DOGE-affiliated individuals full, continuous and online access to that information for an unspecified period of time, means that retirees, taxpayers, fellow employees, companies and other individuals from all walks of life have no assurance that their information will receive the protection that federal laws afford. The American Federation of Government Employees, the largest union of federal employees, representing more than 800,000 workers, filed a suit alongside the service employees of International Union and Alliance for Retired Americans, a group that represents the interests of retired union workers. All three groups are affiliated with the AFL-CIO, an umbrella group with more than 50 unions representing more than 12.5 million workers.

Speaker 1:

Peaceful trading partners are not our enemies. They are our allies. We should beware of the demagogues who are ready to declare a trade war against our friends. Beware of the demagogues who are ready to declare a trade war against our friends, weakening our economy, our national security and the entire free world, all while cynically waving the American flag. The expansion of the international economy is not a foreign invasion. It is an American triumph, one we worked hard to achieve and something central to our vision of a peaceful and prosperous world of freedom.

Speaker 7:

So that was a blast from the past on President Ronald Reagan discussing trade and trade wars, and I think in this case President Ronald Reagan is correct.