Title: Wither free trade? US-Canada Relations in a Post-Tariff Context
Description: Get an in-depth look at the impacts of tariffs on the Canadian economy and our ties to our closest neighbour: how they affect us, how Canada might respond, and the changing face of US-Canada relations.
Queen’s Law and economics professor Cherie Metcalf will be joined by a panel of guests including trade lawyers, and arbitration experts.
Speakers:
- Nicolas Lamp - Associate Academic Director, International Law Programs; co-author, Six Faces of Globalization: Who Wins, Who Loses, and Why It Matters
- Dena Givari, Law’17 - International attorney, International Trade Practice, White & Case
- Jessica B. Horwitz, Law'12 - Partner, International Trade & Investment, Bennett Jones
- Josh Karton - Associate Dean (Graduate Studies and Program Development); Managing Editor, Canadian Journal of Commercial Arbitration
- Anthony Goerzen - Professor, Smith School of Business
- Julia Webster, Law'13 - Partner, Baker & McKenzie LLP
Questions and answers from the chat appear at the end of the transcript below.
Podcast:
Transcript:
[Auto-generated transcript. Edits may have been applied for clarity.]
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Cherie Metcalf: Okay, welcome, all of you. My name is Cherie Metcalf. I'm the Associate Dean for Research at Queen’s Faculty of law, and also a professor in the Faculty of Law and cross appointed to the Department of Economics. And I'm really delighted to welcome everyone here today for our expert panel wither free trade.
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Cherie Metcalf: So this is clearly a tumultuous time in the world of free trade. And as we are suggesting with our playful title, we're asking questions about whether we see a fundamental withering away of the commitment to free trade
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Cherie Metcalf: and also what's the direction that it might be going, acknowledging the sort of fundamental uncertainty that we're facing at this time.
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Cherie Metcalf: We're delighted to meet with our panel of experts today. Before we introduce them briefly and then get right to our questions, I do want to recognize that although we're meeting virtually here for many of us, our home institution Queen’s University is located on the traditional lands of the Haudenosaunee and Anishinaabe. And so we want to pause to recognize their historic and ongoing commitments and relationships
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Cherie Metcalf: with those lands as we gather here today. All right.
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Cherie Metcalf: So let me extend 1st of all our thanks to our panelists and just turn to briefly introducing them. So together we have Jessica Horwitz is with us. She's a partner at the International Trade and Investment Practice Group at Bennett Jones, which is a national Canadian business law firm. She advises clients on a wide range of international trade and customs matters, including tariffs and treaty protections.
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Cherie Metcalf: Now I'll just turn to Dena Givari who is joining us. She's an international attorney at White and Case, a global international trade practice in Washington, DC. So in the hot seat, she is in her practice focused primarily on U.S. trade remedies. We have Professor Nikolas Lamp, who is
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Cherie Metcalf: with the Faculty of Law and he is an international trade expert. His recent book, Six Faces of Globalization: Who Wins, Who Loses and Why it Matters, of course, is going to prepare him to give us great commentary.
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Cherie Metcalf: We have Anthony Goerzen here joining us, the Sobey Professor of International Business at the Smith School of Business here at Queen’s University. He's a fellow of the Academy of International Business and has spent 15 years in industry before becoming an active researcher with a focus on behavior and performance of firms in a strategy context where we're looking at global supply chains.
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Cherie Metcalf: We have Julia Webster. She's a partner at Baker McKenzie and leads the Canadian trade and customs practice. So she's busy advising multinational companies on cross-border matters, and she also teaches International Business Crime for us here at Queen's Faculty of Law.
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Cherie Metcalf: And last, but not least, Josh Karton, who is a professor at the Faculty of Law and also our Associate Dean for Graduate Studies and Professional Programs. Josh's research and teaching focus is on international commercial investment law. And he is also an active arbitrator and consultant for domestic and international disputes and investment disputes.
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Cherie Metcalf: All right. So that's our wonderful panel of experts. And the way we'll proceed here is I'm going to pose questions to different experts on our panel, including some of our faculty members, and we'll get responses back. We'll have a couple rounds of questions, and then we'll turn to Q&A.
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Cherie Metcalf: The 1st question that I have here is going to be directed to Jessica. So we've seen over the last few months, President Trump announcing an intention to impose various different types of tariffs. We're wondering if you can help orient our panel by giving us a brief overview of some of the different types of tariffs that the Trump administration has imposed and started talking about imposing.
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Jessica B. Horwitz: Sure. So it's been a bit of a roller coaster of a couple of months for anybody that practices in international trade law. Just as an intro, I'm a Canadian lawyer, so, caveat, I'll leave it to Dena to talk about some of the details of the U.S. legal mechanics, but just to run through at a high level all of the many, many announcements and moving parts that are happening right now in the world of U.S. tariffs.
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Jessica B. Horwitz: The big news yesterday was the 25% tariff that the Trump administration has been threatening for a while came into effect. So that is effective as of 12:01 am yesterday morning. That is, a 25% across the board tariff that applies to all goods that are products of Canada, determined in accordance with applicable U.S. rules of origin that maybe Dena can get into in more detail,
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Jessica B. Horwitz: with the only exception being 10% tariff applies to Canadian energy products – and energy is defined broadly to include a wide range of different energy-related materials, so crude oil, natural gas,
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Jessica B. Horwitz: refined petroleum, but also things like uranium, coal, biofuels, geothermal heat, kinetic, hydroelectricity, critical minerals. So it's quite a broad definition.
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Jessica B. Horwitz: Justification for this particular tariff is a national security emergency caused by fentanyl and illegal migrants crossing the Canadian border. That is the stated justification, which is the required legal justification under the mechanism that President Trump used for that which is the International Emergency Economic Powers Act, which I understand to be a sort of
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Jessica B. Horwitz: emergency response type power. And so that's why I think we're hearing all this talk about fentanyl, because that's the legal grounding that justifies the tariffs. As for how long they're going to be in place,
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Jessica B. Horwitz: there's potentially going to be some announcements on that today. We don't know. It's a”watch that space,” but that's the world that we're facing now.
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Jessica B. Horwitz: Other things that have been announced, but that have not actually come into effect yet: President Trump has announced that he's revoking the previous exemptions that were negotiated under the steel and aluminum tariffs that were implemented in 2018 against Canada and other countries under the U.S. Trade Expansion Act, section 232.
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Jessica B. Horwitz: So that one, he's announced is coming into effect on March 12. They don't need to do a new investigation for that, because my understanding is that they're relying on the one that was done in 2018. They're simply revoking the previous exemptions that were in place. The big change there is that, in addition to applying to primary and sort of
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Jessica B. Horwitz: basic manufactured secondary steel and aluminum materials, that these tariffs this time are actually also going to apply to derivative products. So products like machinery that incorporates steel parts, the sub-portion of those that equipment that is steel or aluminum will be subject to the tariff. And so that's not going to come into effect on March 12. I think the U.S. Administration needs a little bit more time to figure out how to actually administer that in practice.
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Jessica B. Horwitz: From a valuation appraisal, accounting perspective, how do you figure out which portion of the products are subject to the duty? So that's a question mark. He's also announced new investigations under, I believe, section 232, also, or other mechanisms into automotive parts, semiconductors, pharmaceuticals, lumber and copper, all of which are –Canada is a target for those.
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Jessica B. Horwitz: And then, more broadly, he has announced that he's looking at reciprocal tariffs, which
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Jessica B. Horwitz: is not exactly clear what is meant by that. But the idea being we tariff you what you tariff us, what that means in the context of a free trade agreement like the USMCA where everything's at zero duty, anyway, for the most part, is not entirely clear to me. But I'd be interested to hear my colleagues’ thoughts on that.
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Jessica B. Horwitz: So that's the sort of threat that's that target date for April second or thereabouts. And then he's also talked about a section 301 investigation, which is I believe, a statute or a provision that allows for investigations into anti-competitive trade practices – so predatory or violations of intellectual property or
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Jessica B. Horwitz: anti antitrust-related activities. He's looking at digital services taxes. So Canada's digital services tax that was announced, I think, a couple a couple of years ago now, as well as the digital services taxes of a number of other countries, France, Austria.
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Jessica B. Horwitz: U.K., Spain, a number of other countries, I believe, and Dena can correct me if I'm wrong, that the Canada target for that one is, now he's saying he's going to initiate the USMCA dispute panel in respect to the digital services tax as opposed to a section 301 investigation. So maybe it's a nod to the fact that the USMCA is not entirely dead yet, but I think that all remains to be seen, so I will leave it there.
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Cherie Metcalf: Thanks so much, Jessica. It's a whirlwind of activity. So hopefully, our audience has been able to follow all these different types of tariffs and trade actions that Trump's looking at.
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Cherie Metcalf: I want to turn to Dena next, because we've actually heard her name come up quite a bit here already in the introduction, and the question that I want to pose to you is legally, it's really supposed to be Congress, right, that holds the constitutional power to regulate commerce with foreign nations. But we haven't really seen Congress involved in any way, we want to say
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Cherie Metcalf: or at least, if it is, it's not clear exactly how. So we're wondering if you could help us by providing some background on what is the legal basis for the actions that Trump is taking and how does that fit into the sort of law regulating how U.S. trade gets regulated.
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Dena Givari: Sure. So that's a tall order. But I'm going to do my best. So yes, you're right. Congress has power over commerce under the Constitution. But Congress also has the ability to delegate certain powers to the President. And so that's what we're seeing. There are various laws that have been passed by the U.S. Congress that have delegated to the President the power to impose tariffs.
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Dena Givari: Now, usually, I think, Jessica alluded to this, they require some sort of investigation or procedural step, and that would involve other departments in the government, like the United States Trade Representative Department of Commerce or the Court of International Trade, but in particular, in this instance, with the 25% tariffs that went into effect yesterday, the President is relying on a statute called the International Emergency Economics Powers Act,
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Dena Givari: IEEPA for short. I won't try to say the full name of the act again. I'll just refer to it as IEEPA. So we've seen typically IEEPA used in the past to impose sanctions. This is actually the 1st time that it's being used to impose tariffs.
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Dena Givari: But there is an advantage for the President wanting to use IEEPA, and it has to do with the fact that he's not really delayed by any sort of investigation before he can actually take action under the Act. So, for example, for the section 301 tariffs under the Trade Act recall, this is the 2018 tariffs imposed on China for certain goods, like electric vehicles, semiconductors, batteries.
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Dena Givari: Under section 301 tariffs, the USTR needs to conduct an investigation first, and this could take up to a year, and there needs to be some sort of determination that there is an unreasonable or discriminatory burden or restriction on U.S. Commerce
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Dena Givari: and before Trump, that was typically used in the context of state-to-state dispute. And so that's why when it happened, a lot of people were saying, “Oh, Trump is taking unilateral action.” But so again, there's at least a year before Trump, the President could do anything under section 301, and similarly, for Section 332 tariffs under the Trade Expansion Act – this is the steel and aluminum tariffs.
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Dena Givari: Under this provision, the Department of Commerce needs to conduct an investigation, and there needs to be a conclusion that there's some sort of impairment to U.S. national security. And again, this investigation could take upwards of a year, and so there's a delay. But under IEEPA, all that the President needs to do is declare that there is a national emergency with respect to a threat.
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Dena Givari: So once that declaration is made, IEEPA gives the President very broad powers to take actions, and arguably these powers include the power to impose tariffs. There's many sub provisions in IEEPA that set out various powers that the President can have, but one of them uses words like “the President can regulate
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Dena Givari: importation or exportation of any property in which any foreign country or national thereof has any interest.”
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Dena Givari: I suspect that's their hook for thinking that he has the power to impose these tariffs.
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Dena Givari: And so in this case, if you read the executive order that the President issued to impose the 25% tariffs on Canada, and as Jessica alluded to as well, the President describes the threat as Canada allegedly not doing enough to stop fentanyl from entering the U.S.
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Dena Givari: And this is a national emergency because fentanyl is killing Americans. And it's interesting because we've heard a lot on the news is that there's very little fentanyl crossing the border from Canada to the U.S. So how could this be an emergency?
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Dena Givari: But again, the executive order is drafted very carefully, because it makes a specific point to say even a very small amount of fentanyl entering the U.S. from Canada can jeopardize many American lives and thereby constitute a national emergency. So they already kind of thought of that argument when they were drafting the executive order,
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Dena Givari: but once this declaration was made in this executive order,
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Dena Givari: the President had access to all the powers granted to it under IEEPA – and I flag these are broad and could include tariffs, but these powers are not unchecked. So you mentioned where is Congress and all of this? And you're right. Congress can pass a joint resolution under the National Emergencies Act
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Dena Givari: to declare that the national emergency is terminated, and if it does, then the President's unable to rely on IEEPA anymore for the measures, and they need to terminate immediately.
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Dena Givari: The problem is that passing a joint resolution is similar to passing law. You need two-thirds support from the House of Representatives, and two-thirds support from the Senate, which seems very unlikely right now. Another way for these section 25 tariffs to go away is that the President just changes his mind and declares that there's no longer a threat to national emergency.
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Dena Givari: And then, of course, there's the potential to challenge it in court, argue IEEPA doesn't include the power to impose tariffs, or thatif you're going to take measures under IEEPA, there needs to be some sort of rational connection between the
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Dena Givari: measures, you know blanket tariffs and the threat that you're claiming is there but again, that takes a very long time to do, and
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Dena Givari: it's interesting. I mean, if you heard the President's address to Congress last night –
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Dena Givari: I was going to get into this in the second question, but I'll get into it now, because I think it's relevant. He kind of called out to the farmers, and he said, “I know that it's going to hurt, at first these tariffs are going to hurt you, but in the long run, hang in there. It's going to make things better.” So I think he's trying to impose these tariffs early on during his term, in the hopes that before his term is up
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Dena Givari: he'll win over some of the doubtful stakeholders, but we shall see.
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Cherie Metcalf: Wonderful. Thank you. It's really helpful to have so much expertise here to fill in the gaps, because for many of us it's a little hard to understand how these things are actually grounded in law. So that was great. Thank you. I'm going to turn to Nicolas next
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Cherie Metcalf: with a slightly different question. So you know, a few weeks ago, we sort of had a headline about these U.S. tariffs that said nobody wants these except the guy who wants these. And it's not clear that there really is a significant cohort of people or a constituency that's clamoring for these tariffs. And so
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Cherie Metcalf: we're wondering, can you give us some insight? Why do you think that President Trump is so keen to act and use these unusual powers to impose tariffs now at this point?
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Nicolas Lamp: Thank you, Cherie. So I think there are 3 buckets of justifications that we've been hearing, and the first are the opportunistic ones which Dena and Jessica already mentioned, the concern about fentanyl crossing the border, which in Canada's case is really totally unsubstantiated. And so I think it's fair to say, this is just an opportunistic justification so that Trump can avail himself of the authority of IEEPA.
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Nicolas Lamp: The second one I would put into the grievance-based bucket. So
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Nicolas Lamp: if you watch Trump, you see he has a lot of grievances. He always thinks the U.S. is being taken advantage of, right. You saw it yesterday in the address in Congress, where he completely makes up the numbers of how much the U.S. has provided to Ukraine like he always feels somebody is taking advantage of the United States, and in the trade context, the way that manifests itself is that in his concerns about trade deficits that the United States has – so he has this idea that
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Nicolas Lamp: if the United States buys more from another country than that country buys from the United States, the U.S. is somehow subsidizing that country, which is, of course, ridiculous, because all they're doing is they're actually getting something for the money that they're spending.
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Nicolas Lamp: And that has some power – this idea that
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Nicolas Lamp: if you have a trade deficit, then you're taking advantage of the United States, whereas if the U.S. has a trade surplus, then actually it's all fine. And we saw that with the steel and aluminum tariffs during Trump's first term, where he exempted Australia from the tariffs – and one reason that was given that was that Australia could point out that they actually have a trade deficit when it comes to steel and aluminum with the United States.
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Nicolas Lamp: And so this trade surplus isn’t the concern – and trade deficit is another one. But I think the most fundamental motivation has come to the fore in the last couple of weeks.
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Nicolas Lamp: and that is the fact that he's just an unadulterated protectionist. He just feels that the U.S. has the market, and therefore the U.S. is entitled to the jobs. He just thinks that the U.S. doesn't need anything from Canada. And so he made that very clear in a press conference 2 days ago, where he said, “Look Mexicans, Canadians, if you want to sell to Americans, then come to the United States and set up your factories here.”
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Nicolas Lamp: And so that is, I think, the truest motivation, like his big promise during his first campaign, was “I'm going to bring the jobs back,” and he was kind of held back during his first term and really pursuing that objective. But that's what he's doing now. The problem for Canada is, of course, that
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Nicolas Lamp: we could kind of deal with the with the opportunistic motivation. There was stuff we could do. We could like, send helicopters to the border. We could appoint a Fentanyl Czar and deal with it.
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Nicolas Lamp: With the trade surplus, we could at least argue that if you take out oil, thenthe trade is fairly balanced. If you look at the cars, we are buying about as many cars from the U.S. as the U.S. is selling to us; it's also fairly balanced. So even with the trade deficit concern, if we got through to him, we could maybe still deal with it.
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Nicolas Lamp: With the last one,
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Nicolas Lamp: the protectionism, there's just nothing we can do – like he just doesn't want to trade with – he doesn't want us to sell anything to them. Of course, in some context of oil that's not really possible. And we see that acknowledged in the lower tariffs on energy products. But really there's no argument that we can make here.
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Nicolas Lamp: Let me end with that.
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Cherie Metcalf: That is not entirely reassuring. But so okay, but we'll put a pin in that for now. Maybe later on, in our second questions, I think we'll turn to what our strategies could be if that really turns out to be the motivation. But I'm going to turn to Anthony now, becauseeven in light of what Nicolas has just been saying, there's sort of a threat here that these tariffs are not just something ephemeral or as a negotiating tactic, but maybe this is a little bit more permanent shift.
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Cherie Metcalf: And in either case
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Cherie Metcalf: we've seen announcements that suggest that companies are pausing investments in Canada. And so we want to ask you, how does just this unpredictability of Trump's trade policy impact companies in Canada? And
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Cherie Metcalf: how does this threat of tariffs affect Canadian businesses.
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Anthony Goerzen: Yes, first, thanks very much for inviting me to the panel. I'm very pleased to join in with Queen's Law to talk about this
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Anthony Goerzen: very important issue that's consuming many of us, I see in Queen’s Law, but also in the business school.
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Anthony Goerzen: And of course, the notion of unpredictability in trade policy is a very important one to business, and for a number of reasons. But I'll highlight 4 of them.
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Anthony Goerzen: One just has to do with the notion of investment, uncertainty.
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Anthony Goerzen: Now, businesses are inherently experts at mitigating uncertainty in their operations. I mean, that's what they do. They make contracts. They hedge currencies. They do a variety of things to mitigate the risk, so that they can make investments and then pay their salaries, pay their taxes, and of course return money to their owners.
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Anthony Goerzen: The challenge here, however, is this is a is a sudden shift in the external environment. It's a political, regulatory risk, I would say – actually, those are 2 different things. Political risk is where the government is shift. Suddenly regulatory risk is where the regulations change suddenly they're related, but they're different.
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Anthony Goerzen: I'm speaking now with an organization in Costa Rica who just had an operation in Nicaragua confiscated or expropriated so and you can spend the rest of your life in in court and a million dollars, or you can just move on. And it's a cautionary tale. Beware of doing business in places that are not settled politically.
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Anthony Goerzen: Another sort of interrelated item has to do with capital flight.
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Anthony Goerzen: Investment
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Anthony Goerzen: takes place in part where uncertainty is manageable. And so, when we often see the challenge that emerging markets, Africa, Latin America, have in attracting investment, one of the challenges that they face is that there,
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Anthony Goerzen: the external uncertainty is at a level where businesses can't predict, and they need to know just as we do, let's say at an individual level, when we buy a house, we want to know that we're going to keep our job and that the interest rates aren't going to go to 20%.
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Anthony Goerzen: If those things are uncertain, we may not buy that house, and it's exactly the same for businesses.
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Anthony Goerzen: A third element has to do with supply chain disruptions.
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Anthony Goerzen: Many of the products that are
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Anthony Goerzen: consumed are the majority of them are B2B, which is business to business that is. In the automotive business, for example, a piece of aluminum goes across the border multiple times before it heads into to be assembled into a car.
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Anthony Goerzen: So these supply chains are something that these that businesses spend a great deal of effort, a great deal of energy to try and organize, becauseif your windshield wiper doesn't arrive on time, that BMW is just a paperweight, all right. And so you really have to be aware. And so this notion of
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Anthony Goerzen: where you locate is something that many of us are looking at – the notion of offshoring, reshoring, friend shoring. This is something that is top of mind for many business people and scholars, because
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Anthony Goerzen: the notion is that you need to bring investment within a sphere that you can predict. So we're seeing, for example, investment returning from China back intowithin North America. For just that reason.
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Anthony Goerzen: the last element that I would highlight has to do with currency volatility, that when these things happen it sort of shakes the market, and
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Anthony Goerzen: to the extent that business declines. Let's say, if
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Anthony Goerzen: suppliers are not producing the same amount that they have done in Canada, that means that there are more Canadian dollars available which lowers the price, and so that essentially can play part of the role in mitigating some of these tariffs or these other things by having a devalued currency.
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Anthony Goerzen: And so that makes exports more attractive or more feasible. But it makes imports more expensive. And so things like oranges and bananas, and all of the various car parts, they all rise in price. I would say those are probably the 4 major and interrelated items that relate to the notion of unpredictability in the external environment for business.
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Cherie Metcalf: Great. Thank you. I'm going to turn to Julia now. So, Julia.
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Cherie Metcalf: But even though we've had sort of a variety of explanations for why, the tariffs might be sort of implemented, I'm going to turn back to some sort of traditional trade irritants. So there are a few kind of long standing disputes or irritants to Canada-U.S. trade in particular. So, for example, a newer one is the digital services tax, but we also have persistent
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Cherie Metcalf: disagreement about whether the supply management system in Canada really is compatible with trade obligations that we've had under Free Trade Agreement. So I wonder if you can sort of talk to us a bit about these trade irritants. And what role, if any, you think they're playing in this current trade dispute.
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Julia Webster: Thanks so much, so certainly these historical trade irritants are playing a role in this trade dispute. As Jessica noted, in mid-February, the U.S. administration did issue a memorandum on reciprocal trade and tariffs, and this was a bit of a head scratcher for the trade community, as some of the aims of this memorandum really do run contrary to the current rules-based trading system.
00:28:36.130 --> 00:28:54.330
Julia Webster: But given the administration's actions to dates, perhaps it's less surprising now. So in a nutshell, the U.S. is investigating measures enforced by its trading partners, both tariff and non-tariff measures that the U.S. alleges have an unfair effect on those U.S. imports to those countries.
00:28:54.330 --> 00:29:17.329
Julia Webster: So, for example, if tariffs on U.S. goods are higher than those the U.S. imposes on similar goods imported from that trading partner’s sales taxes, and of course, digital trade taxes – so when you talk about these historical irritants between Canada and the U.S., certain Canadian taxes and programs really are under the U.S. reciprocal trade microscope if we can call it that.
00:29:17.330 --> 00:29:39.749
Julia Webster: And when I think of these historical trade irritants, we have the Federal GST, we have the digital services tax which came into force last year. The first returns are due in June of this year, and potentially Canada's historical supply management system. So, looking at the GST – this was a federal sales tax that was introduced in 1991 – it's a value added tax
00:29:39.750 --> 00:29:49.609
Julia Webster: and it really has been a historical pain point with the U.S. Even since the 1920s, when Canada's federal sales tax was introduced, and the GST replaced this in the early ‘90s
00:29:49.610 --> 00:30:10.180
Julia Webster: the administration's position on the GST. May be that the result of Canada's zero rating goods for export so from Canadian companies, but charging tax on supplies made in Canada that could be kind of the issue that the U.S. is focused on here. So Canadian exporters can sell goods into the U.S. where there's no value added tax in place
00:30:10.180 --> 00:30:27.240
Julia Webster: compared to U.S. exporters that make supplies in Canada; the GST would apply to those. So, even though goods are crossing the border duty free, perhaps under the USMCA, Canada's 5% GST would still apply to those goods from U.S. companies being imported into Canada.
00:30:27.240 --> 00:30:50.370
Julia Webster: When looking at the digital services tax – obviously, this is not a historical irritant, because it's quite new – it's something that the Biden administration also opposed, and Canada's kind of acting unilaterally on this alongside other countries outside the OECD model, where there has been negotiations and discussions for years about taxation of services. And so this is a 3% tax
00:30:50.370 --> 00:30:57.400
Julia Webster: that's going to be retroactive to 2022. The first returns by companies are due in June of this year.
00:30:57.490 --> 00:31:14.010
Julia Webster: This tax is really largely targeting large U.S. companies offering digital services to Canadian consumers, and it is possible that Canada could actually repeal this tax as a potential negotiating point to in effect, eliminate this trade irritant with the United States.
00:31:14.010 --> 00:31:37.349
Julia Webster: When we look at supply management, if I have to pick another historical trade irritant, this is up there with the GST but has been much more front of news in the last few years, and so Canada, in order to protect its dairy and poultry and egg industries, it relies on supply management which controls production and pricing, and it also controls imports of these products into Canada.
00:31:37.510 --> 00:31:48.179
Julia Webster: So this pillar of controlling imports is affected through a tariff rate quota, and although there were some concessions made by Canada in 2020 during the last round of
00:31:48.260 --> 00:31:57.639
Julia Webster: or during the round of USMCA negotiations which provided access to U.S. dairy farmers, the U.S. has initiated 2 chapter 31 U.S.A.
00:31:57.640 --> 00:32:21.300
Julia Webster: USMCA disputes against Canada since the USMCA came into force on July 1, 2020. And these disputes are really focused on how Canada has been allocating these tariff rate quotas to U.S. exporters. And the U.S. argues that there's really a preference that's being given here to Canadian processors. This is one of their arguments, which is only allowing bulk U.S. products to flow into Canada to ensure that any
00:32:21.300 --> 00:32:44.809
Julia Webster: economic value out of processing is actually occurring in Canada and not the United States. So it really remains to be seen what's going to happen with these reciprocal tariffs. Last night, Trump promised that the reciprocal tariffs would be coming into effect on April second. But when I look at where could those potentially attack Canadian goods, I see GST, I see the digital sales tax and the
00:32:44.810 --> 00:32:58.410
Julia Webster: historical issues of supply management really being the focus of the U.S. administration. So at this point, we're in a bit of a holding pattern. But those historical trade irritants certainly are impacting what we're seeing from the U.S. administration right now.
00:32:59.480 --> 00:33:06.357
Cherie Metcalf: Yeah, that's great. I thinkwe could add one more to that list, probably right in terms of softwood lumber.
00:33:07.010 --> 00:33:08.430
Julia Webster: Yeah, absolutely.
00:33:08.850 --> 00:33:10.290
Jessica B. Horwitz: Auto rules of origin.
00:33:10.520 --> 00:33:14.069
Cherie Metcalf: Yeah, it's becoming a longer list.
00:33:14.070 --> 00:33:43.079
Julia Webster: Yeah. And in a way, Trump is directly. I didn't include those in my comments about kind of reciprocal measures only because Trump has said that there are going to be 25% tariffs on autos. And they're going to potentially be 25% tariffs on softwood lumber and other forestry products. After reports are potentially filed by the Secretary of Commerce, who's been tasked to look into this as a national security issue under 232.
00:33:43.750 --> 00:33:52.571
Cherie Metcalf: Yeah, so much happening. Alright, I'm going to turn it over to Josh now. Last but not least,
00:33:54.050 --> 00:34:18.800
Cherie Metcalf: the U.S. tariffsin one aspect, they're really couched as sort of a broader attack on Canadian sovereignty, lots of discourse about becoming the 51st state and using economic pressure. And so on, and you know we've seen very aggressive moves between the U.S. and the Ukraine, and kind of trying to use bargaining power to extract advantages from vulnerabilities.
00:34:19.310 --> 00:34:34.270
Cherie Metcalf: So you know, we're just kind of wondering, is this what Canada can look forward to beyond trade? What are the implications? What does Canada have to worry about here in terms of the U.S. and this turn in U.S. policy?
00:34:35.500 --> 00:34:38.794
Josh Karton: I mean, the short answer is, we have a lot to worry about.
00:34:39.290 --> 00:34:42.609
Josh Karton: But I think I want to put that in the context that
00:34:42.850 --> 00:34:48.539
Josh Karton: I think it's pretty clear that the moves the U.S. is making – the Trump administration is making –
00:34:48.730 --> 00:34:51.170
Josh Karton: that aren't really motivated by trade policy.
00:34:51.770 --> 00:35:02.109
Josh Karton: Yes, Trump has this idea that a trade imbalance is somehow a subsidy. I don't know where he got that idea. I don't know anyone else who thinks that who isn't, you know, trying to ape Trump,
00:35:02.633 --> 00:35:15.319
Josh Karton: but, as we heard from Nicolas, things like citing the fentanyl trade, it's pretty obvious that that's a pretext, right? That that's something that they grasp at, that they can cite for domestic statutory authority
00:35:15.560 --> 00:35:25.390
Josh Karton: and to give a bit of a fig leaf to actions that Trump wanted to take in the first term, and was somewhat restrained, and is less restrained, having been re-elected.
00:35:26.302 --> 00:35:32.799
Josh Karton: So I think the U.S. government or Trump specifically, he's motivated by some combination of
00:35:32.910 --> 00:35:37.290
Josh Karton: odd beliefs about trade balances and the magic of tariffs.
00:35:37.690 --> 00:35:42.670
Josh Karton: But I think you also have to see this in context of something that he said for domestic consumption,
00:35:42.970 --> 00:35:51.820
Josh Karton: which is that I think Trump is looking at significant income tax cuts, primarily on wealthy Americans and corporations, but more broadly
00:35:51.940 --> 00:35:58.490
Josh Karton: and somehow believes that he can make up that revenue with foreign countries paying for it right through tariffs.
00:35:58.870 --> 00:36:01.880
Josh Karton: That's not something that we can argue out of.
00:36:02.000 --> 00:36:06.180
Josh Karton: We know that because his own aides have tried to argue him out of that, and it's made no difference.
00:36:06.400 --> 00:36:11.100
Josh Karton: And then I think there's also just kind of the Trump mentality of
00:36:11.430 --> 00:36:18.350
Josh Karton: wanting to pick up someone or something that he sees as weak and throw them against a wall, just as a display of dominance.
00:36:18.460 --> 00:36:28.189
Josh Karton: And I remember seeing the Oval Office meeting between Trump and Vance on the one side, and Volodymyr Zelensky from Ukraine on the other side, when that went so badly.
00:36:28.330 --> 00:36:41.130
Josh Karton: One of the first sort of instinctive reactions I had is there's going to be no relief or flexibility on the tariff side, because Trump has suffered a sort of like a narcissistic injury to his ego and is going to be looking for a way to feel strong.
00:36:41.630 --> 00:37:06.130
Josh Karton: So tariffs obviously a problem for the Canadian economy. I've seen estimates – you know, because our economy is generally an export-oriented one, and so many of our exports go to the United States – I've seen estimates that the impact of the 25 and 10% tariffs alone is going to be something comparable to the 2008-2009 financial crisis in terms of its impact on the Canadian economy.
00:37:06.330 --> 00:37:08.509
Josh Karton: A recession may not be avoidable.
00:37:09.090 --> 00:37:19.000
Josh Karton: but tariffs, in one sense, are at least within a kind of existing framework of government actions in their economic relationships with other governments.
00:37:19.260 --> 00:37:31.009
Josh Karton: There are things the United States could do. I'm not saying they will, but that they could do that would cause significantly more pain for the Canadian economy and for other trading partners of the United States.
00:37:31.670 --> 00:37:37.019
Josh Karton: They could use sanctions, authority against individual Canadian businesses or individuals.
00:37:37.270 --> 00:37:43.310
Josh Karton: They could shut down the border in significant ways. Right? That would be very expensive, but it's something they could do.
00:37:43.730 --> 00:37:56.329
Josh Karton: Perhaps more seriously, they could freeze out Canadian banks and Canadian companies from the financial system that is really centered in the United States and largely in U.S. dollars.
00:37:56.530 --> 00:38:13.500
Josh Karton: And that's something that you know. For example, the reporting requirements just to stay on the good side of the Canadian finance. The American financial authorities have led banks all over the world to change their behavior, right, to sort of avoid getting pulled into that to the extent that they can.
00:38:14.000 --> 00:38:28.549
Josh Karton: And they could also freeze out Canada on intelligence and military cooperation, if they don't see a threat to the United States from Russia. In fact, if they would like to partner with Russia, for example, with exploitation of the Arctic,
00:38:29.008 --> 00:38:34.090
Josh Karton: that's something that would be extremely damaging to Canadian sovereignty and to the Canadian economy as well.
00:38:34.800 --> 00:38:42.529
Josh Karton: Would some of those measures also hurt the American economy. Sure they would right, but not nearly as much as they would hurt the Canadian economy.
00:38:42.740 --> 00:38:50.680
Josh Karton: And if Trump's ultimate goal is to absorb Canada by applying economic pressure until we crumble, which he seems to think
00:38:50.810 --> 00:38:57.740
Josh Karton: is a possibility and is a good idea for the United States, and if he doesn't get the kind of sort of
00:38:57.950 --> 00:39:08.689
Josh Karton: acquiescence he expects from tariff threats and from tariff imposition, he may ramp up to these other kinds of measures. Now, do we have alternatives?
00:39:08.770 --> 00:39:28.840
Josh Karton: Yes, we do, but none of them are available immediately. In a way that's satisfying. Can we redirect our exports to other countries? Sure, but we are not set up for that. We don't have the pipeline. We don't have the port system, right, to increase our interprovincial trade significantly, or external trade to other countries.
00:39:29.040 --> 00:39:36.110
Josh Karton: Right? So what I would say we should be doing is looking for friends and partners, right? If there's tariffs on Canada today and China and Mexico,
00:39:36.260 --> 00:39:39.060
Josh Karton: they could easily be on the EU next month.
00:39:39.370 --> 00:39:51.940
Josh Karton: But the problem is that it's going to take time to establish those kinds of economic partnerships that are alternatives to the United States. None of them are exactly as good as the United States, because geographic proximity is so valuable.
00:39:52.599 --> 00:39:58.189
Josh Karton: But I think we need to start now. We need to start yesterday on building those kind of new networks.
00:40:01.230 --> 00:40:12.080
Cherie Metcalf: Great thanks, Josh. I mean, I think certainly the idea that it's time to diversify, I think, is one that is sort of emerging from the current crisis definitely.
00:40:12.633 --> 00:40:40.219
Cherie Metcalf: Okay, so this. Now, we're getting into our second round of questions. And I'm going to first turn to Julia, and then only because we have Julia and Jessica. Both are going to leave us right at noon. We can carry on a little bit longer with some of our other panelists. But I'm going to go with Julia, and then I'll turn to Jessica next after that, just so that we make sure we get your perspectives on these issues fully forward for our panelists and for our audience.
00:40:40.410 --> 00:40:41.920
Cherie Metcalf: Okay, so, Julia.
00:40:42.150 --> 00:40:57.750
Cherie Metcalf: this is going to sort of tie in from Josh's question. What is it that the Canadian government can actually do to respond to us tariffs? And can you tell us a little bit about what is the legal basis for Canada's own response in reaction to what we're seeing from the U.S.
00:40:58.420 --> 00:41:14.020
Julia Webster: Sure, absolutely so. Right now, Canada is taking a phased approach to respond. And this phased approach is only in respect of retaliatory tariffs. They're looking at tariff measures and non-tariff measures.
00:41:14.020 --> 00:41:27.240
Julia Webster: And so I'm going to focus first on the tariff measures, and then I'll talk a little bit about how the federal government is engaging with the premiers to also work on some non-tariff measures that are within scope of the provinces, and the measures that they can leverage.
00:41:27.240 --> 00:41:45.279
Julia Webster: There are 2 phases of tariff implementation. As of yesterday morning at 12:01, Canada implemented phase one. So there's a list of tariff items that are subject to a 25% surtax. The Department of Finance also listed provided a list of the phase 2 tariff items that could potentially be targeted.
00:41:45.280 --> 00:42:01.289
Julia Webster: They are currently open for a 21-day public consultation period. So we expect that phase 2 tariffs, assuming these U.S. measures are still in place, would come into force sometime on or after March 25. After that, public consultation period closes.
00:42:01.290 --> 00:42:16.650
Julia Webster: Now, Finance has suggested that in this phase 2 list that only some of these tariff items will actually be captured. So really, this is a good opportunity for companies to look at this phase 2 list of Canadian importers in particular, who could be hit with this 25% surtax
00:42:16.650 --> 00:42:30.440
Julia Webster: and to avail themselves of conversations with either industry associations, or through their own government relations means in order to speak to the individuals at Department of Finance as to why or why not, certain tariff items should be covered
00:42:30.440 --> 00:42:52.569
Julia Webster: as a retaliatory measure. Focusing on the legal basis for this, Canada is relying on provisions that exist under its Customs Tariff Act, which allows the government to suspend or withdraw rights or privileges that have been granted by Canada to the U.S. under an FTA. Well, this is a broad provision. So it's not just specific to the U.S. It's essentially any trading partner under an Fta.
00:42:52.740 --> 00:43:03.520
Julia Webster: Justin Trudeau also confirmed yesterday in a press conference that Canada is indeed requesting consultations both under the USMCA and at the WTO. This is the first
00:43:03.700 --> 00:43:17.369
Julia Webster: phase of this dispute, settlement processes throughout either of these bodies. This is largely a symbolic gesture, a dispute settlement successful result for Canada under either of these bodies is not going to provide
00:43:17.400 --> 00:43:35.849
Julia Webster: immediate economic relief, part of that being the reason that it takes many, many months, if not years, to go through the entire processes at the level of the WTO. It's possible, like we saw the U.S. did in the Chinese dispute settlement that China initiated in 2018-2019, China had a successful
00:43:35.850 --> 00:44:00.630
Julia Webster: panel finding, but then the U.S. appealed that, and it's essentially hanging in the balance because the WTO's appellate body is defunct at this time. So again, this is largely a symbolic gesture, but a positive result for Canada would, in fact, provide legal cover, albeit retroactively, for Canada, implementing retaliatory tariffs against the United States.
00:44:00.860 --> 00:44:24.050
Julia Webster: Now, again, the USMCA and the WTO are not going to provide economic relief to Canadian importers. Canada knows this, and, unlike the U.S., it is allowing historical mechanisms that exist under Canadian customs law to relieve the effect of duties in certain situations. So duty drawback remains available. It's not available to U.S. importers
00:44:24.050 --> 00:44:48.010
Julia Webster: in the United States because the Trump administration has said no exceptions apply, but Canada – it remains available, duties, relief program remains available. The Canadian goods abroad program remain available, and Canada has also implemented a remission order process. So this is again, an authority that exists under the Customs Tariff Act that allows the Minister of Finance to essentially provide
00:44:48.010 --> 00:45:10.859
Julia Webster: retroactive or future relief to importers from paying a surtax. Now this is a highly political and discretionary determination by the Department of Finance, and they've outlined a number of bullet points that importers need to fulfill in making a remission order, application. But the primary threshold test that Finance is asking importers to make submissions on is
00:45:10.860 --> 00:45:21.330
Julia Webster: showing that these goods cannot be obtained domestically or obtained from another trading partner that's not the United States. And that's really the threshold question in seeking a remission order.
00:45:21.330 --> 00:45:33.890
Julia Webster: Now, just commenting quickly on diversification, Josh makes very good points. We do need more export markets. Canada has been working on this. We have a new FTA with Ecuador. We entered into the CPTPP.
00:45:33.890 --> 00:46:00.740
Julia Webster: Canada has been opening specific Trade Commissioner offices in certain regions of the world to try and especially diversify export markets for Canadian agricultural products. But the difficulty that we have is that beyond geographic proximity, we also have to create a market for Canadian goods. Right? So there needs to be a sensitization of those goods to those particular countries, and the population of those countries have to need what Canada has to offer.
00:46:00.740 --> 00:46:05.409
Julia Webster: and I'll leave it at that for now, and let you pass on your next question to Jessica.
00:46:07.910 --> 00:46:09.430
Cherie Metcalf: Thanks so much, Julia.
00:46:11.265 --> 00:46:12.220
Cherie Metcalf: Jessica.
00:46:13.960 --> 00:46:37.709
Cherie Metcalf: we're just we're going to ask you – it's a really practical question, right – and it probably does build on some of the things that Julia was just talking about. What kinds of things are you hearing from firms today about tariffs and trades? What are you doing to sort of help businesses strategize as a way to respond to these sort of new tariffs that we're seeing.
00:46:39.280 --> 00:46:41.670
Jessica B. Horwitz: Yeah. So I think I'll mention
00:46:42.390 --> 00:46:59.690
Jessica B. Horwitz: what is probably the top 3 FAQs, that we've been getting. Certainly in the last 24 to 48 hours, but also in the last few months in the lead up to these announcements. I think the top frequently asked question is, review my contract.
00:47:00.040 --> 00:47:01.310
Jessica B. Horwitz: So it's
00:47:02.390 --> 00:47:21.842
Jessica B. Horwitz: what are the terms of trade under my existing contracts, whether that's a supply, a sale agreement where a Canadian company is committed to supplying something to a U.S. customer or a procurement agreement where a Canadian company is buying materials from a U.S. supplier.
00:47:22.810 --> 00:47:49.110
Jessica B. Horwitz: Historically, a lot of companies have not paid very close attention to the details of the shipping terms in their agreements and purchase orders, because, frankly, there have haven't been a lot of tariffs that have applied, and that has been viewed as something that well, that's the logistics department's job, like it's a detail. It's the customs broker will figure out, the freight forwarder will figure it out, or our shipping people figure it out.
00:47:49.110 --> 00:48:05.969
Jessica B. Horwitz: I, as a manager or C-suite. I don't have to be paying too close attention to who's acting as the importer of record, or where the point of delivery is, where does risk of loss transfer. Now, of course, a lot of companies are very sophisticated, and they understand these principles very well, but
00:48:05.970 --> 00:48:19.189
Jessica B. Horwitz: a lot don't. And so a lot of companies are looking retroactively at their existing contracts that they've already signed and looking at a trade term section that references an incoterm, for example, and first of all, they'll go, what's an incoterm?
00:48:19.747 --> 00:48:44.430
Jessica B. Horwitz: Or they'll go, what does this particular incoterm mean? I reference this incoterm in my contract, the 3-digit shorthand of a set of terms, standard terms and conditions of shipment published by the International Chamber of Commerce. That's an incoterm. They have a library of different kinds of standard terms sets that you can incorporate by reference. A lot of times companies will say FOB
00:48:44.460 --> 00:48:51.619
Jessica B. Horwitz: in their purchase order, and they but they don't actually know what that means, because they have not looked at a copy of the actual terms that
00:48:51.620 --> 00:49:16.430
Jessica B. Horwitz: are incorporated by reference that accompany that that little abbreviation and the purchase order. So I'm getting that question a lot like, “can I have a copy of the FOB incoterms? I've never actually seen them before. I'm not sure exactly what they mean,” or if it's other terms understanding that as well, or, if incoterms are not specified, often contracts are not specific enough about who bears, whether it's the seller or the buyer
00:49:16.430 --> 00:49:29.400
Jessica B. Horwitz: who bears the risk of extraordinary changes in tariff measures that could have a material financial impact on the shipment. So is it a force majeure? Does that trigger your force majeure clause?
00:49:29.400 --> 00:49:51.710
Jessica B. Horwitz: Probably not because well, I mean, it depends on how it's drafted, but often force majeure clauses exclude regulatory measures or tax measures that just have a financial impact. But where the performance of the contract is still possible, it's kind of like, well, it's your problem. It's more expensive. That's your problem, not my problem. If you're the one that agreed to act as the importer of record, and you know, make it
00:49:51.710 --> 00:50:16.069
Jessica B. Horwitz: available to me on a delivered basis in my country. And so I'm getting a lot of questions of understanding where things stand like, what are my obligations, what are my escape hatches? And then also what should I put in my new contracts to make sure that I'm protected? I heard another lawyer actually from the U.S. use the term a Trump majeure clause. So we're seeing clients add Trump majeure clauses
00:50:16.070 --> 00:50:30.080
Jessica B. Horwitz: to their new contracts that have some kind of a price adjustment, mechanism, or a risk sharing or apportionment term that says that the buyer and the seller will share the cost of any additional extraordinary tariffs.
00:50:30.080 --> 00:50:47.850
Jessica B. Horwitz: But that's not something that is standard boilerplate in a lot of older contracts. And so just like how we saw global pandemic added to the boilerplate and a lot of force majeure clauses after the pandemic, we're starting to see more specific tariff related terms added to contracts.
00:50:48.190 --> 00:51:10.069
Jessica B. Horwitz: I would say the second FAQ is classification and origin of my goods. So what is the HS code. And if anyone's looked at this, the surtax order that Julia was just referencing about the specific products that are from the U.S. that are subject to the surtax, it lists a bunch of 8-digit numbers.
00:51:10.070 --> 00:51:35.049
Jessica B. Horwitz: What do those numbers mean? A lot of companies don't have familiarity with the rules that go along with how you actually assign one of those numbers to your product which is a very technical. It is a technical, legal, and technical question, because it goes to the nature of the goods, and how they were manufactured, and what their composite materials are. And it's not something that you can just kind of do a keyword search and pick one
00:51:35.050 --> 00:51:58.760
Jessica B. Horwitz: out of the air. There's a sequence of rules that need to be applied to determine conclusively for legal purposes. What is the classification? And so companies are looking at their inventories and their portfolios of products and figuring out, okay, well, actually, have we done this classification properly, so that we know what kind of tariff applies, and then the sister to classification is origin
00:51:58.760 --> 00:52:13.850
Jessica B. Horwitz: because both the Canadian surtaxes and the U.S. tariffs apply, based on a country of origins. A product of Canada, product of the United States, what does that mean? There are very specific rules that determine what that means.
00:52:14.220 --> 00:52:40.879
Jessica B. Horwitz: But a lot of companies are not familiar with them, and the devil is really in the details when you're talking about rules of origin, because if you're looking at a rule that has a regional value content, for example, now, that's not, maybe not the best example, because most of the well. Sorry. I'll use a tariff shift example. So the rules of origin that apply for these tariffs and surtaxes tend to be rules related to marking
00:52:41.050 --> 00:52:52.659
Jessica B. Horwitz: which are based on what's called the tariff shift, which again goes back to the tariff. Correct tariff classification, so you have to have a certain number of digits changing in the tariff classification of all the input materials
00:52:52.660 --> 00:53:17.619
Jessica B. Horwitz: into the finished material to make that switch. And then, wherever that switch happens, that's the country of origin for marking purposes. But if you're looking at a bill of materials that lists all these materials, they've got all these different classifications. And they've got all these different origins. And you're doing the calculation of okay, this one meets the tariff. This one doesn't. This one doesn't. There's also exemptions for you can take up to
00:53:17.620 --> 00:53:22.000
Jessica B. Horwitz: 7% under the marking rules under the USMCA
00:53:22.180 --> 00:53:35.340
Jessica B. Horwitz: to exclude products that don't make the tariff shift. And so it gets into real, nitty, gritty details of like, what is that costed bill of material, say, and is this product, this one input material that either does or doesn't depending on which
00:53:35.470 --> 00:53:55.989
Jessica B. Horwitz: line side of the line you want to follow meet the tariff shift. Is it 9.98% of the total product cost? Or is it 10.01? Or is it if it's a 7% threshold you're looking at, is it 6.72, or is it 7.03 like it really gets that
00:53:56.110 --> 00:54:13.860
Jessica B. Horwitz: close to the line in a lot of cases. And so companies are putting a lot of work right now into actually doing that review and looking at their historic shipments, looking at their bills of materials and figuring out whether they have their premises right to start with.
00:54:14.290 --> 00:54:20.570
Jessica B. Horwitz: and then the 3rd one really quickly, which I won't go into in detail because Julia talked about it is remissions and relief.
00:54:20.830 --> 00:54:38.360
Jessica B. Horwitz: What can I do to try and get myself out of these tariffs? What are the programs available? What is the discretionary relief that I can ask the minister for? And so I won't go into the details about that. But there are programs that may be available to certain companies, and it's certainly worth exploring.
00:54:40.510 --> 00:55:08.659
Cherie Metcalf: Thanks so much, Jessica. I thought that was actually a really wonderful illustration of how some of the sort of general uncertainty that we've been talking about plays out in these really specific ways, and also just increases the complexity and cost of tradeeven if ultimately you might have a good where the tariff isn't so high, right? So just the disruption in the way that firms are able to actually carry out their operations, I think, was really well illustrated with that comment.
00:55:09.569 --> 00:55:37.529
Cherie Metcalf: Like I said, both Julia and Jessica may have to drop off here in a few minutes, so I'm going to take just a second and say thank you both so much for participating, and we'll be delighted to keep you as long as we can keep you. But in case you have to go and help all your clients with their pressing issues, that I'm sure they're clamoring for your advice on like, I say, we want to thank you so much for being part of the panel.
00:55:37.990 --> 00:55:53.790
Cherie Metcalf: Okay. So now I'm going to turn to a second round of questions. And this is for Dena. You know, we're hearing a little bit here about the Canadian responses and sort of the legal basis for Canadian actions, and so on. What we want to turn to you and ask is in Washington, what are you hearing
00:55:53.790 --> 00:56:21.550
Cherie Metcalf: in terms of any kind of backlash, or is there signs of further movement on the U.S. trade policies? Could there even be a little bit on possibility of counter tariffs in response to retaliatory tariffs? Can you give us any insight into where you think sort of the future U.S. position might be going here, not just Trump's ideas, but more broadly. Congress. The public.
00:56:23.040 --> 00:56:25.959
Dena Givari: Sure. Yeah, I can. I can do my best to answer that. I mean.
00:56:26.160 --> 00:56:37.249
Dena Givari: I think as soon as Prime Minister Trudeau came out and put into effect the retaliatory tariffs, President Trump went to X (Twitter), and made the point that
00:56:37.250 --> 00:57:02.230
Dena Givari: if you retaliate against us, we're going to double the tariffs. But since then, there's also been a bit of mixed messaging in the news about potentially backing down from these tariffs. And I think today there was a report out by someone suggesting that in the midst of these upcoming USMCA CUSMA renegotiations
00:57:02.230 --> 00:57:21.719
Dena Givari: set to happen this year, maybe these tariffs are a leveraging tool, and so there might be a backing down. But all this is complete speculation. President Trump certainly hasn't sort of came and taken a position either way. There is rumors that maybe there's going to be announcement today, but I haven't heard anything yet
00:57:21.720 --> 00:57:51.069
Dena Givari: in terms of sort of more on the ground stakeholders, businesses, and voters. I think generally my sense is that there are a small handful of interest groups who are sort of on board with these types of policies, and these will be no surprise. It'll be the automotive labor union in the United States, the domestic steel and aluminum industries, and I think, textiles. They're all supportive of sort of Trump's imposition of these tariffs.
00:57:51.600 --> 00:58:09.129
Dena Givari: And I know, the United Auto Workers Union, they came out with a statement on Monday sort of praising the President for the tariffs, and also saying that any increase in price, that blame should lay at the feet of the companies because they're passing the prices off to the consumers.
00:58:09.320 --> 00:58:33.689
Dena Givari: But at the same time, I think most people and most businesses are worried. The U.S. Chamber of Commerce has been urging the President to back down from the tariffs. And it sort of commended the President for taking certain actions wanting to elevate the economy, but also ended with, you know tariffs are only going to raise prices and increase the economic pain.
00:58:33.750 --> 00:58:55.450
Dena Givari: And I think another industry that's sort of really fearing what's happening is the generic pharmaceutical companies. You know, they're operating on a global supply chain and relying on inputs. And if their inputs are going to get very expensive, well, then, they're going to have a hard time competing with sort of the brand name drug companies.
00:58:55.690 --> 00:59:09.740
Dena Givari: And again, the farmers, American farmers – I didn't know this; I learned this recently – 85% of their potash comes from Canada. And so they're quite worried, and I said this earlier as well, Trump sort of
00:59:10.050 --> 00:59:38.140
Dena Givari: spoke out to them in his address yesterday, sort of saying, hang in there, things will get better. But they've came out and sort of urged the President to find a way to resolve the disputes with Canada, Mexico, and China. It's a bit interesting. I'm not sure what's happening with Russia, because I understand Russia is also a big supplier of potash, but obviously they haven't been since the war with Ukraine. So who knows what's going to happen on that front? But
00:59:39.010 --> 01:00:05.460
Dena Givari: I think most people are afraid, and I think most economists are sort of, they all agree that tariffs are bad news for business and people, and it's sort of a dance, I think, with this administration to try to first understand what the end goal is, and second, to find a way to come up with a resolution that
01:00:06.190 --> 01:00:09.110
Dena Givari: is rational for everybody on both sides.
01:00:10.430 --> 01:00:12.669
Dena Givari: All that to say is speculation.
01:00:14.060 --> 01:00:19.275
Cherie Metcalf: Rational on both sides would be great. We would all like that.
01:00:19.710 --> 01:00:20.510
Dena Givari: Would hope.
01:00:20.510 --> 01:00:43.119
Cherie Metcalf: Elusive rationality where wither rationality. Okay, let me let me turn to Anthony, because maybe this sort of transitions a little bit. You know some of some of Dena's answer, I think, sort of points to where are we going to go, what are possible sort of shifts that might even influence the way that the U.S. is actually going to respond? And what might happen with constituencies there?
01:00:45.370 --> 01:01:03.070
Cherie Metcalf: What can we do on the Canadian side in terms of sort of proactively ourselves acting to diversify economically in response to the uncertainty and the sort of shifts that we're potentially seeing here with these trade measures from Trump.
01:01:04.430 --> 01:01:07.159
Anthony Goerzen: I think there are a number of things that can be done,
01:01:07.510 --> 01:01:15.196
Anthony Goerzen: none of which are silver bullets or quick fixes. I think these are, we're talking about
01:01:16.170 --> 01:01:23.180
Anthony Goerzen: significant shifts in the way businesses run or the way they operate.
01:01:24.360 --> 01:01:29.050
Anthony Goerzen: My sense is the first, I've got I'd say 3 things that I would highlight
01:01:29.460 --> 01:01:46.799
Anthony Goerzen: and my sense is that the first place to look is at yourself. I mean, we look at an individual level when we're faced with issues, we can point all over the place. But really, the first place you need to look is in the mirror. What can I do? How can I change? What do I need to achieve?
01:01:47.160 --> 01:02:12.510
Anthony Goerzen: And so what I would recommend and challenging, but I think necessary is double down on upgrading your competitive advantage. Of course, what companies are already doing, and they're very good at is trying to squeeze prices out. But I would say, focus more on innovation. Think about how is it that you can change your product and service so as to make it, let's say tariff proof
01:02:12.690 --> 01:02:26.870
Anthony Goerzen: or sanction proof. And I think that, like one example might be, if you're let's say, in the steel business, you can make rebar which just gets covered by concrete, or you can make stainless steel, which gets turned into cutlery.
01:02:27.290 --> 01:02:37.280
Anthony Goerzen: Or, alternatively, but at more individual level, I mean you go to the grocery store and MacIntosh apples are $2.49, a pound of Honeycrisp are $4.
01:02:37.440 --> 01:02:52.440
Anthony Goerzen: We're willing to pay for better. So I would say that a small open economy like Canada, our businesses need to be better than everybody else in terms of the quality that they provide to the world
01:02:52.660 --> 01:02:58.850
Anthony Goerzen: and that kind of combines with my second point,
01:02:59.070 --> 01:03:14.620
Anthony Goerzen: which – oh, actually let me let me just return to the first point for a moment, making yourself different or better. One of the things that is escalating on the world stage has to do with regulations around social and environmental performance.
01:03:14.840 --> 01:03:26.420
Anthony Goerzen: We're seeing many jurisdictions. Europe, Canada – Canada, has the Forced Labor Act – U.S., U.K., France, Germany,
01:03:26.630 --> 01:03:27.939
Anthony Goerzen: the EU.
01:03:28.100 --> 01:03:39.179
Anthony Goerzen: All in the world, it's a major trend towards compelling firms to certify certain elements of their social and environmental performance.
01:03:39.290 --> 01:03:47.609
Anthony Goerzen: So if a Canadian firm can go to its American supplier and say, my product will add zero carbon to your supply chain,
01:03:47.610 --> 01:04:09.569
Anthony Goerzen: suddenly, you've got something that is outside product, outside price, and it is really attractive to them, and increasingly so. So Canadian businesses should be at the forefront of figuring out how do we address some of these social environmental issues that regulators are increasingly paying attention to, and these regulations have teeth.
01:04:10.370 --> 01:04:21.739
Anthony Goerzen: The second thing, I would say, is, begin to look at making your supply chain more resilient, and specifically think about strategic partnerships, and I'll make one example to illustrate.
01:04:22.140 --> 01:04:25.579
Anthony Goerzen: ASML is at a
01:04:26.090 --> 01:04:38.259
Anthony Goerzen: choke point for the semiconductor business. You cannot make a semiconductor without ASML providing you with their product.
01:04:38.620 --> 01:04:48.880
Anthony Goerzen: And so especially the highest quality ones which everybody is interested in, they're the ones that are driving the AI revolution.
01:04:49.450 --> 01:05:01.080
Anthony Goerzen: The president of ASML recently said that their supplier, which is Zeiss in Germany, the lens maker, he said, we are 2 companies with one goal.
01:05:01.270 --> 01:05:08.050
Anthony Goerzen: Now, that's a strategic partnership. ASML will stand up and fight for Zeiss.
01:05:08.580 --> 01:05:21.900
Anthony Goerzen: Canadian companies need to create partnerships with their suppliers and with their buyers, so that they've got strong partnerships based on irreplaceable quality.
01:05:22.430 --> 01:05:29.499
Anthony Goerzen: The last thing I would highlight is this notion of diversifying markets. But as some of the other speakers have already mentioned,
01:05:29.730 --> 01:05:49.350
Anthony Goerzen: that's really tough. We're not going to be selling things to Japan suddenly, or Guatemala with a population of 6 million people. It's like Vancouver. So what I would say is, and it's really encouraging to see that our politicians are starting to dress interprovincial trade barriers.
01:05:49.580 --> 01:06:09.040
Anthony Goerzen: So I think that our businesses need to start paying attention to trade advocacy, to learn how to address those issues, to finally get rid of some of these interprovincial trade barriers, making Canada itself a better market for Canadian business.
01:06:10.230 --> 01:06:13.939
Anthony Goerzen: Those are the 3 things that for me I would highlight.
01:06:16.950 --> 01:06:22.250
Cherie Metcalf: That's great. Thank you. Yeah. I mean, it's been interesting to see the sort of
01:06:22.950 --> 01:06:32.950
Cherie Metcalf: prominence that interprovincial trade barriers have sort of suddenly had in response to the kind of external trade environment shifting so dramatically. So that's a,
01:06:33.200 --> 01:06:46.490
Anthony Goerzen: you know it occurs to me that that might be the silver lining in all this, like we're experiencing some real hardship and anxiety. But if it brings down interprovincial trade barriers, who knows, maybe it's worth it.
01:06:47.980 --> 01:07:00.230
Cherie Metcalf: I think, yeah, I mean, I've definitely seen some figures that suggest that it could have actually like quite a material impact on growth. Right? So it will be really interesting to see how much that initiative gets pushed forward.
01:07:01.057 --> 01:07:18.599
Cherie Metcalf: Great! Now we're running over time here. We still have a couple of questions left that I was going to direct to Josh and to Nikolas. So we can do that, and maybe we'll just try to keep our answers brief, so we can see about a few questions and answers before everyone has to return to daily life.
01:07:19.147 --> 01:07:34.650
Cherie Metcalf: Okay. So, Josh, just really quickly, what does a tariff war mean for investment in Canada? And do you think that we should in any way target U.S. investments in Canada in response to this dispute?
01:07:35.650 --> 01:07:41.779
Josh Karton: I mean the short answer is that the tariff war is already affecting investment in Canada
01:07:41.970 --> 01:07:49.740
Josh Karton: as people have discussed the uncertainty of the economic environment itself is a cost, is a disincentive to investment.
01:07:50.040 --> 01:07:59.879
Josh Karton: But also, investments in Canadian companies or in Canadian products will be less valuable without a robust U.S. market for those goods or those services.
01:08:00.010 --> 01:08:19.010
Josh Karton: The U.S. has the largest pool of investment capital in the world. It has the sort of the most robust capital markets, the most robust venture, capital community, and all of those are going to be taking their cues from the political situation and saying, you know, maybe now is not the time to invest in Canada.
01:08:19.120 --> 01:08:39.379
Josh Karton: The one kind of, I think, countervailing factor there is that this is likely to drive the value of the Canadian dollar even lower, at least relative to the U.S. dollar, and that would make Canada a more attractive place if you earn your money somewhere else, especially in U.S. dollars, and then are buying, making an investment in Canadian dollars. Right? That makes that investment relatively cheaper for the same value.
01:08:39.790 --> 01:08:45.420
Josh Karton: So in response, what can we do? Can the Canadian government target investments?
01:08:45.580 --> 01:08:51.600
Josh Karton: Yes, and I think it would actually be more effective and less damaging to the Canadian economy than counter tariffs.
01:08:51.720 --> 01:09:03.860
Josh Karton: I think there's a sort of a habit, and partly this is built into the World Trade Organization infrastructure of symmetrical retaliation for trade actions. You tariff me, I tariff you.
01:09:04.029 --> 01:09:19.000
Josh Karton: But, as we know, tariffs are a tax on the domestic consumer, they aren't, no matter what Donald Trump says, paid by the country of origin of the goods being tariffed. Of course it has economic effects there, but the exporter isn't paying the tariff. The importer is,
01:09:19.160 --> 01:09:28.000
Josh Karton: so our reciprocal tariffs on U.S. products, while I think they're a good idea we have to recognize they are also increasing prices for Canadian consumers.
01:09:28.640 --> 01:09:52.639
Josh Karton: And so in thinking about what kind of strategy would be effective at kind of imposing asymmetrical effects on the United States, we're in an asymmetrical struggle. We need asymmetrical tactics. We need to remember that trade isn't just about physical products, about goods and investment, isn't just about the flow of money. In particular, intellectual property is an investment
01:09:52.779 --> 01:10:06.340
Josh Karton: and the U.S. has been very aggressive in its negotiation of trade deals to secure strong protection, because U.S. companies own the most valuable intellectual property in the world as pharmaceutical companies, the Hollywood studios, and so on.
01:10:06.820 --> 01:10:30.359
Josh Karton: Well, patents, copyrights, trademarks, those are creatures of national law, and there are provisions in our national law that would allow us, or allow the government to limit or abrogate those trademarks. Now, that would be a really aggressive move, right, if we were to take away American pharmaceutical companies, patents on their extremely profitable patented drugs. That would be more than just a shot across the bow. That would be a shot at the waterline.
01:10:30.778 --> 01:10:34.960
Josh Karton: And that's the sort of thing I think we have to start contemplating in return.
01:10:35.210 --> 01:10:43.409
Josh Karton: We could cancel trademarks or other intellectual property of the Trump organization, right, hotels in Canada and people close to him.
01:10:43.710 --> 01:11:03.390
Josh Karton: We could freeze American companies out of government procurement contracts in Canada. A number of Canadian premiers, I think, especially Doug Ford, in Ontario, and David Eby in BC, have already proposed that, right, cancel existing contracts, or prevent American companies from participating in future government procurement opportunities.
01:11:03.600 --> 01:11:08.289
Josh Karton: We could use the discretionary powers conferred by the Investment Canada Act
01:11:08.350 --> 01:11:26.860
Josh Karton: to provide more searching investigation of investments by American companies and perhaps ultimately reject some of those companies. Right? Make stronger use of our own kind of national security exceptions to the ordinary ways of doing things that exist in Canadian law, and that exist in our international agreements. Now,
01:11:26.860 --> 01:11:45.269
Josh Karton: would some of those actions be contrary to our obligations under CUSMA, the USMCA, or under the WTO, or other trade agreements? Possibly I think there are at least colorable arguments that national security exceptions, for example, could be invoked, given Trump's explicit threats to Canadian sovereignty.
01:11:45.712 --> 01:11:52.009
Josh Karton: But I think at this point we don't have a great deal to lose in terms of at least threatening those kinds of actions.
01:11:52.703 --> 01:11:58.459
Josh Karton: But once again, it's also about diversifying away from dependence on the United States.
01:11:58.600 --> 01:12:04.690
Josh Karton: I think it's always advisable to deal with Trump the way you would deal with a schoolyard bully.
01:12:05.050 --> 01:12:12.100
Josh Karton: Making new agreements with Trump is probably a losing game. There was a reference in the questions to a so-called Mar-a-Lago accord.
01:12:12.280 --> 01:12:21.739
Josh Karton: You know the USMCA was Trump's creation, right? He was the one who insisted on it, right, and is now saying, “Oh, it's a bad deal for the United States,” and he wants to rip it up and start over.
01:12:21.930 --> 01:12:27.930
Josh Karton: So when you're dealing with a schoolyard bully, there's 2 things you can do, right. One is you take up boxing, or karate, or the like,
01:12:28.120 --> 01:12:37.700
Josh Karton: and the other is you find a group of friends, right? And we need to start doing both being sharper in our actions against the United States and in building networks that don't include the United States.
01:12:42.500 --> 01:12:52.850
Cherie Metcalf: That's great, Josh. I think that the metaphor of learning new sports that are aggressive, and also of finding new friends, I think it's a nice way of
01:12:53.810 --> 01:13:05.012
Cherie Metcalf: giving us a visual for these different strategies, but I think I've really sort of threaded through quite a bit of our discussion. For our last sort of formal question, I'm going to turn it over to Nicolas here.
01:13:05.660 --> 01:13:12.709
Cherie Metcalf: In some sense. Again, you know another theme, really, that I think has threaded through all of our conversation is
01:13:13.010 --> 01:13:28.879
Cherie Metcalf: what this current tariff war really means for the future of Canadian trade policy and trade law. And I just, I think, actually sort of trade policy and trade law writ more broadly. Right? So
01:13:29.140 --> 01:13:34.810
Cherie Metcalf: is this sort of a watershed moment, where we turn away from the sort of rules-based trade order that we
01:13:35.050 --> 01:13:39.460
Cherie Metcalf: have seen form one of the pillars of
01:13:39.580 --> 01:13:47.370
Cherie Metcalf: the international economy and just sort of international relations over the last 30, 40 years.
01:13:47.610 --> 01:13:49.390
Cherie Metcalf: What do you think about this?
01:13:49.970 --> 01:14:05.219
Nicolas Lamp: Great. I think we have to think on 3 tracks. Here. One is, we're definitely not turning away from the rules-based order. When it comes to countries other than the United States, and to some extent China – because even though we're so focused on the United States, we think that represents what's happening in the world –
01:14:05.810 --> 01:14:26.590
Nicolas Lamp: we still have the EU. We still have China. We have, the vast majority of countries are still adhering to their obligations under the World Trade Organization towards Canada. And so that is something that's incredibly important to U.S. and we should definitely preserve it. It's really the United States that's the odd one out in terms of its behavior and its attitude toward that rules-based order.
01:14:26.630 --> 01:14:47.990
Nicolas Lamp: So we definitely shouldn't turn away generally from the rules-based order. But we have to realize that it doesn't do anything for us currently, with respect to the United States. And so Canadian trade policy with the United States has to kind of, I think, also run on 2 tracks. The one is the kind of retaliation track. And so we have to see, okay, to what extent is there a realistic possibility of
01:14:48.100 --> 01:15:13.710
Nicolas Lamp: getting rid of these tariffs? And I said earlier, we don't really have an argument because Trump wants to reshore, he really wants to reshore all these jobs. So the only thing we can do is like inflict maximum pain on the U.S. economy. And so I think this, the first track is there for the retaliation track, and to see whether we can actually cause enough pain with our retaliatory tariffs and other measures potentially retaliating against IP
01:15:14.020 --> 01:15:34.859
Nicolas Lamp: restricting investments. There have been proposals to allow Canadian developers to break digital locks, right, to get at some of the income that Silicon Valley gets from Canada, so we could do that and try to maximize the pain. The risk is, of course, that it will just lead to further escalation and a further decoupling.
01:15:35.160 --> 01:15:43.760
Nicolas Lamp: But then the second track is, we also have to think about the long, what it means in the long term for the Canadian economy, and it simply means that a model where we
01:15:43.810 --> 01:16:13.409
Nicolas Lamp: rely on integration with the United States is broken. And so, in particular, in sectors that are critical to our economy, we can no longer rely on the United States, and that has to be the basis for our trade policy. This is not a totally new realization. During the COVID-19 pandemic we saw that we could not rely on the United States for vaccine imports, because the U.S. was prioritizing its own population. And so the Canadian response to that was to invest heavily
01:16:13.410 --> 01:16:24.999
Nicolas Lamp: in domestic vaccine manufacturing capacity. And so this model, we unfortunately will have to expand to other critical sectors. I saw a report recently on how dependent
01:16:25.100 --> 01:16:49.100
Nicolas Lamp: the housing sector is on the United States, like housing, like building materials, are going back and forth, right? And so we have to look – given how essential housing is to the future health of the Canadian economy – we have to look at how we can as quickly as possible become more self-sufficient when it comes to building materials, so that we don't rely on the United States and preserve the ability to retain the territory tariffs if necessary, because there was also a question of whether
01:16:49.330 --> 01:17:16.470
Nicolas Lamp: these tariffs could be used in future bargaining, or we don't want that, we don't want the Trump Administration to be able to use these tariffs in future bargaining. That's why we have the retaliatory tariffs so that we can as kind of in order to generate bargaining power for ourselves. Right? We have to be able to preserve that space, to retaliate against future action by becoming more self-reliant or relying more on other allies. Right? And so
01:17:16.790 --> 01:17:26.269
Nicolas Lamp: these things we have to keep intended. And there's a certain tension here at the moment we may be able to retaliate even in products which really hurt Canadian consumers.
01:17:27.030 --> 01:17:52.619
Nicolas Lamp: Going forward, we may realize that there's some products which we have to get from the United States, where we just can't make up for it. And so we will have to ease retaliation on those products. But then focus on becoming more resilient and self-sufficient in the areas where we can become more reliant on ourselves. And so keeping these 2 scenarios in mind, first, the maximum pain on the U.S. and try to not get rid of the tariffs.
01:17:52.620 --> 01:17:59.300
Nicolas Lamp: Second, the more long-term adjustment of the Canadian company is really difficult. There are really difficult trade-offs here,
01:17:59.390 --> 01:18:05.699
Nicolas Lamp: but it's what we're faced with. As Trudeau said, “We didn't choose this. We didn't want this, but that's what we have to deal with.”
01:18:08.620 --> 01:18:09.610
Cherie Metcalf: Wonderful.
01:18:09.860 --> 01:18:27.769
Cherie Metcalf: Okay, so we are at 12:19 here. So we did not do a good job of keeping ourselves really on track with our time which maybe is not surprising, because it's an incredibly complex topic, and we really ranged through a number of
01:18:27.870 --> 01:18:57.133
Cherie Metcalf: different aspects of it. So I think maybe what I will do is I'm going to just thank all the panelists and I don't see any questions and answers in our Q and A box. I think Josh and maybe some others have been typing responses for our audience. If anybody has a question that you'd like to pop in. I'm sure you know the people who can stay are happy to stay and answer them. But, like I said, I know that for many of you,
01:18:57.660 --> 01:19:13.569
Cherie Metcalf: it's a very busy time. So I just really want to extend, thanks to the panelists in particular, for taking the time to share their expertise, and to all the members of the audience for joining us for this session on this really
01:19:14.500 --> 01:19:25.070
Cherie Metcalf: such an important policy topic, and so many different legal and business implications. So thank you to everyone. And yes, for those of us leaving,
01:19:25.810 --> 01:19:27.170
Cherie Metcalf: thanks for joining us.
01:19:30.710 --> 01:19:31.720
Dena Givari: Thank you.
Chat Question and Answers
Will CUSMA still work for Canada-Mexico trade, or will we need to negotiate a separate free trade deal with Mexico?
Jessica B. Horwitz: Yes it will still apply, and furthermore, Canada and Mexico also are free trade partners under the CPTPP agreement, so they will still have free trade if USMCA/CUSMA goes away.
Josh Karton: I think it's less that you could promote "through" CPTPP and more that you can reassure clients in Mexico that, even if the USMCA becomes worthless, exports and imports with Canada will still be protected both from tariffs and with investment protections through the CPTPP.
As Dena explained, Trump introduced tariffs through IEPA with reference to fentanyl. How does this purview arguably extend to imposing reciprocal tariffs? Is it simply using the same provision that was mentioned?
Dena Givari: I suspect it would be under IEEPA because we expect the reciprocal tariffs to go into effect on April 2. The other statutory authorities would have procedural hurdles that would prevent these tariffs coming into effect so soon. It will be interesting to see what the threat to national security will be described as.
And why don’t we talk about “goods AND services” when referring to trade deficits or surpluses? Of course we know why trumps doesn’t, but why aren’t we? There’s no deficit.
Josh Karton: Agreed! People tend to think of trade as being just physical products; this is a blind spot shared by many political leaders.
Is a military pact with the EU a realistic option?
Josh Karton: We already have a military pact that includes many EU states. That's what NATO is! If the U.S. pulls out of NATO, which is an increasingly realistic possibility, it is likely that the military alliance will continue in some form with Europe as its centre of gravity. But I can't predict what Canada's role in such a pact would be.
What might happen to our ability to truck goods through the States in bond? Our Mexican free trade deal depends a great deal on this.
Josh Karton: The short answer is that no one knows yet, because Trump has been running ahead of his own government and no guidance has been given on details like this.
How can large institutional owners/customers ensure that vendors are properly applying the rules?
Josh Karton: There has been a huge growth in supply chain management processes and techniques, mostly developed to monitor ESG concerns, that could also be employed in the ways you are asking about. Partly it's due diligence conducted on one's own, but there are also vendors who can effectively help with this kind of monitory of contractual counterparties.
Do you give any credence to the so-called “Mar-a-Lago Accord” advanced by economists in Trump’s orbit, wherein the tariffs are a bargaining chip aimed to strong-arm allies into an agreement to deliberately devalue the US dollar?
Short answer--no, I don't give it any credence.
Is it advisable for Canada to attempt to leverage its economic relationship with China in order to influence tariff resolutions with USA?
Josh Karton: China is likely to be the biggest beneficiary of Trump's moves on trade. Not only is it advisable for Canada to expand its economic partnerships with China, but it is likely unavoidable. However, we shouldn't exchange economic dependence on the US for dependence on China. As people have been saying, as with your own family's investments, diversification is the only safe play over the long term.
Are there any realistic opportunities for cross-sector retaliation against US tariffs, i.e. retaliatory measures not necessarily on trade in goods but on US services, IP, etc.?
Nicolas Lamp: Yes, there are some great ideas how to do that: https://doctorow.medium.com/canada-shouldnt-retaliate-with-us-tariffs-a0e32042fec8
Is there a legitimate argument for Canada joining the EU?
Josh Karton: There is a legitimate argument, but it 's not clear how much it would gain us, since we already have NATO as a military alliance with many EU states and have CETA as a tree trade agreement with the EU. I don't think it would make much sense for Canada to sign onto the EU entirely, for example with respect to its rules on free movement of people and workers within the EU.