Canada To Lose 90,000 Jobs From Trade War: Brace For 'Economic Pain' | Trevor Tombe

Kristy Freeland (0:00)

This trade war, it's going to hurt Canada. Canadians know that. The government has been very clear about it.

But Canadians are prepared to take that pain because our sovereignty is worth it. And it's not just Mark Carney who is saying that. Stephen Harper, the former Conservative Prime Minister of Canada, said very clearly that Canada, and this was last year as the threats first mounted, he said Canada should be prepared to endure any amount of economic harm to defend our sovereignty. 75% of Canadians agree with that.

David Lin (0:32)

That was Krista Freeland, former Deputy Prime Minister of Canada on CNBC, explaining her stance on the US-Canada trade war. Late August, the US imposed a 50% tariff on $20 billion worth of Canadian imports after trade negotiations fell apart. Canada quickly retaliated dollar for dollar a few days later with 50% tariffs of their own.

I made a detailed explainer video on what happened exactly, why the negotiations failed, and what both sides claimed. I'll put the link down below in the description so you can check it out for more detail on that part of the story. Now, Freeland brought up two key points that all Canadians should note. One, she admits that Canada's retaliation will cause economic pain. Those are her words, and she's not even sugarcoating it. But how much economic pain is expected, and should we as Canadians prepare for it in the name of defending our so-called sovereignty, as she claims? Those are the two fundamental questions we'll be discussing with our next guest, Trevor Tombe, who has quantified exactly how much economic pain is ahead for Canada. His research on this exact topic was featured all over the Canadian media. He's a professor of economics at the University of Calgary, and he's calculated exactly how many jobs Canadians will likely lose as a result of this trade war, in which sectors and provinces will be most impacted.

This video was sponsored by Goldgroup Mining, but more on that later. Professor Tombe, welcome to the show. Good to see you.

Trevor Tombe (1:59)

Great to be here. Thanks for having me on.

David Lin (2:01)

Before we get to your research, which has been trending all over Canadian news, by the way, I'd like to play for you this short clip of US Secretary of the Treasury, Scott Bessent, talking about his views on the trade war with Canada. Just take a listen and we'll respond together. This was earlier in the week with CNBC.

Scott Bessent (2:19)

Fortunate that Prime Minister Carney has turned this, I think this is very unfortunate that Prime Minister Carney has turned this into a political shouting match. I mean, we're not at war with Canada. How are we going to be at war with Canada? What, are they going to take their two submarines from the Edmonton Mall and sic them on us? That, you know, he came to power on a anti-American, anti-Trump agenda. He was 20 points behind in the polls. And then he started this. And it's unfortunate that he's not doing what's best for the Canadian people. He's doing best, what is best for the Liberal Party, what's best for Mark Carney. And in the long run, the Canadian people are going to see through that. And, you know, I will say that they were offered the best trade deal of any country on the globe. And he chose to walk away from it at the last minute.

David Lin (3:08)

Okay, let's talk about that.

To your understanding, what fell apart? Why did negotiations fall apart and both sides apparently walked away? The Canadians have blamed the Americans, the Americans have blamed the Canadians for all sorts of things.

Trevor Tombe (3:21)

Yeah, I think there's a lot of details that we don't know, so it's hard to be definitive, but based on the reporting that has occurred, and there's been a lot of good reporting, providing some of the insight around what might have been at issues, I think there's a couple of things that was a concern for Canada's federal government. And first, it was accepting a degree of permanence of, I believe, about 15% on tariffs of a wide variety of autos that would have been manufactured in Canada. And the view might have been that that 15% rate would have meant that a lot of manufacturing activity might not have been competitive in Canada any longer. And so accepting it as a new permanent feature of the trading relationship might not have been something that they were prepared to do.

Another were provisions around Canada committing not to enact trade agreements with other countries around the world without first having approval or consultations or something with the United States, which is something that is not usually a feature of trade agreements and would constrain the government's ability to reach deals with other countries. And there are a wide variety. They're currently ongoing. I think some of the most significant involve South America, Brazil and Argentina in particular through Mercosur. And so those are two things that I think loomed large. Issues like French labeling we heard a lot of in the news. I don't think that that was something where the US itself would have even pushed very hard on. So I think it was tariffs in the auto sector and restrictions on Canada's ability to pursue and sign trade agreements with others.