Hello Roy here. I just wanted to let you know that you can listen to the Roy Green Show ad-free on Amazon Music included with Prime. So one of the things we spoke with Mr. O'Leary about was Mr.
Trump's threat to Canada and to Mexico with 25% tariffs across the board on Canadian products and Mexican products entering the United States. If our two countries do not satisfactorily secure our borders with the US and that gets us of course to thinking what would the individual and total impact be for this country. We think about this country before we think about Mexico and there's more that we want to talk about but we'll start with this and I want to tell you I'm just reading in the Globe when male Prime Minister Justin Trudeau has taken steps to try to stop Donald Trump's promise 25% tariffs on all Canadian goods convening a meeting Wednesday of course as we know with the provincial premiers, fighting to work through the US President-elect's demands and launching a campaign to lobby members of Congress. Of course Mr.
Trudeau met with Mr. Trump last night at Merilog with three-hour dinner. It goes on to say the Mexican President, Claudia Shinebaum Pardo, by contrast to taking a defiant approach she said she'll retaliate against any tariff and demand that the US do more to crack down on the flow of illegal guns into Mexico and its own domestic market for illicit drugs. So it looks as though I mean just gazing in from the outside and I'm glad I wasn't there honestly.
I think probably we have a better situation with the United States than Mexico but our border is a major concern to the Americans and I've talked to quite a few Americans close to or at the border over the last couple of weeks and they do express a deep concern. None of them wanted to come on the air but they were willing to talk to me off the air and I talked to people in Vermont and I talked to people in New York State particularly those two states who are very familiar with the Canada-US border in both of those states and yeah they're quite happy to talk to me off the air, quite happy to express their concern but nobody wanted to come on the air and deal with it or talk about it. Professor Eric Cam is whether it's our great friend macroeconomics, professor at Toronto Metropolitan University. Professor Cam how are you doing today?
I'm doing well Roy but I have to tell you I got back yesterday from a week in Florida and like you I really enjoy talking to Americans and getting their perspective of our country and I can tell you right now it really is just a simple case of size matters and whether you're talking about Canadians that are down there or you know Americans who live their lives they're really not terribly concerned about Canada and in fact the part that Mr. O'Leary has correct and I think this is the part that bothers me the most over and above the academic economic financial concerns is that sometimes we come up as a little bit of a joke to people and I do blame the Prime Minister for that and the way he approaches things and some of the Americans that I spoke to when I was talking about border control they were saying that they really value their border it's a way of keeping out undesirables and far too many people probably shot off their mouth but still when they spoke to me they said we're not you we're not Canada we don't take in everybody and feed and clothe and educate them just because they wander into our country we have some rules and some regulations as to who we let in and I think that's what bothered me about this whole border patrol argument Roy just over and above the academics of it it's just this perception that we're a really really small country that is a really really small speed bump on America's growth across Baredy and as a Canadian you know that's hard to swallow right? You know we have situations that you know where individuals have crossed Trump Canada into the United States or attempted to and their objective was to commit acts of terror and the Americans are very concerned about they have some really big numbers that I wasn't aware of I really did not know that the numbers were as big as the border patrol will provide you as being but look let's talk about let's just talk about what could happen because you know Mr. O'Leary says he's not expecting Mr.
Trump to move forward with his tariffs but GOP and Democratic members of Congress are divided I was reading a story the other day on whether Trump would impose 25% tariffs on Canada and Mexico Republicans say it's a negotiating tactic as Trump tries for a better USMC that's the son of NAFTA trades pact while Democrats say Trump is very serious about engaging in tariffs on Canada and Mexico what would a 25% tariff what damage would a 25% tariff do to Canada and Canadians and where and on what would such a tariff hit mostly directly? Well so what Trump is really talking about is putting that type of a massive tax on goods that the United States imports from Canada so it's an old argument it's called an infant industry argument right which is if you want to protect your industries and let them grow don't let other countries in and so as we know Trump previously imposed these tariffs on things like Canadian steel and aluminum and he talked about things like national security concerns like you're talking about so return to such policies could really and indelibly and forever harm Canadian exporters and absolutely reduce our competitiveness in any type of US market right and any additional tariff so restricted trade measures really could lead to retaliatory actions but the United States isn't terribly concerned about our retaliation because they have a trillion dollar country hundreds of trillions of dollars and we have billions of dollars of an economy they are a large open economy we're a small open economy I think it's going to go back to things like the big the big thing steel aluminum cars energy natural gas things like that oil of course and of course those are goods but we haven't even talked about the dollar I mean if this thing goes through right we know that Trump's policies are going to lead to some market uncertainty and volatility and that's going to do nothing more in this economy than we can the Canadian dollar against the US dollar and now just two quick things number one our dollar is already at about a dollar 41 I spoke to many Canadians in Florida who one of the things they love to do is run to malls and buy goods because they're cheaper in the states that is gone US no longer has to worry about that right now Canadians are not buying goods so a weaker dollar increases the cost of imports and it's just going to terribly negatively impact Canadian consumers and businesses so simply put right the US is not they don't want our goods and so they're going to put protections tariffs quotas to keep our goods out and as a result of that what it's going to do to the dollar is just have a reinforcing effect where Canadians go for the first time in decades we can't afford to shop in the United States so right now we're right as it sits right now and I don't care if it's 25 percent it could be 10 percent 15 percent the score right now is United States one Canada zero so if if that 25 percent tariff situation were to develop and they did it the editorial on stealing aluminum during the first term of mr. Trump is president and I took some time to negotiate it off or negotiated away if there were a 25 percent tariff across the board would we see new supply chain issues would we see inflation climbing higher again would that be an unavoidable consequence or is that would that just depend on other circumstances I want to tell you why I think this is a real problem right let's talk about the impact on the supply chain for a second right it's just now this one you know much much like we did during the pandemic the cross-border supply chain delays are a really big deal right and so if he does impose stricter trade policies tariffs whatever you're going to create bottlenecks at the supply chain just like you saw during the pandemic for automotive goods and agricultural goods and we know that Canada is deeply tied to production so I started to think about this right and I thought well let's play the old game of follow the money what do you do when you are staring down a possible true erosion of consumer confidence in your economy completely reducing foreign investment into Canada and the other potential recessionary effects that you've touched well you know what you do if you're a federal government with not much clue right you double down on your one growth strategy and that has been consumption so I thought to myself you know what the government would do if they're really concerned about this they would have a tax vacation which is nothing more than doubling down on consumption they're saying if we're gonna get whacked on the supply side just like we did during the pandemic well let's do what we did during the pandemic because you know that seemed to be okay at the time let's just keep running more and more conspicuous consumption so I think I've kind of come up with a clue at where this magical tax vacation came from I think it's a response to what the government fears of a Trump situation and so to your point I know I've been long-winded but when you take high aggregate demand like they're hoping kicks in during a tax vacation and a strangulated supply it's only one thing that can happen Roy prices are going to go up and so I ask people to kind of follow along I know it sounds a bit devious but I think I've come up with why we're going to see a tax vacation that's really interesting that is really interesting because I think people are more attuned to what's going on financially and with the economy from the economic side of things financially because we didn't hit so hard because we learned over the last couple of years of the pandemic and we've learned since that the inflationary trend you know maybe we didn't previously pay as much attention as we should because they didn't last that long if you know interest went up a little bit they came back down this time it was something that stuck with this and I think we're more sensitive to these fluctuations than if they stay we know what they can do to us now I saw this headline on global news.ca bank of Canada official this will be the deputy commissioner no the governor of the bank of Canada bank of Canada official warns it would be quote painful and quote the sea big price drops what are they talking about it I have absolutely no idea the only thing I can kind of think that they're doing is they're kind of reminding people that again in advance of this tax vacation asking people to spend money that people they want people to realize that oh I think the population wants to see prices going down but times of deflation tend to be recessionary times so the only thing that I can understand about this because it's hard to me to wrap my head around it is it's a little bit more Roy what you're talking about of this erosion of consumer confidence which is really hard to measure on a graph or a mathematical equation but we know coming out of the pandemic and I'll be quick that this economic instability from the US that spills over is really on high alert right now and so I think in its own way this might be the bank of Canada's marriage to the government to say okay government you have a tax holiday make sure consumption stays strong just in case no goods come flowing over or no goods go pouring into the other country and we'll do our bit by reminding Canadians that what you don't want our prices coming down too fast and too strong I think there's a lot of snake oil salesmen right now we're waiting I think a lot of people are scared mhm spoke with the Sylvan Sharlabov the professor from the Al housing university the agrofords lab director and we were talking about the the gst break on food and it's going to be minor really because so many food products do not have a gst component anyway and professor sharlabov said the what he would love to see is just the taxes removed from food purchases period it's immoral to be charging tax on food and I've brought that up with politicians in the past finance ministers and what I've heard is well we need the money we need the money we need the money and how badly do they need taxation dollars from food purchases and could we survive very well thank you very much if they stopped taxing food period we absolutely could survive if they stopped taxing food period and they could actually we could survive if they stopped taxing menstrual products period all you need to do is do some shifting of the tax burden over to some other goods and I don't want to geek out but goods that have a very inelastic supply which means we don't have a lot of choice but to purchase them I mean there's a lot of fear mongering right now Roy but professor charlobot is absolutely smarter than the average person and what he's saying is in his food economics way is that there's no way to grow an economy by having taxes removing taxes putting taxes back on you either have taxes or you don't have taxes and you find something else to tax but this on off on off policy not only does it not stimulate long run growth it does nothing to short run growth right you know and we need to reestablish convenience confidence that canadians have in our systems and certainly our monetary systems because we struggled so much and are still struggling to this to this day professor cam thank you for the time good talk to you as always thank you denon roy's they're healthy