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US-Canada trade war 'The cost of fighting back' · DEEP INSIGHT

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  Speaker 1: U.S.
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  Speaker 2: President Donald Trump has hit back at Canada's retaliatory tariffs
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  Speaker 2: on U.S. products, saying they were foolish to think they
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  Speaker 2: could win a trade war with him. Trump also posted
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  Speaker 2: on his social media platform that Canada was trying to
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  Speaker 2: get the benefits of being a state without being one.
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  Speaker 2: On Saturday, Canadian Prime Minister Mark Carney told reporters that
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  Speaker 2: the U.S. and Canada were engaged in a trade war,
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  Speaker 2: saying you are at war when you get attacked. Carney
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  Speaker 2: has repeatedly vowed to match U.S. tariffs dollar for dollar.
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  Speaker 2: I'm now joined by Wendy Cutler, senior vice president at
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  Speaker 2: the Asia Society Policy Institute and former diplomat and negotiator
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  Speaker 2: in the office of the U.S. trade representative. Wendy, we're
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  Speaker 2: glad to have you.
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  Speaker 1: Thank you.
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  Speaker 2: Let's talk trade wars. As far as that goes, the U.S.
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  Speaker 2: and Canada are now at opposite ends of the barrel
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  Speaker 2: But I'm curious, how strong is Washington's position given how
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  Speaker 2: interconnected the two economies are?
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  Speaker 1: Look, I think Washington can withstand a limited trade war
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  Speaker 1: with Canada. The impact of these tariff hikes and back
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  Speaker 1: and forth and escalation is going to take a much
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  Speaker 1: more serious toll on Canada's economy, where 70 percent of
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  Speaker 1: their exports go to.
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  Speaker 2: The U.S., So is the U.S. president correct when he
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  Speaker 2: says that Mark Carney is being foolish?
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  Speaker 1: Look, he can say whatever he wants. I think Carney
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  Speaker 1: feels like he's standing up for Canadian national interest and
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  Speaker 1: that in his view, the negotiation ended up in a
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  Speaker 1: situation where he and he could not sign on to U.S. demands.
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  Speaker 1: I also don't think all of this is over yet.
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  Speaker 1: One thing I've learned in trade negotiations through the years
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  Speaker 1: is nothing's over until it's over. And Canada's retaliatory tariffs
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  Speaker 1: against the U.S. take place September 8th. That's two weeks away.
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  Speaker 1: It seems like it's around the corner. But in the
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  Speaker 1: trade world, two weeks does provide a window for cooler
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  Speaker 1: heads to prevail and hopefully for the two sides to
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  Speaker 1: find an off ramp. But it's going to be difficult.
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  Speaker 2: So big picture here. I have your first initial take,
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  Speaker 2: but I wonder whether there's some nuance. As far as
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  Speaker 2: the leverage in this dispute, who has it? The United
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  Speaker 2: States because of its market size or Canada because of
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  Speaker 2: its role in supplying energy and critical minerals?
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  Speaker 1: Look, right now, I think the U.S. clearly has more leverage.
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  Speaker 1: But that said, will Canada use certain exports as tools
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  Speaker 1: against the United States as choke points like China did
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  Speaker 1: with respect to critical minerals. If Canada goes down that route,
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  Speaker 1: I think things are just going to get a lot
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  Speaker 1: worse before they get better.
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  Speaker 2: OK, so the U.S. has the leverage. Is this a
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  Speaker 2: trade war that the U.S. can win realistically without causing
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  Speaker 2: significant pain for American consumers and businesses?
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  Speaker 1: I think that pressure from consumers and businesses in the
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  Speaker 1: United States will mount as long as these tariffs go
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  Speaker 1: into place and are escalated. So I think over time,
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  Speaker 1: a resolution will be found because it's a lose-lose situation.
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  Speaker 2: How damaging could Canada's retaliatory tariffs be, especially if they
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  Speaker 2: target politically important U.S. industries and states?
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  Speaker 1: Mm-hmm. Look, targeted tariff retaliation does work in the United States.
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  Speaker 1: We are a democracy. I'm sure Canada is looking at
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  Speaker 1: our electoral map very carefully, trying to pick out those
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  Speaker 1: states and products that are going to hurt the White
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  Speaker 1: House the most, particularly in the lead up to the
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  Speaker 1: midterm elections. So even though the size and the magnitude
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  Speaker 1: of the tariffs may not be that large with respect
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  Speaker 1: to the U.S. economy, targeted retaliation could have some real
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  Speaker 1: immediate and harmful impacts.
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  Speaker 2: I know you don't have a crystal ball. You did
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  Speaker 2: say that it's unlikely that this thing ends where it
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  Speaker 2: is now, or at least there's more runway before this
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  Speaker 2: actually gets executed. What is the most likely scenario that
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  Speaker 2: the 50 percent goes down to 40 or 30 or
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  Speaker 2: that the tariff goes away altogether on both sides?
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  Speaker 1: And that's a great question because there are like different
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  Speaker 1: ways that you can proceed. And let's just say the U.S.
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  Speaker 1: and Canada decide that they want to kind of lower
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  Speaker 1: the pressure. It doesn't mean they have to go back
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  Speaker 1: to where they were a week ago. It could be
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  Speaker 1: that they start with, you know, reducing these tariffs by
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  Speaker 1: 50 percent, going back to the table and then seeing
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  Speaker 1: if they can reach a deal which will allow for
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  Speaker 1: all the tariffs then to go away. So there are options.
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  Speaker 1: And again, I think this is a lose-lose proposition for
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  Speaker 1: both economies, for businesses and workers on both sides of
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  Speaker 1: the borders. So I would hope that we can find
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  Speaker 1: a way to get back to the table with Canada.
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  Speaker 1: But it's going to be difficult because both sides have
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  Speaker 1: become very public and are kind of laying out their
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  Speaker 1: positions and becoming very ingrained. And I think that's going
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  Speaker 1: to introduce some difficulties, and it's going to take some really,
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  Speaker 1: some good diplomacy to figure out how to get both
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  Speaker 1: sides together.
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  Speaker 2: I know you're not a psychologist, but to what extent
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  Speaker 2: does the temperament of both of these leaders play into
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  Speaker 2: the way that this negotiation, if you will, or this
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  Speaker 2: discourse is being manifest?
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  Speaker 1: Unfortunately, I think it has already played into the deteriorating
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  Speaker 1: relationship between the United States and Canada and I think
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  Speaker 1: is going to complicate efforts to find a landing zone.
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  Speaker 1: Our president is not happy with Prime Minister Carney, and
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  Speaker 1: you can hear Prime Minister Carney's frustration and disdain for
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  Speaker 1: President Trump in his comments, albeit he's being pretty level
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  Speaker 1: in his comments today. But this is going to introduce,
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  Speaker 1: I think, an element that's going to make it, you know,
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  Speaker 1: that's going to make a solution trickier. I'm hoping that
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  Speaker 1: we can find folks on both sides in Ottawa and
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  Speaker 1: in Washington that have the trust of the leaders that
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  Speaker 1: can find an off ramp.
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  Speaker 2: I suspect we could chat all evening, but we're going
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  Speaker 2: to have to end it there. Many thanks to you.
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  Speaker 2: Wendy Cutler, Senior Vice President at the Asia Society Policy Institute.
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  Speaker 2: Really appreciate it.
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  Speaker 1: Thank you. My pleasure.