How new tariffs on Canada will impact the economy | ChicagoLIVE

All right, well, coming up next, we've got a major shift in international trade is sending shockwaves through the North American economy. United States has ordered a massive new 50% tariff on $20 billion worth of Canadian imports. Here to tell us a little bit about what this will mean for your wallet is Northwestern University Professor Phillip Braun. Professor, thanks so much for joining us this morning. Think we may have you on mute. Let's see. Sorry about that. No worries, no worries. We got you, we got you now. All right, well, a 50% tariff is very heavy hand. And when it comes to trade policy, what do you think is the primary political or economic catalyst that is driving the U.S. to implement this specific strategy now? Well, we know Trump loves his tariffs. And so he's just instituted tariffs across the board or around the world of at least 60% of our trading partners. So it's gonna be more of the same. He's just filing these tariffs under a different regulation because the Supreme Court found his previous tariffs illegal, but it's not gonna change much in the economy. We already have wide tariffs across the board around the world. Canada is one story, of course. It's not clear if that's gonna pass legal muster or not. But overall, it's more of the same. What are some of these Canadian tariffs on? Are they things we need like lumber and oil and whiskey? What specifically are the Canadian tariffs taxing? It's across the board. It won't be oil, but it'll be wine. It'll be agriculture products. It'll be manufactured products from Europe as well as China. So it's pretty much across the board. What are the potential repercussions of America doing this to Canada? Does Canada then turn around and say, okay, fine, then we're gonna do the same thing right back to you? It's a major issue, what the president is doing with Canada. The Canadian prime minister, of course, is not a fan of Trump. But putting tariffs on this extent because the wildfires or whatever excuse he's using is really unfortunate for our relationship with Canada. It's unfortunate, especially for American consumers because a lot of cars are produced in Canada. And it's estimated so far that the cost of the tariffs already in place have increased the cost of automobiles to US consumers from $3,000 to $9,000 per car. So it's gonna be, this could raise that even more. This isn't set to take effect until August 19th. So we got about two and a half, three weeks or so before this kicks in. Do you think that there's any chance that there could be some diplomatic negotiations to maybe scale this back before it officially starts on the 19th? I think it'll be on a country by country basis. But I think for some countries it's possible. And there's always, of course, somebody can try to intervene and take this to the Supreme Court. And find these tariffs illegal like the previous ones. But I think in terms of diplomacy, it's gonna be country by country. I don't expect to see any diplomacy with Canada, however. I thought I saw a headline just in the last week or so about how tariffs were gonna be lowered to 10 to 12%. But now we're hearing about 50% tariffs. How are those two tariffs different? Are they different countries, different trading partners? What exactly are we looking at there? This is very broad-based. So it's not really different trading partners. It's more the same trading partners plus more. And so the average tariff, as you said, will be 10 to 12%, which is not that, it's estimated that right now the average tariff U.S. corporations are paying is around 10%. So it's not gonna be that much of a bigger difference from what we're feeling right now. We mentioned this going into effect around mid-August. How long until the average consumer starts feeling that impact on their pocketbook? It'll be pretty quick, especially for things like automobiles and imports. Most of our consumption is being imported from abroad. So it's pretty widespread. And it can be felt pretty quickly. So I think the president really likes tariffs. He thinks that the American consumer is not the one that pays them. Of course, we all know that's incorrect. We already feel the effect of tariffs on prices in the U.S. and it's gonna go up marginally. Do you feel like this move could at all maybe inadvertently push Canada to strengthen trade alliances with both Europe and Asia and maybe even isolate the U.S. in some ways? Oh, absolutely. There can be retaliation tariffs from other countries, which we've already seen from some countries like China. And so countries like Canada, they have no choice but to reach out to find other trading partners. And the same applies to the EU and other developed economies. They're just gonna try to work around this to keep their export levels up by finding other countries. And ultimately it has and will continue to isolate the U.S. You mentioned earlier that obviously Canada dealing with those horrible wildfires that have been burning for a while now. That in conjunction with these tariffs has gotta be just a lot for them to be dealing with simultaneously. How much worse is this for them in conjunction with the fact that these wildfires continue to burn? It's quite severe. We can use the auto sector again as our example. They produce a lot of U.S. consumed cars in Canada, part of the original Canada-Mexico-U.S. trade agreement. And with the tariff at 50%, that's really gonna shut down the Canadian automobile sector, at least that sector that exports to the U.S. So it's a major, major impact for them. Be something we'll be keeping an eye on between now and August the 19th. Again, a massive new 50% tariff on our neighbors to the north. Professor Phillip Braun from Northwestern University, thanks so much for your time this morning. You're welcome. Thank you very much. Take care.