LEILA FADEL, HOST:
Canada is imposing retaliatory tariffs on around $20 billion of American products.
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FRANCOIS-PHILIPPE CHAMPAGNE: When the United States of America asks too much and offered too little, we made a choice. We chose Canada.
FADEL: That's Canadian Finance Minister Francois-Philippe Champagne just now at a press conference announcing the tariffs on more than 700 American goods, including steel, dairy products, appliances and farm equipment. The move comes after President Trump imposed 50% tariffs on Canadian products.
I spoke earlier with Drew Fagan about the threats to one of the world's largest trading relationships. He was a senior official in Canada's Department of Foreign Affairs and International Trade. He's now a professor at the University of Toronto's Munk School of Global Affairs and Public Policy. I started by asking how much economic pain Canada will feel because of these American tariffs.
DREW FAGAN: Significant damage. You know, the relationship between Canada and the United States economically is significant. It's significant for the United States as well. The relationship is asymmetrical. Canada's a medium-sized economy - the size of Spain, the size of Brazil. But obviously, we're - in this case, we're up against a super heavyweight that's more than 10 times our size.
So it's asymmetrical, but it's symbiotic. We both get something from the relationship. That's the way it's worked in the free-trade era for more than 40 years. But this is a different situation. And the tariffs that are being imposed - particularly on industries in central Canada, I think it should be said - you know, are - will be deeply damaging. And that's basically why the prime minister - Prime Minister Carney - walked away from the table on Friday. The tariffs would have been so high that you had to question whether these industries would continue.
FADEL: Yeah. I mean, the prime minister said Trump wants to destroy Canada's major industries and pointed to Canada signing more than 20 trade and security deals with other trading partners. I mean, can that offset the economic hit from the tariffs imposed by the U.S.?
FAGAN: The challenge is it really can't, at least in the short term. You know, the - again, the relationship is bilateral, Canada-U.S., and most of our exports go to the United States. That's natural in a relationship like this in which geography dictates much of that. Canada's been talking about diversifying its exports for, really, generations. And there are opportunities. There's no question. We have a pipeline to the West Coast now, another underway to send energy to Asia. There are other steps that we can take. Trade is actually growing with the rest of the world faster than it is with the United States - logically, given the circumstances.
Fundamentally, Canada wants to trade with the United States and trade with other parts of the world as well. Part of the challenge with this negotiation is not just that the administration wants to block trade with Canada but wants to dictate to Canada the terms by which it can trade with other countries in certain circumstances as well. And that's just not on.
FADEL: Now, Trump told Canada's leaders to, quote, "fall in line." Ontario's premier, Doug Ford, was asked for his response on Monday, and here he is during a press conference carried by CTV News.
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DOUG FORD: I don't respond to a dictator like President Trump, a bully like President Trump. As I said before, he's the type of guy in school that would take your lunch money one day, take your toque off your head the next day and then steal your running shoes. But I'm not going to take any advice off a guy that's the king of bankruptcies.
FADEL: Tough talk like this, insults aimed at Trump - do they hurt or help Carney as he navigates this?
FAGAN: So let's think of Carney as the country's ego, the - an intellect, a leader, well-respected globally - and Ford, the premier of the biggest province, as the id, in effect. He'll get down with Trump. Whether that's effective or not, I don't know 'cause, you know, many people would say Trump can go lower than anyone. I think what's the challenge here with somebody like Ford is he wants to escalate. And that is not, probably, smart strategy. What we need to do is meet the United States, with regard to tariffs, tit for tat. But I don't think that Canada, which is by far the smaller party, would be smart to start cutting off exports.
FADEL: Drew Fagan is a professor at the University of Toronto's Munk School of Global Affairs & Public Policy. Thank you.
FAGAN: Thank you very much.
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