WEBVTT - Is a Potential Pivot on Tariffs Looming? 0:00:02.520 --> 0:00:13.760 Bloomberg Audio Studios, Podcasts, radio news. This is the Bloomberg 0:00:13.840 --> 0:00:17.920 Surveillance Podcast. Catch us live weekdays at seven am Eastern 0:00:18.200 --> 0:00:22.000 on Apple CarPlay or Android Auto with the Bloomberg Business App. 0:00:22.360 --> 0:00:25.680 Listen on demand wherever you get your podcasts, or watch 0:00:25.760 --> 0:00:28.080 us live on YouTube without. 0:00:27.880 --> 0:00:31.040 Question or interview to day Jean Beavan out of Princeton, 0:00:31.160 --> 0:00:33.040 all of his good work at Black Crack, and of 0:00:33.080 --> 0:00:37.159 course with his Montreal heritage, with a real understanding of Canada. 0:00:37.320 --> 0:00:39.919 We're doing Canada in this half hour. Stay with us, folks. 0:00:40.000 --> 0:00:42.480 It's going to be interesting, Jean Lescott, get away from 0:00:42.479 --> 0:00:46.200 Canada first to the moment at hand. What I love 0:00:46.240 --> 0:00:49.360 about your note is you talk about time. You talk 0:00:49.400 --> 0:00:53.640 about the x axis. President Trump's x axis is a 0:00:53.640 --> 0:00:57.480 little different than the leader of China's x axis, isn't it. 0:00:58.960 --> 0:01:00.440 Yeah, I think totally. 0:01:00.440 --> 0:01:02.840 I mean, there's, uh, there's a speed at which things 0:01:02.840 --> 0:01:07.800 are happening right now that is, you know, unprecedented lots 0:01:07.840 --> 0:01:10.800 to figure out. Ninety days is a short period of time, 0:01:11.840 --> 0:01:15.360 and you know, I don't it doesn't seem that China, 0:01:15.440 --> 0:01:17.920 for sure is is on the same time frame right now. 0:01:17.959 --> 0:01:20.160 So there's there's a there's a bit of a gap there. 0:01:20.200 --> 0:01:21.759 We'll see how that gets resolved with. 0:01:21.800 --> 0:01:25.200 All the resources of black Rock has. When you hear 0:01:25.240 --> 0:01:30.360 the word negotiation, the President loves to say this negotiation. 0:01:31.200 --> 0:01:34.240 We're working towards a deal, are they, Jean. 0:01:34.040 --> 0:01:37.480 Beava, I think you know, one one of the key 0:01:37.480 --> 0:01:40.720 things that we've come to a conclusion now is, you know, 0:01:40.760 --> 0:01:45.119 trying this negotiation, trying to understand what will be the 0:01:45.280 --> 0:01:47.800 tit and tat steps along the way, it's probably like 0:01:47.880 --> 0:01:49.000 a futile exercise. 0:01:49.040 --> 0:01:51.240 I think. I think we need to think more about. 0:01:51.080 --> 0:01:53.280 Like what are the kind of you know, the forces 0:01:53.280 --> 0:01:55.600 that will be at play that would shape the outcome. 0:01:55.360 --> 0:01:58.360 No matter what the intent or the negotiation tactics are. 0:01:58.520 --> 0:02:01.080 So we think there are some mutable laws at play 0:02:01.160 --> 0:02:02.800 here that you know, you cannot break. 0:02:02.680 --> 0:02:04.280 And so that's what we try to focus on. 0:02:04.840 --> 0:02:08.160 One is on the trade supply chain wirring that cannot 0:02:08.200 --> 0:02:11.160 be kind of on one overnight or very quickly, so 0:02:11.200 --> 0:02:13.320 that's gonna play into the shaping the outcome in the 0:02:13.360 --> 0:02:15.160 near term. And the other is the dead level in 0:02:15.200 --> 0:02:17.680 the US that's going to be a constraint as well. 0:02:17.880 --> 0:02:20.240 John, I think you know, most of our viewers and 0:02:20.320 --> 0:02:24.480 listeners grew up in a world where globalization was the 0:02:24.639 --> 0:02:27.520 backdrop for global trade, global free trade. 0:02:28.240 --> 0:02:33.800 Is that over, Well, it's gonna be evolving for sure, 0:02:34.800 --> 0:02:38.600 based on you know what what what is being contemplated here. 0:02:38.919 --> 0:02:41.960 I think you know, again, this this, these are decades 0:02:42.000 --> 0:02:44.560 in the making, and you know it can evolve. I 0:02:44.560 --> 0:02:46.880 don't think it's going to feel very different here from now. 0:02:47.480 --> 0:02:49.320 We're very linked, we're very intertwined. 0:02:49.840 --> 0:02:50.120 Uh. 0:02:50.160 --> 0:02:52.360 And again there are these immutable laws, right so, I 0:02:52.400 --> 0:02:57.120 mean we've built this you know, international trade framework for 0:02:57.200 --> 0:02:57.960 many decades. 0:02:58.560 --> 0:02:58.920 Uh. 0:02:58.960 --> 0:03:02.400 And you know there's no way to flip and close 0:03:02.480 --> 0:03:05.440 Crain account deficit and at the same time rely on 0:03:05.560 --> 0:03:07.360 foreign investors to finance. 0:03:07.000 --> 0:03:08.040 Thirty percent of the debt. 0:03:08.160 --> 0:03:11.520 Right So those two things, you know, you cannot one 0:03:11.600 --> 0:03:14.280 and not the other. And so that that's kind of 0:03:14.320 --> 0:03:17.360 these forces that will be there. I think, so globalization 0:03:17.520 --> 0:03:20.720 is being rewired. It's going to look different, but I think. 0:03:20.520 --> 0:03:23.040 There's going to be a version of globalization that's going 0:03:23.120 --> 0:03:24.160 to still be very much there. 0:03:25.040 --> 0:03:27.560 And I guess Jehan as recently as the beginning of 0:03:27.600 --> 0:03:30.840 this year, the I think the discussion among most investors 0:03:31.000 --> 0:03:35.600 was about the US economic exceptionalism visa via the rest 0:03:35.640 --> 0:03:36.160 of the world. 0:03:37.040 --> 0:03:37.840 Is that now over? 0:03:39.480 --> 0:03:39.720 Yeah? 0:03:39.840 --> 0:03:43.600 Well, that is certainly the big question in every comline conversation. 0:03:43.680 --> 0:03:46.760 I spent a week in Europe last week, and you 0:03:46.800 --> 0:03:49.720 know that's the starting point of all conversations, especially since 0:03:50.200 --> 0:03:54.000 we subscribe to this, to this idea that like europ 0:03:54.000 --> 0:03:58.640 inequities would be outperforming for fundamental reasons that is being tested, 0:03:58.680 --> 0:04:02.120 that shaken, certainly, and that's not a given for lobal rassers. 0:04:03.160 --> 0:04:05.680 I do think for US, we focus on what we 0:04:05.720 --> 0:04:09.360 call mega forces like ai UH and think about where 0:04:09.400 --> 0:04:12.320 they're more likely to play out and quickly and generate profit. 0:04:12.400 --> 0:04:14.640 And that still leads us to see the US as 0:04:15.320 --> 0:04:17.039 as a place where we're going to see return over 0:04:17.160 --> 0:04:20.120 like a one two year horizon. But clearly it is 0:04:20.120 --> 0:04:22.839 more uncertainty now imanating from the US, and that is 0:04:22.920 --> 0:04:25.400 denting that that teases that exception. 0:04:26.279 --> 0:04:27.080 Can I go nerd? 0:04:27.240 --> 0:04:28.160 Jean be sure? 0:04:28.240 --> 0:04:30.320 Okay, We're gonna go nerd right now, Folks the Global 0:04:30.360 --> 0:04:32.880 Wall Street, you can do this with doctor Boven of 0:04:32.960 --> 0:04:36.880 Blackrock Sean. What if I'm fascinating here is the media 0:04:36.960 --> 0:04:40.600 is fixation on OMG, It's all over we're all gonna die. 0:04:41.040 --> 0:04:43.800 And the other side of the coin is somehow we're 0:04:43.800 --> 0:04:46.479 gonna get back to what we did pre Trump and 0:04:46.600 --> 0:04:49.240 what I'm thinking of here out of Princeton, and there 0:04:49.320 --> 0:04:52.040 was all sorts of great work there is we get 0:04:52.080 --> 0:04:56.760 almost a dampening function to and in between this a 0:04:56.880 --> 0:05:01.400 sign your sotal dampening function of this complex real GDP 0:05:01.680 --> 0:05:06.159 trade and all where we just moderate over time after 0:05:06.279 --> 0:05:12.280 some new middle tendency between doom and gloom and the 0:05:12.320 --> 0:05:16.200 American exceptionalism. We do is that where we're heading is 0:05:16.200 --> 0:05:19.280 to some middle tendency out there somewhere. 0:05:20.520 --> 0:05:20.760 Yeah. 0:05:20.880 --> 0:05:22.839 Well, I think that's another way to talk about these 0:05:23.360 --> 0:05:25.920 what I've been talking about, these immutable forces. I think 0:05:25.960 --> 0:05:29.000 we you know, we it's very easy to get stuck 0:05:29.040 --> 0:05:31.359 on the fact that uncertainty is high. I think this 0:05:31.440 --> 0:05:33.400 is the word that is I still not cannot pronounce 0:05:33.440 --> 0:05:35.159 it properly, but that's the word that This is the 0:05:35.200 --> 0:05:38.080 most often mentioned these days, uncertainty. 0:05:38.120 --> 0:05:40.360 And I think this is easy to stop there. 0:05:41.520 --> 0:05:44.039 I think, you know, it might not be the outcome 0:05:44.080 --> 0:05:46.159 that people would have liked that's gonna come, but I 0:05:46.200 --> 0:05:48.880 think we're going to get more clarity the smoke's gonna 0:05:48.880 --> 0:05:52.320 come out. There are forces that will shape what's gonna happen, 0:05:52.360 --> 0:05:55.320 independent of independently of like the opening gambits, we're gonna 0:05:55.360 --> 0:05:57.040 hear and I think this is what we need to 0:05:57.080 --> 0:05:59.880 focus on. And it's kind of a middle ground that 0:06:00.080 --> 0:06:02.600 will will discumber, of course in the next few months. 0:06:02.760 --> 0:06:05.520 Jean Bovan with us with Black Crock on this moment 0:06:05.640 --> 0:06:08.920 that we're all living futures negative seven the vics. Paul 0:06:08.960 --> 0:06:11.960 noted under twenty eight yesterday at twenty eight point three six. 0:06:12.279 --> 0:06:14.040 All right, now we welcome all of you on your 0:06:14.080 --> 0:06:18.000 commute across North America. Good morning in Mexico City, Good 0:06:18.000 --> 0:06:21.000 morning in Canada, and of course on YouTube, growing each 0:06:21.040 --> 0:06:25.440 and every day. Subscribe to Bloomberg Podcast. Lisa Mataloe humbled 0:06:25.440 --> 0:06:28.000 by the growth there. It's absolutely it's because of her 0:06:28.040 --> 0:06:28.839 newspaper paper. 0:06:28.839 --> 0:06:30.600 Second, yeah, you know, absolutely, no question. 0:06:30.800 --> 0:06:33.160 Jean, let us switch to Canada. I was supposed to 0:06:33.200 --> 0:06:36.280 do a seminar with you in Toronto. You couldn't make it. 0:06:36.320 --> 0:06:38.440 You were with Martin Sant Louis trying to get the 0:06:38.480 --> 0:06:42.560 Canadians into the playoffs, and Jean, I look at this 0:06:42.680 --> 0:06:45.520 moment in Canada and I think we can look at 0:06:45.600 --> 0:06:50.160 it as the liberal tradition of Quebec and Lower Canada, 0:06:51.160 --> 0:06:54.039 Upper Canada and then out to the west, a far 0:06:54.160 --> 0:06:59.040 more conservative tradition some would say, almost trump like in 0:06:59.080 --> 0:07:03.320 its nature. How will Canada move forward after this election? 0:07:05.120 --> 0:07:08.080 Well, you know, I think the the. 0:07:07.360 --> 0:07:10.800 The Canadian experience over the last two months, uh is 0:07:10.800 --> 0:07:14.800 is another kind of testimony of the unprecedented the world 0:07:14.840 --> 0:07:18.560 we live in. Things have been completely upended compared to 0:07:18.600 --> 0:07:21.800 where they stood, you know in January. Uh and this 0:07:21.840 --> 0:07:25.080 is entirely driven by uh, you know, what's happening south 0:07:25.120 --> 0:07:25.640 of the border. 0:07:26.120 --> 0:07:27.640 So that has. 0:07:27.640 --> 0:07:32.720 Completely uh changed the political calculus in in Canada and 0:07:32.960 --> 0:07:34.840 uh we see that elsewhere in the world. 0:07:34.960 --> 0:07:35.080 Right. 0:07:35.160 --> 0:07:37.920 So I think this is we'll see what happens on Monday, 0:07:38.080 --> 0:07:40.840 but clearly this is about how Canada we'll deal with 0:07:42.200 --> 0:07:44.800 the US going forward. It's about how it's gonna kind 0:07:44.800 --> 0:07:49.400 of rewire itself given the evolution uh and you know 0:07:49.880 --> 0:07:51.880 uh and one of the big questions will be on 0:07:51.960 --> 0:07:56.840 how internally, uh they are able to increase competitiveness between 0:07:56.880 --> 0:08:00.400 and across provinces, because we know that trade barrier between 0:08:00.440 --> 0:08:03.520 provinces are higher than with the US, So there's an 0:08:03.520 --> 0:08:05.120 opportunity there, I guess to explore. 0:08:05.160 --> 0:08:08.840 Are you optimistic that Canada can find a new productivity 0:08:08.960 --> 0:08:10.040 as America has. 0:08:12.400 --> 0:08:15.280 I've been working you know, on commissions and things like 0:08:15.320 --> 0:08:17.080 that for the last thirty years and Kenda trying to 0:08:17.360 --> 0:08:20.880 think about how we increase the productivity and the king 0:08:20.920 --> 0:08:21.880 productivity which is. 0:08:21.920 --> 0:08:23.440 Still is not resolved. 0:08:24.240 --> 0:08:26.120 But I think I do think that, like you know, 0:08:26.280 --> 0:08:31.320 increasing trade across provinces and reducing those barriers is one way. 0:08:31.240 --> 0:08:31.640 To do it. 0:08:32.000 --> 0:08:35.240 I think that might also give an impetus to to 0:08:35.320 --> 0:08:39.160 spend on things that you know, we were relying on 0:08:39.800 --> 0:08:42.960 other partners due to supply and so that could create 0:08:43.000 --> 0:08:46.360 as well some some opportunities in Canada. So you know, 0:08:46.559 --> 0:08:49.240 I'm not I'm going to be skeptical until I see it, 0:08:49.280 --> 0:08:51.319 but you know, they are their opportunities. 0:08:51.559 --> 0:08:55.120 Well, John, you're you mentioned you're over in Europe speaking 0:08:55.120 --> 0:08:59.319 with black Rock clients recently. What are they viewing How 0:08:59.320 --> 0:09:03.559 are they thinking about the US, the US markets, the 0:09:04.520 --> 0:09:07.000 safe haven nature of the US. Are they viewing the 0:09:07.080 --> 0:09:07.839 US these days? 0:09:09.040 --> 0:09:11.080 When I was exactly there during the week where this 0:09:11.240 --> 0:09:14.040 kind of came to an head, right when we saw 0:09:14.040 --> 0:09:16.080 the ten year and through the year, like move like 0:09:16.280 --> 0:09:20.080 very aggressively up on over the course of hours and days. 0:09:21.040 --> 0:09:24.480 And I think that that certainly cut the attention of investors. 0:09:24.480 --> 0:09:24.960 And I think. 0:09:24.800 --> 0:09:27.760 What's happening here is like and it's a natural tendency. 0:09:27.840 --> 0:09:30.480 Right when you're facing something you don't understand and it's 0:09:30.840 --> 0:09:33.280 out there, I think you tend to go back home 0:09:33.679 --> 0:09:35.439 and stay closer to the home base. 0:09:35.840 --> 0:09:36.520 I think this is. 0:09:36.520 --> 0:09:39.120 Exacerbating a bit of the home bias that is a 0:09:39.240 --> 0:09:42.440 natural you know, we've been talking to clients globally for 0:09:42.559 --> 0:09:44.680 years about like you need to reduce your home bias, 0:09:44.679 --> 0:09:48.320 you need to diversify internationally. Well, in an environment like this, 0:09:48.440 --> 0:09:51.480 it kind of goes in the opposite direction and reinforces it. 0:09:51.840 --> 0:09:54.719 So that's certainly something you could pick up, I think. 0:09:54.760 --> 0:09:58.240 At the same time, and I do think that you know, 0:09:59.000 --> 0:10:02.439 people understand that like treasuries has been taken as the 0:10:02.480 --> 0:10:06.720 safe as asset in the world and unquestionably, uh and 0:10:06.760 --> 0:10:08.319 now you know, people ask. 0:10:08.240 --> 0:10:11.600 Questions about this. So I still think this is you know, 0:10:11.679 --> 0:10:12.640 this is this is. 0:10:12.760 --> 0:10:15.280 At the margin and uh, you know, this is an 0:10:15.280 --> 0:10:18.080 immutable force that we uh, it's a freshole equilibrium. But 0:10:18.120 --> 0:10:20.520 we in the US cannot afford you have a term 0:10:20.600 --> 0:10:23.440 premium that blows out because the debt will become you know, 0:10:23.520 --> 0:10:25.480 unmanageable and so on. So I think they'll at the 0:10:25.559 --> 0:10:27.000 end of the day that's going to be contained. But 0:10:27.320 --> 0:10:29.160 the fact that people are asking those questions it is 0:10:29.200 --> 0:10:29.959 certainly notable. 0:10:30.280 --> 0:10:33.320 Jean, thank you so much. Doctor Bovan with Blackrock thrilled 0:10:33.320 --> 0:10:36.680 that he could be with us today. 0:10:38.800 --> 0:10:42.400 You're listening to the Bloomberg Surveillance podcast. Catch US Live 0:10:42.440 --> 0:10:45.600 weekday afternoons from seven to ten am Eastern. Listen on 0:10:45.720 --> 0:10:49.360 Applecarplay and Android Auto with the Bloomberg Business app, or 0:10:49.520 --> 0:10:51.199 watch US Live on YouTube. 0:10:51.600 --> 0:10:55.800 Brian Kingston is hugely qualified. He's got a fancy title 0:10:55.880 --> 0:11:00.200 with the Canadian Vehicle Manufacturers Association, but he's all also, 0:11:00.200 --> 0:11:05.640 I got bulletproof academics led by Carlton University on trade 0:11:05.960 --> 0:11:09.240 and on what it means for auto manufacturers. What is 0:11:09.280 --> 0:11:14.560 the biggest conceit myth thing we get wrong, Brian about 0:11:14.600 --> 0:11:17.040 that bridge between Windsor and Detroit. 0:11:18.720 --> 0:11:21.040 Well, look, I think the biggest myth that we see 0:11:21.080 --> 0:11:24.080 there is that this bridge and the bilott of relationship 0:11:24.120 --> 0:11:28.120 in auto between Canada and the US primarily benefits Canada 0:11:28.559 --> 0:11:32.679 when the fact is we're so deeply integrated over sixty 0:11:32.800 --> 0:11:36.240 years and now the United States actually has an automotive 0:11:36.280 --> 0:11:39.520 surplus with Canada. And what many people don't realize is 0:11:39.520 --> 0:11:43.319 that Canada is the largest export destination for US manufactured 0:11:43.400 --> 0:11:46.960 vehicles by far. The Americans send more cars to Canada 0:11:46.960 --> 0:11:50.320 than they do to China, Germany, and Mexico combined. So 0:11:50.400 --> 0:11:53.520 we're deeply integrated and we effectively build vehicles together. 0:11:54.040 --> 0:11:57.160 What is the tone of the layoffs right now? Over 0:11:57.200 --> 0:12:00.680 a beverage of my choice, I'm noting Volva laying off. 0:12:00.720 --> 0:12:03.559 I believe it was nine hundred people. But give us 0:12:03.600 --> 0:12:08.520 the immediate Thursday morning state of the labor economy in 0:12:08.559 --> 0:12:09.320 this trade war. 0:12:10.440 --> 0:12:13.760 Well, look, it's all about uncertainty at the moment. Automotive 0:12:13.800 --> 0:12:16.960 is a huge sector in Canada. We've got over one 0:12:17.040 --> 0:12:20.480 hundred and thirty thousand Canadians directly employed in manufacturing, but 0:12:20.520 --> 0:12:23.360 if you look at the broader industry impact, it's closer 0:12:23.360 --> 0:12:26.920 to half a million. And there's just no clarity on 0:12:27.000 --> 0:12:29.240 what the path forward is right now. I mean, the 0:12:29.280 --> 0:12:32.959 tariffs are on, then they're off. The interpretation of the 0:12:33.000 --> 0:12:37.800 tariffs changes consistently, so for anybody in this industry, it's 0:12:37.960 --> 0:12:40.640 just so difficult to plan right now, and of course 0:12:40.679 --> 0:12:43.160 that has a huge impact on the labor market. 0:12:43.280 --> 0:12:47.080 Okay, one thousand, Henry Ford's center drive Yep, and Google 0:12:47.160 --> 0:12:51.119 misspelled it. It's center. They misspelled center. I don't understand 0:12:51.160 --> 0:12:57.240 that this is in Windsor Ford Motor Company, Windsor Engine plant, Paul. 0:12:57.320 --> 0:12:59.960 Imagine the conversation in there this morning. 0:13:00.120 --> 0:13:03.880 So, Brian, when you talk to the k and manufacturers, 0:13:04.800 --> 0:13:07.120 what are they doing today? How are they planning? How 0:13:07.120 --> 0:13:09.640 are they are they just kind of how are they 0:13:09.679 --> 0:13:10.560 just going day to day? 0:13:11.800 --> 0:13:15.800 Well, what we're seeing is because of the uncertainty, it 0:13:15.920 --> 0:13:20.280 makes it very difficult for companies to move forward with investments, 0:13:20.320 --> 0:13:23.640 to deploy new capital, of course, and Canada has received 0:13:23.640 --> 0:13:27.240 over forty billion dollars in new auto investments since twenty twenty, 0:13:27.400 --> 0:13:30.079 huge reinvestment into the industry. A lot of that's related 0:13:30.120 --> 0:13:33.319 to electric vehicle production. So there are some big, big 0:13:33.360 --> 0:13:36.560 projects underway or on the books, but until we have 0:13:36.640 --> 0:13:40.280 clarity on the tariff situation, it's very difficult to proceed. 0:13:40.320 --> 0:13:42.359 And just to give you a sense of how expensive 0:13:42.360 --> 0:13:46.360 these tariffs are, we're estimating that US based manufacturers are 0:13:46.360 --> 0:13:48.840 going to incur about one hundred and seven point seven 0:13:48.960 --> 0:13:52.280 billion dollars in cost if they remain in plate So 0:13:52.400 --> 0:13:54.560 what makes it hard to move forward with any project? 0:13:54.640 --> 0:13:58.240 We're talking with Jean Beavan, Blackrock, you know, Montreal, Brian, 0:13:58.240 --> 0:14:00.640 it's a city up to the right, it's up this 0:14:00.720 --> 0:14:06.120 Saint Lawrence. We're talking with Joe Bovent And to me, 0:14:06.240 --> 0:14:09.160 the basic idea is this word negotiation. I don't know 0:14:09.200 --> 0:14:12.160 what it means. What if whoever the new Prime Minister 0:14:12.240 --> 0:14:15.720 of Canada, what if they just say no to President Trump, 0:14:15.760 --> 0:14:18.800 We're not going to participate in this trade war. What 0:14:18.840 --> 0:14:23.200 are the consequences for Lower Canada and Upper Canada? 0:14:24.400 --> 0:14:27.280 All the consequences are are massive. I mean, the Canadian 0:14:27.320 --> 0:14:32.040 economy is so highly dependent and integrated with the US, 0:14:32.760 --> 0:14:34.400 you know, and that goes back to we had a 0:14:34.440 --> 0:14:37.400 bilateral trade agreement initially then NAFTA and of course now 0:14:37.440 --> 0:14:40.440 the US MCA. And because of that, all of our 0:14:40.440 --> 0:14:43.200 supply chains are on a north south basis. So it's 0:14:43.240 --> 0:14:46.960 not as though Canada has the ability to diversify and 0:14:47.000 --> 0:14:50.240 do it quickly, pivot to Asia Europe. We are truly 0:14:50.440 --> 0:14:53.360 connected with the American economy. So you know, I think 0:14:53.640 --> 0:14:56.520 negotiating with the US day one for the incoming Prime 0:14:56.560 --> 0:14:59.040 minister has got to be the top priority. And for 0:14:59.160 --> 0:15:01.480 auto over nine eighty percent of what we build in 0:15:01.560 --> 0:15:05.040 Canada goes to the United States. That's how the industry 0:15:05.080 --> 0:15:05.880 has that we found it. 0:15:06.120 --> 0:15:08.240 That is zero amazing, Brian. 0:15:08.320 --> 0:15:12.080 What does all this uncertainty within the auto industry mean 0:15:12.200 --> 0:15:17.760 for the transition to electric vehicles? It seems like it 0:15:17.800 --> 0:15:20.920 was kind of sputtering anyway. People were unsure about the demand. 0:15:21.040 --> 0:15:23.960 I can't charge so on and so forth. The prices 0:15:23.960 --> 0:15:26.640 are too high. Does this make the transition to EV's 0:15:26.680 --> 0:15:28.760 even more difficult? Is that what you're hearing from some 0:15:28.800 --> 0:15:30.000 of your manufacturers. 0:15:30.600 --> 0:15:33.720 Yeah, it definitely does. I mean, first of all, we're 0:15:33.760 --> 0:15:37.840 anticipating because of the terrorists that vehicle prices could go 0:15:37.960 --> 0:15:41.400 up by as little as forty seven hundred US dollars, 0:15:41.640 --> 0:15:45.320 but could increase up to over ten thousand US dollars. 0:15:45.360 --> 0:15:49.920 And for EV adoption that's particularly problematic because evs are 0:15:49.960 --> 0:15:52.480 more expensive. It's still a new technology, and so you 0:15:52.640 --> 0:15:56.120 price gap in Canada of about fourteen thousand dollars between 0:15:56.200 --> 0:15:58.800 a gas powered vehicle and an electric vehicle. So now 0:15:58.880 --> 0:16:02.440 you throw in the economic uncertainty that these tariffs are 0:16:02.440 --> 0:16:05.480 creating the potential for a downturn, which obviously has an 0:16:05.520 --> 0:16:09.200 impact on new vehicle sales, plus a price gap that 0:16:09.320 --> 0:16:12.840 could even widen because a lot of the battery components 0:16:12.880 --> 0:16:15.040 come from other parts of the world which will be 0:16:15.080 --> 0:16:19.040 impacted by the US reciprocal tariffs. And it doesn't add 0:16:19.120 --> 0:16:21.720 up to a good situation for ev adoption. 0:16:22.040 --> 0:16:24.840 Got one, This is brilliant, Brian. I got one final question, 0:16:25.440 --> 0:16:29.320 whether the Canadians are going to Myrtle Beach or Palm Beach. 0:16:30.120 --> 0:16:31.560 It's over, isn't it. 0:16:31.680 --> 0:16:36.400 Nobody's traveling right, No, I mean, the the numbers that 0:16:36.400 --> 0:16:40.440 we're seeing are just phenomenal. Some of our major border crossings, 0:16:40.680 --> 0:16:44.080 you're seeing travel down in some instances over forty percent. 0:16:44.760 --> 0:16:48.480 And so Canadians have really taken this personally. We're so 0:16:48.600 --> 0:16:51.520 closely tied to America and it's been such a strong 0:16:51.560 --> 0:16:54.360 relationship that a lot of Canadians just feel really kind 0:16:54.400 --> 0:16:56.800 of saddened by what's going on, and so they're canceling trips. 0:16:57.120 --> 0:16:59.440 So it is having a big impact on the tourism industry. 0:16:59.480 --> 0:17:02.200 We look for just speaking to you again. Brian Kingston's 0:17:02.240 --> 0:17:06.679 President of the chief executive officer the Canadian Vehicle Manufacturers 0:17:06.680 --> 0:17:11.280 Association and is closely affiliated with a VAMP Forum, which 0:17:11.320 --> 0:17:15.240 is a wonderful economic effort up at Canada. 0:17:15.720 --> 0:17:19.600 This is the Bloomberg Surveillance Podcast. Listen live each weekday 0:17:19.640 --> 0:17:22.960 starting at seven am Eastern on Applecarplay and Android Auto 0:17:23.080 --> 0:17:26.040 with the Bloomberg Business app. You can also listen live 0:17:26.119 --> 0:17:29.679 on Amazon Alexa from our flagship New York station, Just 0:17:29.760 --> 0:17:32.280 Say Alexa Play Bloomberg eleven thirty. 0:17:32.920 --> 0:17:35.640 Hugh von Steinas with you yesterday with Oliver Wyman. When 0:17:35.720 --> 0:17:38.920 Hu von Steinas wants to understand sanctions, there's one person 0:17:39.320 --> 0:17:42.600 he turns to joining us now from Oliver Wyman in Washington, 0:17:43.040 --> 0:17:46.439 Daniel Tannembaum. He's been a huge support for all of 0:17:46.480 --> 0:17:49.640 our efforts here. Just you know tannabomb one oh one, 0:17:49.960 --> 0:17:53.880 Dan Tannerbaum. Has sanctions against Russia been successful? 0:17:56.160 --> 0:17:57.879 Well, Tom, thank you for the intro, and it was 0:17:57.920 --> 0:18:00.959 good to see Hugh on yesterday. I think sanctions on 0:18:01.119 --> 0:18:03.840 Russia have played a role, But I think the challenge 0:18:03.880 --> 0:18:07.159 we've seen, particularly since Trump has taken office again, is 0:18:07.359 --> 0:18:11.520 the US really hasn't been driving on sanctions policy much 0:18:11.640 --> 0:18:13.840 at all. When I talked to my clients in the 0:18:13.840 --> 0:18:17.440 European Union, in the UK government, they're really not getting 0:18:17.480 --> 0:18:20.800 the same level of engagement. So without the continued usage 0:18:20.840 --> 0:18:23.080 of sanctions and then the enforcement of them for those 0:18:23.119 --> 0:18:25.560 who would violate them, it is hard to say that 0:18:25.600 --> 0:18:26.640 they're actually effective. 0:18:27.600 --> 0:18:30.920 So, Daniel, you're done in Washington, DC, the IMF meetings here, 0:18:31.000 --> 0:18:35.879 What are our trading partners telling you about kind of 0:18:36.440 --> 0:18:40.119 where they think the next hours will be, days will be, 0:18:40.520 --> 0:18:41.600 in weeks and months. 0:18:42.359 --> 0:18:44.960 Well, I mean we talked about this at Davos. Cautious 0:18:45.000 --> 0:18:48.400 optimism I think has shifted into just pure fatigue at 0:18:48.400 --> 0:18:52.159 this point. I think we saw the market spikes over 0:18:52.200 --> 0:18:54.800 the last few days with the announcements related to China. 0:18:54.880 --> 0:18:58.439 But my anticipation last night was we hadn't heard from China, 0:18:58.480 --> 0:19:01.440 and obviously we did over and their reaction was we're 0:19:01.480 --> 0:19:05.440 not actually talking. So everyone's really looking for smooth air, 0:19:05.520 --> 0:19:08.720 for some degree of a clear path forward, and I 0:19:08.800 --> 0:19:10.359 just don't think we're seeing that yet. 0:19:10.760 --> 0:19:13.520 Dan, at George Washington University a few years ago you 0:19:13.600 --> 0:19:16.760 took the courses. Is brutal. You think you're going to 0:19:16.800 --> 0:19:19.239 go in and get an a tannabomb. Was lucky you 0:19:19.240 --> 0:19:24.159 got out with the C plus negotiation three to two tannabomb. 0:19:24.480 --> 0:19:28.320 When President Trump says he's negotiating, is he negotiating? 0:19:29.080 --> 0:19:32.400 Well, that's the question. I mean, there are certainly some 0:19:32.480 --> 0:19:37.120 talks going on bilaterally with different trading partners post liberation Day, 0:19:37.440 --> 0:19:39.960 but China's made very clear we don't know what you're 0:19:40.000 --> 0:19:42.119 talking about. And that is a bit of the question 0:19:42.280 --> 0:19:46.560 right now of where is this discussion happening. Some countries 0:19:46.600 --> 0:19:49.119 are certainly having them, but remember all of these deals 0:19:49.119 --> 0:19:51.520 in ninety days was always going to be a tall order, 0:19:51.760 --> 0:19:54.199 and China is the one that probably requires the most attention, 0:19:54.359 --> 0:19:55.320 more so than anyone. 0:19:56.600 --> 0:19:59.879 So, Daniel, are we literally going to be trying to 0:20:00.000 --> 0:20:06.439 negotiate seventy odd trading negotiations and deals and all that 0:20:06.480 --> 0:20:06.960 kind of stuff? 0:20:07.000 --> 0:20:09.080 Is that what we're Is that our strategy. 0:20:09.200 --> 0:20:11.960 If you're to listen to people like Peter Navarro, Yes, 0:20:12.440 --> 0:20:15.240 because we're not doing this in any sort of block form. 0:20:15.680 --> 0:20:19.560 These are really one off trade deals where we had 0:20:19.680 --> 0:20:22.679 kind of broader alliances where you could impose trade on 0:20:22.720 --> 0:20:26.119 a broader scale. So that does seem like what may happen. 0:20:26.480 --> 0:20:29.359 I hope there'll be broader blocks that come in for 0:20:29.440 --> 0:20:31.639 some of the discussions with USTR and other parts of 0:20:31.680 --> 0:20:33.639 the government, but that is a bit of the question 0:20:33.720 --> 0:20:35.600 at this point of how they're going to navigate all 0:20:35.640 --> 0:20:36.120 of these. 0:20:36.080 --> 0:20:38.639 Now, Dantannabam, I want to come back to that discussion 0:20:38.720 --> 0:20:42.280 of doctor Navarro with some real criticism. I would say, 0:20:42.280 --> 0:20:45.760 within the Zeit case of doctor Navarro and Paul, would 0:20:45.800 --> 0:20:48.399 you say he's been sidelined the last week or two. 0:20:48.800 --> 0:20:51.800 Yeah, I certainly have not seen him as much as 0:20:51.880 --> 0:20:52.439 we had it right. 0:20:52.520 --> 0:20:56.439 I could never see Dantannabam's sideline norigy. Mister Tannabob's going 0:20:56.520 --> 0:20:58.439 to stay with us with Oliver Wyman here as we 0:20:58.480 --> 0:21:01.880 get this key claim data out here, we say good 0:21:01.920 --> 0:21:05.680