The Munk Debates Podcast

Friday Focus: A late night tariff announcement and Canada's plan to recognize a Palestinian state

Aug 1, 2025
A sudden 35% tariff imposed on certain Canadian goods raises questions about trade negotiations and economic sovereignty. Discussions revolve around the implications for key industries like aluminum and steel. Meanwhile, Canada's plan to recognize Palestinian statehood at the UN introduces tension, as it may complicate conflicts and strengthen adversarial positions. Notably, some Arab nations are calling for Hamas to disarm, hinting at shifting dynamics in the region.
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INSIGHT

Impact of Trump's Tariff Announcement

  • Trump's new 35% tariff affects 10% of Canadian goods outside CUSMA, but steel, aluminum, and auto tariffs remain punitive.
  • This partial tariff hike causes significant disruption, particularly in the Canadian auto sector, making some Canadian auto parts costlier in the U.S. than those from Japan or Europe.
INSIGHT

Uncertainty Overshadows Tariff Hikes

  • The uncertainty due to absence of a deal on CUSMA affects Canadian business and economy greater than the 1% tariff increase.
  • The future of CUSMA is grim with potential for a flat 15% tariff toll to access the U.S. market, signaling an end to the free trade era.
INSIGHT

Canada's Trade Dilemma with U.S.

  • Canada is uniquely exposed to the U.S. economy but was unwilling to accept a flat tariff and large investment commitments like Europe and Japan.
  • Canada's challenge is balancing economic dependence on the U.S. with preserving sovereignty and managing complex issues like supply management.
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