Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
Feb 27, 2025
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Mike Moffatt, Founding Director of the University of Ottawa's Missing Middle Initiative and former advisor to Justin Trudeau, offers a deep dive into Canada's economic challenges. He discusses the severe implications of U.S. tariffs on Canadian trade, housing crises, and the struggles of small businesses. Moffatt also shares insights on how political narratives influence public perceptions of economic policy, and he critiques the disparities within Canadian society, linking them to broader issues like manufacturing dependencies and immigration policies.
Canada's economy is grappling with a housing crisis driven by soaring prices, making homeownership increasingly unattainable for younger generations.
The appointment of Howard Lutnick's sons to lead Cantor Fitzgerald highlights concerns over nepotism and its potential impact on corporate governance and performance.
Tariffs imposed by the Trump administration could significantly threaten Canada's economic stability, reflecting the intertwined nature of U.S.-Canada economic relations and public perception.
Deep dives
Skiing Experiences and Cultural Observations
Skiing is seen as a mixed bag of thrill and dread, especially for those who have previously suffered injuries. One speaker reminisced about his ski trip, expressing anxiety about potential accidents, particularly the risk of tearing an ACL, which detracted from the enjoyment of the experience. The conversation navigated through the lighter side of ski culture, illustrating how European ski lunch breaks, with their festive atmospheres and absurdities, offer a stark contrast to more stressful skiing. While one speaker declares he's done with skiing altogether, another voices the enjoyment found in lunchtime camaraderie, emphasizing a diverse range of feelings toward the sport.
Apple's $500 Billion Investment and Its Implications
Apple announced plans to invest over $500 billion in American innovation over the next four years, a move perceived as politically motivated rather than a genuine expansion of operations. This funding aims to create 20,000 new jobs and develop a manufacturing facility in Houston but may simply repackage existing plans to appease government interests. Analysts suggest this investment is relatively expected given Apple's previous budgetary commitments, possibly less a bold initiative and more a strategic PR maneuver. The reality reflects a critical assessment of Apple's broader economic health, which includes challenges in matching the growth rates of its tech peers.
Nepotism in Corporate Leadership
A significant corporate governance shift occurred when Howard Lutnick appointed his sons to lead Cantor Fitzgerald, sparking debates about nepotism in the business world. This decision raised eyebrows due to the sons' relative inexperience and their family connection, typical in many companies yet often detrimental in terms of performance and innovation. The conversation explored how such leadership transitions can reflect personal ambitions rather than sound business practices, with examples cited from various industries, emphasizing that family legacy roles often lack the accountability present in publicly traded companies. Despite criticisms, Lutnick's control over the firm enables him to make such familial appointments without requiring external approval.
Consumer Spending and Economic Inequality
Latest data highlights a concerning trend in the United States, where the top 10% of earners account for nearly 50% of consumer spending, exacerbating wealth inequality. This concentration implies potential economic instability, as wealthier individuals tend to save more rather than spend, limiting stimulation in the broader economy and locking lower-income earners into a cycle of economic disadvantage. Such dynamics suggest a growing need for a more progressive tax structure to redistribute wealth and energize consumer spending within the lower or middle classes. The conversation extended to potential future societal impacts, including reduced social mobility and increased crime rates, framing these trends as a call to action.
Challenges in Canadian Society
Canada currently faces pressing challenges, particularly in housing, inequality, and economic structure, highlighted by soaring home prices that displace younger generations. With an average household price significantly above many residents’ means, homeownership has become increasingly elusive, prompting young Canadians to remain with their parents longer. Economic concentration has also become a pain point, where a few families dominate the market, stifling competition and innovation. The discussion presented a picture of a nation grappling with growing pains, much like its southern neighbor, but with its distinct context and cultural considerations influencing outcomes.
Ed and Scott open the show by discussing Apple’s new investment in “American innovation,” Howard Lutnik’s decision to put his sons in charge of Cantor Fitzgerald, and a new Moody’s Analytics report on U.S. consumer spending. Then Mike Moffatt, Founding Director of the University of Ottawa's "Missing Middle Initiative” and former economic adviser to Liberal Leader Justin Trudeau, joins the show to unpack the biggest challenges facing Canada’s economy. He offers insight into the country’s political landscape, breaks down its housing crisis and explains why small businesses struggle to thrive in Canada. Finally, Mike explains how Canadians perceive the Trump administration’s rhetoric and what tariffs could mean for Canada’s economic future.
