JR Afternoon with Chris Renwick

Tariff Tango Threatens North American Trade Harmony

November 26, 2024 ~ Chris Renwick and Anderson Economic Group, CEO, Patrick Anderson highlight potential economic fallout from proposed U.S. tariffs on Mexico and Canada, impacting industries like auto and agriculture, particularly in states like Michigan.

Duration:: 10m
Broadcast on:: 26 Nov 2024
Audio Format:: other

So there's no doubt that Mexico is far more dependent on trade with the United States than we are dependent on trade with Mexico. They get about 80% of their goods from us. Whereas it's it's really quite the opposite for us. What what is Mexico generally import to the United States vehicles. They've got electric electronic equipment. They've gotten different types of petroleum's crude petroleum oils. Medical instruments is a big exporter from Mexico into the United States. And if Donald Trump goes ahead and puts these 25% tariffs on places like Mexico, like Canada, with the explicit intent of these countries doing their part in eliminating illegal border crossers into the United States. Well, that's one way to look at it. Bill Ackman, who somebody is being considered as a member of the doge board said that on X, Donald Trump is going to use the tariffs as a weapon to achieve some sort of economic and political gain by holding these countries accountable for their lackadaisical approach in allowing people to come through their countries into the United States. Kenny turn them on. Kenny turn them off. Is it something that is easy as flipping a switch? Let's talk to Patrick Anderson, the principal and CEO of the Anderson Economic Group. It's great to talk with you, my friend. It's it's starting right out of the gate that these these tariffs are coming. Yeah, certainly. Incoming President Trump, President Elect Trump is wasting no time putting his stamp on economic policy. And you know, not even waiting to laugh for Thanksgiving. And we're bringing out the big guns. Is this is this something that people should fear? Could we see a tremendous rise in prices on on imports from Mexico? Everyone in Michigan and Ontario and Indiana and Ohio and Illinois and Texas and many other states should be taking this very seriously. First of all, this is the incoming president of the United States. He does have the authority to make tariff decisions like this. Second, he has ample authority to make immigration decisions. And this is obviously he's connecting immigration and particular illegal immigration and importing of fentanyl and other drugs directly to trade. And he's doing it in a very blunt and direct way. I think that's a charitable way to put this. And it's something that we need to take in Michigan very seriously. There's no state that is more vulnerable to let me say a tariff war with Canada and Mexico than Michigan. I'd say Ontario and Michigan and Ohio as well and other Midwestern states that are in have a strong connection with the auto industry. Michigan's got agriculture too. A lot of agricultural exports to go to Canada and Michigan has energy requirements. And so a lot of that oil comes from Canada. So this is definitely something we need to be taking very seriously. Obviously the voters and the incoming president both feel that immigration policy was again, let me be under statement here handled badly in the last administration and they want to be taken much more seriously. And here we are before Thanksgiving with a very serious threat being issued by a person who's the incoming president of our country. So at the end of the day, because I agree, I mean, I think that the ties that we in particular have to both Mexico and Canada make us particularly susceptible to a rise in prices. But is this more? Do you view this as more of an economic threat or as something that he will truly carry out? But right now to be straightforward, it is a threat. This is a person who's not presently in the United States yet. But he is going to be not too long from now. And when he when he takes office, he'll have authority to do things like this, including on immigration and trade. It's consistent with what he said during the during the campaign. It's one of the reasons people voted for him or in some cases against him. And I will remind folks that I and others weren't when he spoke in Detroit not too long ago, just weeks ago, and said things that pretty much were indicating this is the direction. So it's it's definitely a credible threat. It's definitely a signal of a different way of doing business of taking something seriously that a lot of voters think the current administration has not taken seriously. And it's it's something that where Michigan is vulnerable, if we don't get the kind of policy changes and here potentially Canada, Mexico and the United States that are acceptable, we could be really subject to a lot of disruption to our core industries of manufacturing and agriculture. You mentioned a tariff war, Claudia Shinebaum, the president of Mexico, in a in a letter that she is sending to incoming president Donald Trump. One of the things that she said is why in danger, companies like General Otter Stellontis or Ford Motor Company, with tariffs that would harm both nations. Any tariffs imposed by one side would likely prompt retaliatory tariffs, leading to risks for joint for the joint enterprises. You mentioned the tariff war. If it comes to that, how how, you know, if it's one thing that we're going to put these tariffs on these goods coming in from Mexico, how much more inflated would that be if Mexico then returns that favor? It's what the President of Mexico is saying is standard understanding of how tariffs work and standard understanding of how companies countries operate. And quite possibly, let me say a conner for that. Hey, you you tariff my country. We're going to tariff yours. And this is how you see things that that have deteriorated, such as the smooth Holly tariffs in the 1930s that help bring on and steepen the Great Depression. But Michigan is vulnerable here more than just prices. I mean, we are and have been for decades building cars, sending parts of cars across to Canada, having cars assembled in Canada, brought back across and vice versa, to the great benefit of both Canada and the United States. It's one of the reasons why the North American auto industry is still so strong, even with all it's been through. And obviously, the president, incoming president, is making clear a threat. He wants to take immigration and in particular illegal immigration much more seriously. He's making no bones about that. Let's hope we get that that settled because the potential cost to us in Michigan in particular is quite significant. What do you make of the number 25% to both Mexico and Canada? To me, it's like almost if you're going to make the threat, you'd want it to be a little higher. You really don't want those countries that are importing goods into the United States from Mexico to have to pay a 50% tariff, a 75% tariff. What did you make of the number when he announced that? 25% is a very big number. If you were sending auto assemblies back and forth. Let's say it's a 10% price, just 10% price increase. How many people here would feel quite comfortable paying 10% more for a car? Not many. Now, how many, if it was some other things such as garments or one-time purchase of something that costs less, maybe it doesn't affect you as much. But for our auto industry, it means a lot. And I'll say for agricultural exports, a 25% change in prices is quite significant. Do I think some scientific analysis went into the 25% number? No. Do I think 25% is a credible threat and a painful one? Yes. Interesting stuff as always. Patrick Anderson, thank you. Always appreciate your time. Have a wonderful Thanksgiving with your family. Will you please? All right. Happy Thanksgiving view, too. All right. You got it. That's Patrick Anderson, the president and CEO of the Anderson Economic Group here on JR afternoon. I want to hear from you. 800-859-0957-800-859-0WJ. This is something that Donald Trump has talked about. This is this is exactly what Donald Trump has laid out. In his campaign leading up to the election, he talked about using tariffs in a way that would make things very uncomfortable for other countries to help achieve America-first perspectives and help achieve things that he wants to get done, like stopping the flow of illegal immigration or stopping the flow of fentanyl entering the United States. Now, I will also give you something that Claudia Shinebaum, the president of Mexico said. Because I think one of the things she said was really quite tone-deaf. And I take um, I take Umbridge with it. Because when you're dealing with people and addictions, I'm not sure I would have gone to where she went. I'll give you what her comments were coming up and we'll get to your calls, your texts, 800-859-0957. You're listening to JR afternoon.