Transcript:
"China and Canada both unveiling their own counter measures against US tariffs. China will enact a 34% levy on all US imports and Canada planning to tariff all US-made vehicles at 25%. Canadian Prime Minister Mark Carney calling President Trump's protectionist policies a tragedy for global trade."
"Our old relationship of steadily deepening integration with the United States, is over. Well this is a tragedy. It is also the new reality. We must respond with both purpose and force"
"Joining us now to discuss what's next in tariff negotiations, Kevin O'Leary. O'Leary Ventures chairman. Kevin great to have you back with us. Thank you for making the time. I want to start on these tariffs. The market is on track right now for its worst weekly performance since March of 2020. How do you continue to be an advocate for these tariffs given the selloff we're seeing, given that I have had every source on our show this morning say that these tariffs will be causing a recession in the United States?"
"They don't know that yet, they don't know how long the tariffs' going to be on. Uh we've never done this before. We've never taken on the entire globe. Usually it's done in trade agreements with specific countries such as NAFTA which was Canada and Mexico or European Union situation. This is unique, over 60 countries.
Now there's two aspects to these tariffs. Number one is there's reciprocality uh against tariffs from one country to another based on products and services that are specific. So if you're charging a 20% tariff in India, it's going to be reciprocated in the United States and those go away pretty quickly. That that actually leads to fair trade.
The more complex aspect of these negotiations are around the idea of trade imbalances. And so when you put on tariffs to try and fix trade imbalance, it's difficult, because the largest economy on earth is the United States. So really you're starting a behemoth negotiation. And it's, it's happening in every country. You highlighted Canada but you might as well talk about Britain or even Switzerland where I am right now where they have over 30% tariffs imposed 48 hours ago.
And so you can assume that behind the scenes are two spheres of negotiations. One is, let's try and reduce the imbalance of trade, by buying more stuff from the United States, that's one signal. And the other which is very easy to fix is simply, remove all tariffs. If you're going to have reciprocal tariffs at 20%, 30%, 40%, just get rid of them, bring them down to zero"
"But Kevin as of this morning with the 34% retaliatory tariff from China to the United States we are not getting closer to free trade. We are just getting further into a trade war"
"No, China's a whole different story. This isn't about trade war with China. This is about leveling the playing field on a wide range of issues including IP law, access to business, access to courts. Being compliant with US regulations on securities. There is a laundry list of grievances with China that have been around since they joined the WTO. And none of the administrations previously have ever dealt with China"
"So why are tariffs the right way-"
"dealt with for the first time. So this has nothing to do with just tariffs. I mean right now I can't litigate"
"But that's the tool that the administration is using. Why are tariffs the correct tool if to your point these have nothing to do with tariffs?"
"What tool do you suggest they do when nothing else is-"
"I'm not the president. It's not my job"
"Well exactly. So let him do his work. China's different than all the other countries, China has to be dealt with. I am, listen, I'm having lots of problems with China as are millions of other companies in the United States that try to do business there. They do not play by the rules. They're going to have to start doing it pretty soon. That's a different conversation.
You want to talk about the markets correcting, yes they are. By the way, markets correct every 18 months, up to 20%. You're watching it happen right now, it's not pleasant. You can't blame just the tariffs for this. These have been very expensive markets now for almost 18 months. Now they're having a correction. I think what matters is is this a recession signal, yes or no. And how long will these tariffs be on?
I would say 50% of these tariffs across these 60 countries will be negotiated pretty quickly, including the Canadian situation you made details on. Canada's different because they're in the middle of an election. Carney's not an elected official. He has no mandate from the Canadian people. He's just an interm prime minister when they threw out Justin Trudeau a few weeks ago. He's got to get elected first. So he's going to say anything he possibly can to try and distract Canadian voters from the fact that his party bankrupt the country. 25% of Canadians live in poverty. They have had no GDP growth for 10 years. There's no, in, investment capital in Canada anymore. And the dollar's lost 41% of its value. Canadians can't go to the United States because they can't afford it under Carney's leadership in his party.
So those are different issues too. There's a lot of things going on at the same time"
"A lot of things that economists tell me are not fixable via tariffs. But I am curious from your perspective then, why do you think that we are moving towards a negotiation where these tariffs are not going to be as bad as they seem right now at least for financial markets? What is it that gives you confidence that there is going to be a negotiation reached"
"Because there, there's a good reason to do it. I mean you got to distinguish the noise versus the signal, I've said this countless times about Trump. Let's take the Canadian situation which we've been talking about. If you combine those economies, I'm not saying buying the country but if you combine the economies which seems impossible to do given the rhetoric and what's going on right now, but the truth is, the signal is it would be much stronger against China if there were no tariffs between Canada and the United States and they had a common currency and they protected the northern border, not the 49th parallel.
Now the Canadians know that's worth it because 75% of their output has been sold to the United States for over 120 years. 17 states call Canada the number one trading partner. 28 states in addition to those 17 number two trading partner's Canada. So it'd be economic suicide not to work this out. The obvious answer is to remove all tariffs, and that will happen, my guess is right after the election when the Canadians make their choice about who they want to lead them, that person will fly to Washington immediately and start negotiations, which I would call NAFTA 3. But right now that's not happening because Carney's trying to use this whole Trump issue as fulcrum to try and distract Canadians away from the facts that he wiped out the country. Maybe he'll get elected maybe he won't, nobody knows right now. But nothing's going to happen on the Canadian situation until the election's over in just over 5 weeks"
"So let's talk about the Canadian citizen reaction because we've already seen evidence of Canadian citizens boycotting American products. We've heard from CEOs that they are concerned about that. Even airline CEOs and the governor of New York being concerned about Canadians not wanting to travel to the United States. Are you getting that push back from your fellow citizens in Canada?
"No no no, you can understand if you've got the froth and rhetoric around an election cycle why you would get some of that in. Some Canadians are unhappy, there's no question about it. But Canadians are not stupid. They understand the economic advantage of working and selling to the United States and having no tariff whatsoever. The behemoth economy is a golden jewel of an idea, and everybody gets that joke. Americans do not hate Canadians, Canadians do not hate Americans. Politicians have lots of rhetoric when they're trying to get elected, that's what they're doing here. All of this will pass too. What drives everybody long term are economic interests. And that's what really you should focus on here. This will pass. Things will calm down. More rational minds will sit at a table across from each other in about six weeks in Washington and in Ottawa."
"More rational than, more rational than the president?"
"At the end of the day the president's not an idiot either. Neither is Lutnick or Burgum or any of those people negotiating these deals right now. You have to look at the economic opportunity. They're not idiots, they're negotiating. This is a giant nasty negotiation with a little bit of politics and a little dash of dewy of politics because of the crazy timing of the Canadian election. Trump has a four-year mandate, at least two of them are in a majority situation. If he's going to do all of this volatile stuff, which he's doing right now, he's got to do it now, because he may not have a majority mandate after the midterms. So that's why you're getting such an accelerated pace of policy. These tariffs, as I said earlier, 50% of them can be easily melted away to a reciprocal of zero tariffs. And then this trade deficit is a trickier situation country by country. The only reason there's a deficit in Canada is the fact that so much oil is imported from Alberta into the US economy. If you took away oil, Canadians buy more goods and services from the United States than vice versa. There is no trade deficit ex-oil. So that is obvious too. The numbers are the numbers. It will get resolved. And I think calmer minds will prevail after the the election is over in Canada Kevin"
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