Packing Bags or Just Changing Seats? U.S. Eyes Mideast Pivot

0:00What we've been talking about it for some time now. I mean, Michigan's vulnerability when it comes to the tariff tiff, the back and forth between the United States and Canada because of our geographic location, because of the collaborative work that the United States and Canada does together in Michigan at the center of all of that. And obviously the mod automotive industry is in that spotlight more than any other. And with these new retaliatory tariffs in effect, what can we come to expect? Let's talk about it. Glenn Stevens is the executive director of Mishado and joins us once again this morning. Glenn, good to have you back. Good morning, guys. How are you today? We're good. We're good. Are you? What are we starting to see now? These have been in place now for 24 hours or so. And what can we expect realistically over the next coming weeks if if a deal isn't put into place? Well, yesterday was quite a day. There was a lot that happened in Washington yesterday in Ottawa. Of course, the Canadian tariffs went into place. But then we

1:05decided to issue some retaliation on our own out of the US trade office in the White House. And we reworked some of the previous tariffs we could put in place. I mean, literally, you have to have a scorecard for this thing at this point. And so what we can expect to see is unfortunately an escalation of a situation which looked really good just about 21-22 days ago. We're not really sure what the impact is going to be across all factors. But what the biggest problem I think guys is that we're starting to punch holes into the framework of the USMCA. That's not a good sign. Should auto workers Glenn be concerned about production slowdowns or maybe some temporary layoffs or companies moving investments elsewhere? Well, that's a great question. We get that question a lot. What I tell people is, and I ran into a CEO this weekend and we talked about it. And I can tell you, we've talked about this before. One of the things they have, everybody has this fatigue from this because it's hard enough to build a vehicle and a modern

2:09in a modern global supply chain. And now you've got all this complexity that's coming at people. So this uncertainty word is very, very big. But what I would say to your question, Lloyd, is that the market's still pretty stable. It's not robust. It's not in bad shape, but it's really fragile. And if this keeps going in this direction, there's just no way that it's not going to dampen demand. And you know what happens when that happens. It flows back to the supply chain. How do auto companies deal with this? And more broadly, how do they deal with it from a whiplash perspective? Because look, when you go from administration to administration, you know, a different party changes hands in the White House, all of a sudden you've got a different set of priorities. But when you start getting down to the nitty gritty and these tariffs start start taking effect, how do the companies navigate those waters? Well, one of the things they do is they take a lot of resources from their, the people they have

3:10or having to hire external resources to navigate this. So you know, as I said, the supply chain's complex. But now you're laying on all these various tariffs and retaliatory. So what you need to do is you, first of all, you want to mitigate it. So you're going to look to how can I get around these tariffs? How can I maybe change a supply source on a resin or maybe a steel that I buy or aluminum I buy? So the amount of resources that it takes has really been exhausting. And then, you know, of course, they had tariffs which were reversed by the Supreme Court. So companies are not going back for refunds, more administrative costs. And then, of course, this big uncertainty, you're not going to make major decisions. You're not going to put expansion on hold. It's quite paralyzing. And again, I'll say it's fatiguing to companies to continually get up and say, okay, what do I have to navigate today? I wonder too, Glenn, you know, the president is now threatening to block Bombardier, the aircraft from the US market. Are you concerned that maybe expanding

4:12this dispute beyond the automobile is going to make it hard for negotiated settlement? Well, you know, that's interesting. That really reared it's had the last few days too. I mean, Bombardier is a basically an OEM that operates in Canada and they build vehicle or build aircraft. But they have literally hundreds, if not a thousand American suppliers that supply them. They have engines that come from different parts of the country, our country that go up to Canada. It's extremely similar to the integrated automotive supply chain and it's extremely concerning that we're now expanding and looking at different products. And this is again, the framework for USMCA is still in place, but now that tariffs in the retaliatory are starting to supersede it, and that is really concerning. And it is going to impact things. And again, boy, we're really concerned about jobs. Yeah, I'm glad you brought up the USMCA because I think that that's another major factor here is so some of these tariffs are superseding that trade agreement,

5:16but that trade agreement is still in flux. Yeah, well, exactly. We were headed towards a path of strengthening it. And now we're very far from that. So the frameworks in place, but these tariffs and these retaliations do override it. And again, that's going to cause input costs to go up and the tariffs have to be paid by somebody and companies cannot absorb more input costs right now. So what do they do? They have to pass that up the supply chain and ultimately to the customer. And while we don't know what we're going to see from a fallout standpoint, nothing is indicating real well right now. And we got about 30 seconds, Glenn. Does this dispute risk permanently damaging our relationship with Canada even after the tariffs are maybe removed? Well, there's a lot of damage that's been done and it can be repaired, but I think the key is, I've said this before, we should be stronger together with Canada on a global stage,

6:18not separating ourselves or moving away from an incredibly important trade partner. Yeah, no doubt about it, Glenn Stevens. We appreciate you. Thank you. We'll talk soon. Thanks guys. Have a good day. You do the same. You know, the other part too is the United States does things well. Canada does things well. Mexico does things well. And we rely on all of those strengths in order to build a vehicle. Yes. And so when you start isolating, when you start pushing away, when you start throwing a monkey wrench into those strengths, all of a sudden, that really does throw off how you're able to produce at mass vehicles, for example. All right, coming up on the other side, Mike's, my cox is giving money back. Why? We'll talk about it.