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‘The stakes are high’: Theo Argitis on Trump’s inauguration speech and the latest tariff threats

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President Donald Trump speaks during the 60th Presidential Inauguration in the Rotunda of the U.S. Capitol in Washington, Monday, Jan. 20, 2025. Pool Photo via AP/Chip Somodevilla.

Theo Argitis, managing director at Compass Rose Group and publisher of the Means & Ways newsletter, joins Hub publisher Rudyard Griffiths for a breakdown of Trump’s inauguration and the latest tariff threats being made by the American president.

The following is an automated transcript. If you are quoting from or referencing this episode, please refer to the audio to verify.

RUDYARD GRIFFITHS: Hi Rudyard Griffiths, here, the publisher of The Hub. Welcome to this our up to speed short video series on this program. We interview regular contributors to the hub. Give you a sense of their latest news insights and analysis on the key issues and events making the news today. We’re fortunate to have on the program. Theo Argitis, managing director at Compass Rose group. Theo great to be in conversation with you about a terrific snapshot that you provided our readers this morning the day after the Trump inauguration, outlining some of your key thoughts on how Canada should respond to the tariffs. So let’s start there. Theo, how concerned are you about the news that came late last night, that the President is mulling over the idea, the suggestion that there could be a 25% tariff on Canadian imports into the United States as of February 1.

THEO ARGITIS: Yeah, we’ll talk about whiplash, right? Because earlier in the day, we were seeing reports out of the US where we wouldn’t be seeing tariffs anytime soon, that the US administration would be studying the matter, and everyone felt that we had been given a little bit of a grace period there to kind of, you know, negotiate with Trump, and then at the end of the day, really, as a response to a question from a journalist. So it was off the cuff, saying that we could face tariffs, blanket tariffs of as much as 25% as of February 1. So, I mean, I think this reflects a couple of things. One, I think that it reflects that Trump’s primary objective is to create as much chaos and uncertainty as possible. He believes that it maximizes his negotiating power. And you know, the more he scares the hell out of us he thinks, the more likely we are to negotiate. And maybe his objectives are not necessarily to to kill the Canadian economy, but to just for us to kind of concede on a few things, which is why I actually do not think that we are going to se tariffs imminently, because I think that would undermine his negotiating power the moment he imposes tariffs. Then, of course, Canada and Mexico are going to respond in kind, and that’s going to impose a massive cost on the US economy and the US consumer, and, of course, he’ll also galvanize opposition within the US. So I think his objective is essentially to create a lot of uncertainty. The other thing I would say is I actually don’t believe we are going to see blanket tariffs. I think that kind of undermines some other kind of objectives he has for for, you know, the domestic economy in the US, I think we’re going to see more targeted tariffs going forward, but certainly, you know, he’s going to keep us guessing, and he’s going to create a lot of uncertainty, because he believes that’s how he’s going to maximize his negotiating power.

RUDYARD GRIFFITHS: Theo, what is your advice for Canadian decision makers? You had some in your your brief for us today at the hub.ca. I mean, it’s very destabilizing, isn’t it? I mean, you, you have these seemingly, as you said off the cuff, remarks, it’s whiplash. It’s it’s one message in the morning, we’re going to study tariffs, and then come eight o’clock at night, no 25% as of February 1, should Canadian decision makers be reacting to this? Is it instead? Maybe just kind of noise that we should be tuning out, and if and when tariffs come, we’ll react, but until then, all of this is just a president sounding off.

THEO ARGITIS: Yeah. I mean, the stakes are so high that mean we can, we can talk about this in theory and talk about, you know, what you know our negotiating tactics are should be. But the reality is that if we’re wrong, then, I mean, the the cost is, is huge, which is what he’s trying to exploit here. So I think we need to, but having said that, I mean, we do need to kind of think through, kind of the probabilities. And I don’t think that blanket tariffs imminently is a high probability thing. But again, the costs are so high for wrong that you know you have to be careful here. I mean, the Canadian government has kind of already talked about a three kind of prong, plan one. And this is something that Melanie Joly was talking about yesterday at the cabinet retreat they were having here nearby in August. Were one, you know, to avoid the tariffs, which is the right, you know, top priority for for Canada. The second priority is to prepare retaliatory tariffs, if needed to retaliate. And the third priority is trade diversification. And so that’s kind of what the government is telling us. I mean, I think it’s important to talk about retaliation. I think we need to kind of make the Americans uncomfortable as well as as uncomfortable as they are making us feel. The problem with retaliation is, if we get into a trade war, I don’t know if it’s a trade war, a war we can win. We are much more reliant on the US economy than the US is on us prolonged trade war, we will lose a prolonged trade war, and it would require a lot of resolve, political resolve that I don’t think we have right now. And I actually don’t even think we even have a well thought out plan. And on the on the other kind of, the third kind of, kind of part of that plan, the trade diversification. We’ve been trying to diversify from the US for about five decades now, unsuccessful. Yeah, I don’t know why we would think that would be any different. So I think, I think our focus should definitely be on avoiding trade tariffs, avoiding us tariffs. And you know, how we go about doing that is, is what we should be focused on. And it becomes clear, once you kind of look closely at the issue, becomes pretty clear that, you know, the the Trump administration will try very hard to redirect as much demand towards us, production of goods and services as it can. That is kind of the focus. They want more production in the US. They want to re industrialize the US. And once you kind of see it through that lens, it becomes pretty clear for us that it becomes pretty clear that for Canada, we will need to buy more US goods, and we have to figure out how we can do that, the big trip, I mean, that’s also easier said than done, because what ultimately that means in the medium and long term is that we would probably need to buy fewer goods from the rest of the world. So we’re going to have to figure out a way if we want to avoid trade war, and assuming that these threats are credible, that we will have to find a way to redirect some of our demand, Canadian consumers and businesses, away from from the rest of the world, towards the US.

RUDYARD GRIFFITHS: Yeah. Final question, Theo, many of our viewers will know that you were a Bloomberg News reporter for almost a quarter century. So you know something about markets and the economy. What are your thoughts on the market reaction today? A little bit of sell off in the dollar, but given the threat, maybe not as much as people thought, and the market reaction here on the TSX and elsewhere, quite muted at this point. What’s going on here? Why aren’t, why aren’t markets in the dollar reacting more to uncertainty? I always thought markets didn’t like uncertainty.

THEO ARGITIS: Well, I mean, I think, I mean, we have seen the dollar fall quite a bit over the last 12 months or so. So there has been, and certainly since, since the election, and the threats that Trump made just after the election. So the US, the Canadian dollar, has actually lost about 8% I think, against the US dollar and and so we have already seen the markets price in some of that uncertainty. I think you know, as I you know, was just saying, I think the markets are pricing in a low probability of a massive trade war. I don’t think people think Trump is irrational to the point that he would undermine the US economy. So I think the markets are simply pricing in scenario that is not the worst case scenario, and it’s wait and see. And we just saw, you know, just kind of the whiplash that we had yesterday. I think that doesn’t really kind of suggest seriousness, either. So I think people are just people think he’s just negotiating.

RUDYARD GRIFFITHS: Yeah, we will wait and see, as they say, theoretus, managing director at the Compass Rose group. Thank you for coming on up to speed today and sharing your analysis and insights. I urge our listening audience to head over to the hub.ca and check out the latest edition of in the know, we’ve got Theo providing some real time commentary and analysis on yesterday’s news. Thanks everyone for being part of the program.

The Hub Staff

The Hub’s mission is to create and curate news, analysis, and insights about a dynamic and better future for Canada in a single online information source.

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