Tariffs, Explained: The latest on U.S. trade measures and what it means for us

As a new set of tariffs on Canadian goods is announced by the U.S. Administration, we call on the experts for advice. Ashley Kalyn, International Trade Consultant at Peacock Tariff Consulting (peacocktariffconsulting.com), joins host Andrew Ross to talk about the new and changing tariff landscape, what aftermarket organizations need to focus on, and what it might signal for the overall economy.

Transcript

SPEAKER_00 0:33

Welcome to the podcast, everyone. It's your host Andrew Ross. Now, this topic of tariffs has been with us for a little while. Uh, you know, as a result of maneuvers uh in on the part of the U.S. administration going back uh you know more than a year now. Now some of those were overturned, uh, new ones were introduced, and then just very, very, very recently, a new round of tariffs have been suggested. Um so uh as I'm not an expert on such international trade issues, I thought, well, let's do what we always tell our uh clients to do and our shops to do, is look for the experts, right? So uh so with me today uh on the podcast is Ashley Kalen, uh international trade consultant with the Peacock Tariff Peacock Tariff Consulting with offices in Aurelia, Ontario and Washington, D.C. and uh places around the world as a global business, right? So Ashley, uh thanks for joining me on the podcast.

SPEAKER_02 1:25

Oh, I'm happy to be here. Thank you so much, Andrew.

SPEAKER_00 1:28

Yeah. So you uh just before we started recording, you said, you know, the tariff business used to be a really methodical, predictable business. Um, welcome to an exciting exciting world of tariffs these days, I guess.

SPEAKER_02 1:42

Uh it's funny. I uh I call anybody who works in tariffs right now the modern day pharmaceutical rep because it's such a hot career right now. Uh it's uh it's a real growth industry, although super niche. Uh it's it's very important. I'm grateful for the opportunity and I'm excited about what's been going on. I mean, is it great for Canadians or Americans? Not necessarily, but it's an interesting time in history.

SPEAKER_00 2:06

Right, right, right. So, I mean, uh as we're speaking, just days ago, uh, the latest round of uh uh tariffs has been uh proposed by the US administration on a whole host of products, um, but with a really strong focus uh on addressing some what they consider to be um inequities in dairy and uh most importantly to us in automotive. Uh, even though the products themselves that have been listed aren't necessarily automotive, it's clearly that's their focus, right?

SPEAKER_02 2:40

Yeah, so I on Monday he imposed a tariff from section 338 of the 1930 Smoot Hawley Act. Uh, it has not been used yet in this trade war. It is brand new, um, but he did it the right way. So there's actually there's actual legal basis here. Um, in the past, he's enacted uh trade and tariff, um, he's imposed tariffs not legally, I would say. And that's why the Supreme Court could turn around and turn them over. And that's why we're seeing a lot of companies now are getting refunded from that. But this this was done legally. Uh apparently we were discriminatory against American products. So uh, for example, we didn't want to have American alcohol on the shelves anymore. And that and that is his basis in all of it. Um, he's turned around and he's put a 50% tariff on, I think upwards of $20 billion worth of Canadian goods. And it's it's been a very busy few days for us, let's put it that way. As a Canadian-based uh tariff consulting firm, the phone has been ringing nonstop. Um, great for business, not great for Canadian business owners. The uh the tariffs hit milk and cream, hockey equipment, uh alcohol, cement, electrical equipment, and machinery. Um uh, as you know, the uh the automotive aftermarket is already the most exposed segment, uh, with section 232 hitting aluminum and steel. Um, and it's it's just been tough all around.

SPEAKER_00 4:10

Yeah. So uh, I mean, these are certainly a different basis from what we've seen. As you suggest he's really they've really dug into the memory banks here for this uh uh legal platform to support this this move. Um, you're suggesting that that this one is a more firm basis uh uh you know on which to to launch these tariffs than some of the ones that that were actually overturned, right? And and that's it.

SPEAKER_02 4:35

Yeah, so it does have a legal basis, and that's why we're taking it a bit more seriously. Um, because he in the past Trump has stomped his feet and has made decisions rashly without much consideration, or and he hasn't listened to his aides or or any of the legal items. He's just gone ahead and done things, and that's why they've been overturned. This, however, is is a very real, is a very real tariff. Um, and I don't think it's going anywhere. Like we have 30 days to discuss, uh, and Carney's not taking it lying down, but who knows? Um, who knows? Uh it they are intensifying the trade discussions in response to these tariffs, but it it might have teeth. And I think that's why he did it in the first place was to see if it it would stand. Because if this works against Canadians, he can turn around and impose this against European countries as well.

SPEAKER_00 5:30

Right, right, right.

SPEAKER_02 5:31

So we're sort of the guinea pigs in in this one, that sounds like then which is unfortunate considering you know the relationship that we've had historically.

SPEAKER_00 5:40

Right.

SPEAKER_02 5:40

It's very disappointing, and it's a it's a it's a big sign of an economic downturn. It's a big sign of economic depression. Um, again, the last time this was put into place, it was 1930. Uh, it wasn't blamed for the Great Depression necessarily, but it was a huge part of it, and it worsened how things were going in the 1930s. Uh, it seems to be a bit of a trend. Uh every uh uh like it seems to be a trend. The 1830s, the 1930s, and now the 2030s, what we're going into. Um, him doing this is really just writing on the wall of where the American economy is and where it's going.

SPEAKER_00 6:19

Right, right, right. Because you know, we won't hear them uh very much uh people in the administration admit uh that there's any difficulties whatsoever in any of the uh economies, right? It's just not right, but it's kind of uh roses, you know.

SPEAKER_02 6:30

So yeah, well, just like we read Teeleys, right? And just his actions here, uh it was concerning. Right. It was concerning. It was like, okay, there's much more to it than what meets the eye. This is a sign of huge economic depression and things to come.

SPEAKER_00 6:48

Right, right, right. For the the kind of more uh near term, uh for aftermarket organizations, uh, both in light of the current uh the new uh tariff introductions and you know the current landscape. Uh uh, you know, what what what do they need to be watching for and uh you know how do they navigate the this to the I mean to mitigate, I guess, the the impact as much as they can?

SPEAKER_02 7:15

So in my opinion, uh okay, every time a tariff is imposed, it hurts. Margins decrease, companies absorb it, they try, they try to lessen the pain on their clients by absorbing the tariff, and then over time prices increase. That's just historically that's what happens. So it's gonna be painful for a little bit, automotive, especially, as it has been, as you know, automotive uh companies have been used to, it's gonna be painful for a little bit, uh, for a little bit. But the number one most important thing moving forward is compliance. So my company is based or is made up of uh compliance professionals with decades of experience. Um and like we discussed previously, uh trade has been very methodical up until this point. Um, so compliance was was simple and straightforward, not so much anymore. Um, with this change, the customs border patrol, uh, they're gonna be flagging things much quicker. Uh we've seen it with 232 with aluminum and steel. If you are not compliant, if you are misclassifying, or if you're not 100% above board, it's not just a slap on the wrist anymore. It's it's very serious. So uh yeah, absolutely. Confirm your compliance status on every scoop now. It's the single biggest lever on exposure. Uh rules have shifted twice in a year. It's be on stay on top of it. Like use duty drawback, bonded warehouse strategies where possible. Uh diversify your supplier and distribution redundancy across the border rather than relying on one-directional flow. Have a contingency pricing and sourcing plan ready before August 19th when this goes into motion, not afterwards.

SPEAKER_00 8:59

Right, right.

SPEAKER_02 9:00

And that's that's my advice. That's my advice to you.

SPEAKER_00 9:03

Yeah, yeah. I mean, it's you know, an awful lot of the uh, you know, the trade and the aftermarket is is cross-border, you know, the distribution organizations uh straddle the the Canada US border and and beyond. Uh you know, they're big they're big organizations, they're moving parts around a lot. Uh and uh you can I don't know, I don't want to be, I don't want to, I don't want to be the person, the logistics uh professional responsible for getting something hung up because it wasn't classified properly or in a timely fashion or something, some piece of paperwork didn't get uh didn't get filled out quite correctly and something gets hung up for uh who knows, you know?

SPEAKER_02 9:43

They're sitting in the hot seat right now. There's no question. That's why the phone's ringing off the hook.

SPEAKER_00 9:47

Right, right, right, right. Well, what's the outlook? I mean, that's that's I mean, is is this is this just gonna be more of this till we don't know when, or or or is is there any kind of suggestion that there might be a return to, I don't know, the old new normal or where there's the relationships are predictable, or or is just this, you know, the new chaos where the new normal.

SPEAKER_02 10:10

So honestly, what I tell people when I'm talking to companies and I'm I'm pitching them about Peacock and our services, uh, I tell them like this this is how it is now. And it's true, even if Trump, you know, is gone, is out of the picture, what has been set in motion is in motion. So these times may be unprecedented, but this is just how it is. Um, I've gotten into it a few times with with veterans who are, you know, been business owners for 30, 40, 50 years. And oh, you know, tariffs can't stick, care tariffs can't stay. It's like, well, yeah, yeah, they can. Yeah, they can and they have. I mean, tariffs are an original um tactic for international trade. It's not like it's a new thing, uh, they're just being imposed more and more often now. Uh, money is being made in places that the country hasn't seen before, the US country hasn't seen before. And I think new leadership will recognize that and they'll see that the money's coming in, and the powers that be will not want to be left hung out to dry. They they see that the money is coming in uh from these things and they they won't want to give up on it.

SPEAKER_00 11:14

Right, right. It's very difficult to find uh any kind of government coming in and you know, so uh it is uh kind of crazy that way. So um yeah, so again, uh you know, uh so the outlook for for professionals, I guess, is to um just uh you know uh deal with the reality that we have, or live in the world that it that of reality and not wish for a world that we don't have, right? And we're hearing that a lot lately.

SPEAKER_02 11:45

So it it is what it is, it is what it is, and I mean I I think the business owners are feeling it the most. It's it's awful, especially like as a Canadian. Like I know I've talked to people and they're just distraught. Um, I mean, this is the difference between the light staying on, right? For many, for many small and medium-sized enterprises. So it's a lot, it it is. Um, but again, this isn't it's not set in stone yet, right? We have until August 19th for uh anything to be changed or or more things to come to light. Uh, we are working vigorously. Um just another note that is interesting in 2018 and 2019, Canada matched US tariffs dollar for toll for dollar for dollar and held them for 14 months until both sides stood down together. So, I mean, just informed speculation. Icarney did say he didn't want that to happen again, but you know, we're not taking it lying down.

SPEAKER_00 12:41

Right, right, right. It just seems like, you know, in talking to some, you know, the distribution professionals uh at the you know, if the first rounds came in uh, you know, some time ago, about a year ago now, um, and the amount of resources they were finding they had to spend, getting basically all of their a lot of their best people in their you know, uh finance departments spending now a lot of time and resources to do exactly what you said is to figure out where things were and what they were, you know, being compliant and also making sure that they were, you know, accounting for these additional costs. Uh and it's just a huge drag on business, even just that part of it, you know.

SPEAKER_02 13:17

Oh, huge, huge. But that's where we come in. So again, we're super niche, right? The need for us popped up overnight, but it's important. I mean, business owners have enough on their plate, right? You have to run your business, you have so much to worry about. Um, and the reality is not many companies can afford to have an entire floor of compliance professionals.

unknown 13:38

Right.

SPEAKER_02 13:38

You know what I mean? So that's why having the knowledge and the expertise on your side, we are purposely not customs brokers because we want to be able to advise you on your best possible route. Um, and that's where we step in.

SPEAKER_00 13:51

Right, right. Well, super, I mean, I never imagined, you know, uh some years ago that I would even be thinking about tariffs because as you said, it was a totally stable area. A totally stable area, you know, nothing it was boring as heck. Uh, nothing changed, you know. It was, you know, this percentage coming in offshore and and uh almost nothing except for a few exceptions coming across Canada US border for as long as I can remember, new age, new days, new realities, right? Um, and uh maybe the need for some new professionals uh to help out, right? So uh Ashley, uh it's great. Thank you so much, Hammond. Uh we'll put uh some contact information in the show notes on this. Uh, but uh uh for those who are listening, uh, you know, get your compliance right. Uh if if you know, yes, uh seek professional help if you don't have it in-house, but by all means, do not ignore it, it will not go away, it will get you into trouble. So all right. Thanks very much, Ashley. Thanks everyone for listening. And uh uh hang on, everybody, it's gonna be another wild ride, I guess. Take care.

SPEAKER_01 15:07

You are listening to the great Canadian After American podcast, brought to you by the publishers of Indie Garage and Jumper Nation. Connect with us online at indiegarage.ca and jumper nation.ca, a brilliant of chat integrated media.