Tariffs on Canada Spark Trade War

I'M JENNIFER CRAWFORD AS THE TRADE WAR BETWEEN THE UNITED STATES AND CANADA HEATS UP. ECONOMISTS SAY YOU MIGHT WANT TO BRACE YOURSELF FOR HIGHER PRICES FOR EVERYTHING FROM HONEY AND HOCKEY STICKS TO BUILDING SUPPLIES IN STEEL. JUST TO NAME A FEW EXAMPLES OF THE COSTS EXPECTED TO RISE WITH THE LATEST ROUND OF TARIFFS IMPOSED BY BOTH COUNTRIES. THE FIRST ROUND OF COUNTER TARIFFS IMPOSED BY CANADA. THEY ARE SET TO KICK IN ON SEPTEMBER 8TH. THIS IS AFTER PRESIDENT TRUMP'S 50% TARIFF ON 20 BILLION DOLLARS WORTH OF CANADIAN GOODS WENT INTO EFFECT ON AUGUST. 22ND FLORIDA GULF COAST UNIVERSITY ECONOMICS PROFESSOR AT THE LEAD GROUP COLLEGE OF BUSINESS. DOCTOR VICTOR CLAAR HELPS US BREAK DOWN WHAT THE TARIFF WAR ACTUALLY MEANS FOR US AND OUR BANK ACCOUNTS. THANK YOU FOR JOINING US TO A GREAT TO BE HERE. I WISH THE NEWS WERE BETTER, BUT IT'S ALWAYS GOOD TO BE HERE. THERE'S A LOT OF UNCERTAINTY REGARDING THE TARIFFS. ONE THING THAT IS FOR SURE IS THAT SHOPPERS ON BOTH SIDES OF THE U.S. CANADIAN BORDER. WE'LL SEE PRICES INCREASE. WHAT ARE SOME OF THESE IMPACTS? WE CAN EXPECT. >> IT REALLY IS A WILD THING BECAUSE WHEN YOU THINK ABOUT IT, REGARDLESS OF WHAT POLITICIANS CALL YOU, THE TARIFF IS A TAX THAT'S PAID BY COMPANIES IN YOUR OWN COUNTRY TO BRING IN INPUTS IN GOODS AND SERVICES THAT WHEN THEY WANT TO SELL TO THEIR LOCAL CUSTOMERS AND THEY EMPLOY LOCAL WORKERS. AND SO IN AN EFFORT MAY BE TO SAVE SOME JOBS IN ONE PART OF YOUR ECONOMY, YOU INTRODUCED THIS TAX IN OUR CASE. IT'S A TAX THAT'S PAID BY AN AMERICAN IMPORTER TO WASHINGTON, D.C., EVERY TIME THEY BUY SOMETHING THAT COMES ACROSS THAT BORDER BETWEEN THE UNITED STATES AND CANADA AND IT MAKES IT HARDER TO DO BUSINESS FOR THOSE AMERICAN COMPANIES THAT ARE JUST TRYING TO SERVE CUSTOMERS AT REASONABLE PRICES AND KEEP EVERYBODY ON AT THEIR CURRENT HOURS THAT THEY EMPLOY. >> WHAT ARE SOME OF THE DIRECT IMPACTS AND SUPPLIES, GOODS AND SUPPLIES THAT ARE GOING TO BE HIT BY THIS. >> ONE THING THAT I CAN SEE IN A PLACE LIKE SOUTHWEST FLORIDA IS WE HAVE A LOT OF CONSTRUCTION AND WE RELY HEAVILY ON CANADA FOR THINGS LIKE CEMENT, ALL MILLED WOOD PRODUCTS OFF LUMBER FOR FRAMING THOSE KINDS OF THINGS AND THAT DRY WALL THAT WE PUT ON THE LUMBER AFTER WE'VE GOT THAT LUMBER IN PLACE. ALL OF THOSE COSTS ARE GOING TO BE HIGHER FOR AMERICAN COMPANIES THAT USED THOSE THINGS. AND AS MUCH AS WE TALK ABOUT AFFORDABLE HOUSING AND NOT ENOUGH HOUSING AND HOUSING CRISES, THIS IS ONE THING THAT'S GOING TO MAKE IT EVEN HARDER. STILL TO BUILD AFFORDABLE HOUSING AND TO MAKE IT HAPPEN AS QUICKLY OR AT LEAST FASTER THAN IT WOULD OTHERWISE. >> AND WHAT ABOUT THE IMPACTS ON PEOPLE WHO ARE INTERESTED IN BUYING A NEW CAR? MY UNDERSTANDING IS THIS COULD REALLY HAVE AN EFFECT THERE. >> WE'VE BEEN SEEING THIS FOR THE LAST YEAR AND A HALF. EVERY SINCE WE HAD LIBERATION DAY BACK IN APRIL LAST YEAR, PEOPLE THOUGHT WASHING MACHINES, DRYERS AND APPLIANCES. AND IN SOME CASES, CARS IN NOT BECAUSE THERE WAS EVEN A TARIFF YET. BUT JUST THE THREAT OF THE POSSIBILITY THAT THERE MIGHT BE A TARIFF THAT WOULD MAKE THAT THING MORE EXPENSIVE. PEOPLE CHANGE THEIR MINDS AND THEY BUY THINGS SOONER THAN THEY WOULD HAVE PREFERRED TO. AND THEY MAYBE EVEN PUT THOSE THINGS ON THEIR CREDIT CARDS BECAUSE THEY WERE FEARFUL OF THE FUTURE. PRICE INCREASE. WE'RE SEEING THE SAME THING NOW. BUT ONE THING I KNOW IS AN ECONOMIST. NOBODY LIKES UNCERTAINTY. AND WE'VE ALL BEEN PELL PLAYING A GUESSING GAME FOR AGAIN, ABOUT A YEAR AND A HALF ABOUT WHICH GOODS AND SERVICES WILL BE CARE OF FROM WHICH COUNTRIES AND WHAT THE PERCENTAGES WILL BE ON THOSE GOODS AND SERVICES. SO IT'S REALLY HARD RIGHT NOW TO MAKE AN INFORMED DECISION AND A WELL TIMED, A DECISION BECAUSE THERE'S SO MUCH UNCERTAINTY. POLITICIANS KEY CALLING THIS SOMETHING DIFFERENT. IT SEEMS LIKE EVERY DAY. >> AND OFTEN I KNOW WHAT I THINK OF A TARIFF. I THINK A VOTE ONE WAY OR ONE TIME TARIFF. BUT THAT'S NOT THE CASE. >> YEAH. MOST GOODS IN A COMPLEX MODERN ECONOMY ARE NOT A SINGLE ITEM LIKE ASPARAGUS OR AVOCADO. THERE ARE THINGS LIKE CARS AND CARS ARE EXTREMELY COMPLEX AND VERY EXPENSIVE THINGS TO MAKE AND THE SUPPLY CHAIN IS IN CRICKET. AND IF YOU THINK ABOUT SOMETHING AS SIMPLE AS WE'RE VIEW MIRROR FOR A CAR, THOUGH, SMART ONES THAT, YOU KNOW, NO LONGER HAVE TO FLIP ANYMORE. WHEN YOU GO FROM DAY TO NIGHT BECAUSE THEY HAVE A SENSOR, THE SAME MIRROR MIGHT CROSS THE BORDER 5 OR 6 TIMES IN THE GLASS ITSELF. MIR IS JUST A PIECE OF GLASS WITH REFLECTIVE COATING THAT MIGHT HAPPEN IN THE U.S. IT MIGHT GET PAST ACROSS THE BORDER WHERE THEY'RE MAKING THE PLASTIC ENCLOSURE FOR THAT PIECE OF GLASS THAT WILL ULTIMATELY BE INSTALLED IN YOUR CAR. AND THEN THEY SEND IT BACK BECAUSE THERE ARE AMERICAN COMPANIES IN PLACES LIKE MICHIGAN THAT PUTTING THE CENTERS AND THE ELECTRONICS TO MAKE THAT REARVIEW MIRROR A SMART LIGHT SENSING REARVIEW MIRROR. ONCE THAT HAPPENS, IT MIGHT BE PURCHASED BY YET ANOTHER COMPANY BACK IN CANADA. THAT ATTACHES THAT SMART REARVIEW MIRROR TO A WINDSHIELD AND THEN ANOTHER COMPANY THAT'S ASSEMBLING THE CARS BACK IN THE U.S. MAY BE IN KENTUCKY. THEY PURCHASED THAT WINDSHIELD ASSEMBLY WITH THAT SMART REAR VIEW MIRROR. AND THEN FINALLY IT'S INSTALLED IN THE CAR. SO IF YOU'RE AN AMERICAN CONSUMER. PART ONE PART OF THE CAR HAS NOW BEEN TAXED 5 OR 6 DIFFERENT TIMES. AND IF YOU THINK THAT'S NOT GOING TO SHOW UP IN THE STICKER PRICE OF AN AUTOMOBILE, YOU'RE KIDDING YOURSELF. >> AND PRODUCE WE HAVE A 6.5 BILLION DOLLAR CROSS-BORDER PRODUCE TRADE. HOW DOES THAT IMPACTED BY THIS IS ESPECIALLY IN FLORIDA'S SOUTHWEST FLORIDA. CANADA IS ONE OF OUR BEST NEIGHBORS, ESPECIALLY IN THE WINTER BECAUSE IN FLORIDA WE CAN GROW THINGS. THEY CANNOT GROW UP THERE. >> NOW, AT LEAST FOR NOW, A LOT OF WINTER VEGETABLES AND BERRIES THAT WE NORMALLY SELL TO THEM. THOSE SEEM TO BE PROTECTED FOR THE TIME BEING FROM THIS NEW WAVE OF TARIFFS. BUT WE STILL SO THINGS UP THERE LIKE SUGAR AND HONEY, WE DO A LOT OF SUGAR NOT ONLY GROWING HERE IN FLORIDA WITH CANE SUGAR, BUT WE ALSO DO A LOT OF THE PROCESSING IN PLACES LIKE HENDRY COUNTY AND CANADA IS GOING TO TAX THOSE GOODS WHEN THEY ARRIVE IN CANADA AND IT WILL DRIVE DOWN THE DEMAND OVER TIME. A LOT OF THE THINGS THAT WE DO IN FLORIDA TRADE REALLY IS A TWO-WAY STREET. IT SHOULD BE WIN WIN. BUT IN THIS CASE, WE'RE MAKING IT EVEN MORE DIFFICULT TO REALIZE THE POTENTIAL GAINS FROM TRADE THAT WE NORMALLY WOULD EXPECT. >> DR. CARL, WHAT WOULD BE YOUR ADVICE TO JUST THE AVERAGE WORKING FAMILY OUT THERE RIGHT NOW WITH ALL THIS UNCERTAINTY? >> DON'T SPEND MONEY THAT YOU CAN AFFORD TO SPEND WHAT YOUR PARENTS HAVE TOLD YOU WAS TRUE. IT'S NOT AN EMERGENCY. IF IT'S NOT REALLY AN EMERGENCY IN THE CASE OF UNCERTAINTY, YOU NEED TO DO EVERYTHING YOU CAN TO PROTECT YOURSELF FROM SOMETHING BAD THAT MIGHT HAPPEN. AND FOR MOST WORKING FAMILIES RIGHT NOW, IT'S SAVING EVEN MORE FOR A RAINY DAY. I KNOW IT'S HARD. I KNOW WE'VE HAD 25 OR 30% INFLATION OVER THE LAST 5 OR 6 YEARS. BUT ANYTHING YOU CAN DO TO PUT A LITTLE BIT MORE AWAY TODAY, NOT KNOWING WHAT WILL HAPPEN TO SOME OF THE PRICES THAT YOU FACE EVERY DAY IN THE FUTURE MIGHT BE A REALLY GOOD THING TO DO. ALL RIGHT, DOCTOR CLARK, THANK YOU SO MUCH FOR JOINING US TODAY FROM FTC USE. >> LOCKARD COLLEGE OF BUSINESS. THANK YOU. GREAT TO BE HERE.