President Donald Trump says tariffs on some products from Mexico and Canada could go up early next month. Last week, he announced and then paused tariffs on our neighboring countries.
While Mexico is Arizona’s biggest trading partner, Canada is the state’s second biggest. The Arizona Commerce Authority reports total trade reaching more than $5 billion in 2023. In a speech over the weekend, Canada’s new Prime Minister, Mark Carney, talked about the trade war, saying “My government will keep our tariffs on until the Americans show us some respect.”
Glenn Williamson, founder and CEO of the Canada Arizona Business Council, joined The Show to talk about the impact of this back-and-forth.
Full conversation
MARK BRODIE: Glenn, good morning. Thanks for being here.
GLENN WILLIAMSON: Good morning, Mark.
BRODIE: So what does, we don't, we obviously don't know what's actually going to happen, but just sort of the back and forth, yes tariffs, no tariffs, maybe tariffs, pause tariffs. What has that been doing for the relationship between specifically Arizona and Canada?
WILLIAMSON: So Mark, I think the very beginning of this from chaos comes opportunity. I think that's the first positive thing to look at an extraordinarily negative situation. I think in the case of Arizona, as you got from ACA, the $5 billion in trade pretty much changes 5% or 10% every year. The really big relationship with Arizona is foreign direct investment.
And that is the largest. So up until TSMC, Canada is and was the largest foreign direct investor in the state, and that hasn't changed. As a matter of fact, Mark Carney, who you just spoke about, was chairman of a company called Brookfield. And he during his private sector up until January of this year moved Brookfield to New York, and this is a $1 trillion Canadian company, so that and 58% of all of their investments are in the U.S.
BRODIE: Does it seem as though that might change though, like if these 25% tariffs on Canadian goods go into effect in April or some point down the road, or even if there's just this continued threat of them, you know, maybe coming on down the road, does that change Canadian investors, Canadian business thinking of maybe the U.S. is and maybe Arizona is not such a great place to invest.
WILLIAMSON: Every once in a while, this kind of an attitude goes on between Canada and the United States, and the emotions run very, very high, especially when you call into question sovereignty. And I think Canada is an extraordinarily proud country, but the tether between Canada and Arizona is extraordinarily deep as well, from tourists to snowbirds to companies, we have over 500 Canadian companies here. The next closest country is about 130 companies here, so it's pretty big, pretty big, and it's very, very strong.
BRODIE: Is there any danger though? I mean, are what kinds of conversations are some of those businesses having about like, is this still a place that we see as welcoming? Is this still a place that is good that makes sense from the bottom line perspective?
WILLIAMSON: It is because at the end of the day, the ROI is some of the things that are most important to these companies. In Canada right now it's very expensive tax-wise, and we see a lot of these Canadian companies concerned about what's going on in the US and Canada and therefore they're hedging their bets and they're doubling down with operations in the U.S. to serve the U.S. market.
BRODIE: What are some of the biggest, like what, what products come between Arizona and Canada? Like we know for example, dairy and lumber are some of the biggest Canadian products coming into the U.S. Is that, is that what's coming into Arizona as well, or is there, are there other things?
WILLIAMSON: No, it absolutely is. Mattamy Holmes is a Canadian company down here. What's fascinating about dairy, and very few people know this, is that Canada has a 250% tariff on northbound dairy. So what Trump did was balance the situation with the 250% coming down here. In the case of Arizona, that doesn't really play a big role, but wood and lumber does. That will be one of the first things that will hit this region.
BRODIE: Well, and especially in a place like, like Arizona in the Phoenix area with as much construction and home construction, I would think that'd be a pretty, that could be a pretty big hit if lumber becomes more expensive.
WILLIAMSON: It will be, Mark, and one of the things to look at a company I'm associated with as chairman of EPCOR, we've invested close to $2.8 billion in this state. And Canadian companies are doing more and more of that. Bank of Montreal has invested in this state. Capital Power has invested in the state. So we see the capital side of an emotional scenario that's going on right now has its downfalls, but at the same time, the returns on U.S. investments for Canadian companies are very significant.
BRODIE: How might that change depending on what happens with the U.S. economy? We heard the president over the weekend wouldn't really predict if this country could see a recession, for example, this year or going, you know, potentially going forward. Like does that impact how Canadians and Canadian businesses might be thinking about coming to Arizona or or trading with Arizona?
WILLIAMSON: So in the case of Arizona, one of the things to always look at with those 500 Canadian companies down here, many of those companies, their CEOs were snowbirds down here first. So 87% of all private jet traffic internationally at Scottsdale is Canadian, and over 20% of residents in Desert Mountain and Silverleaf are Canadians.
So there's an emotional tether. And that emotional tether then moves on to why do I want to set up in Michigan or New York or California when I can set up in Arizona because I have a house here and I'm a decision maker, and we see emotional exactly the same reason we see this emotional issue going on in Canada. The CEOs of these companies are very, very interested in Arizona compared to the other 49 states.
BRODIE: So we've been seeing sort of a ramping up of rhetoric between the U.S. and Canada. We, you know, we, for example, heard Canadian fans booing the American national anthem during the recent Four Nations faceoff hockey tournament. How much does that trickle down sort of from the You know, from the official government level to actual just people who are living and working in Arizona, like, does, has the relationship changed between Arizonans and Canadians, do you think?
WILLIAMSON: We have not seen anything yet. We've been interviewing and talking to a lot of people, and I think there is a geography and a distance issue that does have something to do with our proximity to Mexico. But many of these Canadian companies also operate in Mexico, and we've seen a couple of big issues are water and energy. The top three private water utilities in the state of Arizona are Canadian. Tucson Electric Power is Canadian. Capital Power is Canadian. So we're watching Canadian companies play the long game for infrastructure in the state of Arizona.
What is currently going on between the United States and Canada is a very short term hit right to the head. It's like a good hockey game where a fight breaks out, and then eventually they all go out and have a beer afterwards. So I, I truly believe that you will see once this once Trump has finished bludgeoning Canada, it will sort itself out down the road.
