Trade war escalation, what's next? - Dialing back classroom technology

0:00This is The Mornings with Simmy Podcast. On Today's show, trade, trade, trade. That is the number one issue being talked about right now. Canada has kicked in retaliatory tariffs against the United States. What does it all mean? What industries? What provinces will be most affected? And what is the plan for dealing with it? We'll take a look at the issues, break it all down for you. And with the kickoff to another school year, parents are also squaring off against technology in the classroom, particularly artificial intelligence. Are we ready to deal with this in a way that we weren't when it came to social media? What are we doing differently? We'll talk about coming up on The Mornings with Simmy Podcast. Let's get started. I just heard it in the news. Six hours ago, Canada's retaliatory tariffs took effect. Now, this covers about $20 billion worth of imports from the United States. Things like steel, some types of dairy products, some appliance, some kind of food, some appliances.

1:00I mean, there's a long list of items here. I think we all know how we got here. The question is, what do we do now? And what kind of an impact is all of this going to have? Now, Rambo Bibuti is Senior Counsel at Borden Ladner, Jerve's LLP. He specializes in international trade and economic regulation and joins us now. Thank you so much for being here. It's a pleasure. Are you surprised? Thank you so much for having me. Are you surprised that we've kind of gotten to this place? In a sense, yes. I'm in a sense, no. I think since November 25, 2024, that is to say, three weeks after President Rambo was elected, and he gave his speech about Fentanyl and illegal migration and past and so on. We've known that the world that existed before was gone. And I suspect for some of us, this may clear that that world wasn't going to come back.

2:01At the same time, the intensity of the attack and then the back and forth, and the kind of noise, really, that's coming out of some circles in Washington. I think any rational observer would say that that's given our long history, that that would be unexpected. So we knew something was up, and we were confirmed, and that very quickly. But we're all to get to this point. Yeah, a bit surprised. So what should Canada be doing in your opinion to deal with all of this? Well, Canada should be doing what it is doing. Number one, the project of diversification is not a government project.

3:03I mean, the government of Canada can do what it can, opening up markets here and there, entering into agreement and so on. But fundamentally, it's up to the private sector to take advantage of the market openings that are presenting themselves around the world. And that means that finding, you know, everyone needs to be finding new markets. Everyone needs to reflect on supply chain. This is really a national effort, and it's not just a question of government seeking diversification. So that's the first one. The second thing that we need to do is we need to be prepared for a, don't like to use the word war, but it is a bit of a war of attrition at this point. And we need to, we need to brace ourselves and we need to be aware that this situation

4:11isn't going to resolve itself tomorrow the next day. Eventually, I think the forces of rationality will prevail, but in the meantime, there will be some pain across the country. Do you think though that Canada is doing some of what you've talked about there? Like, you talked about businesses stepping up. Our business is stepping up. Absolutely. I think it's very clear that everyone recognizes that market dynamics as they are are not going to be tenable. And so everyone needs to find new markets and everyone needs to find new supply chain. And that is painful. Some companies are some businesses are better positioned to do that than others, but that's what we see across the board.

5:13Now we saw the last 30 years companies diversifying where they build their products. Like we'll just use the example of Bambardiya because that's in the news this morning. They build some stuff in Canada, they build some stuff in Europe, they build some things in the United States. Is that going to change now? Do you think when companies have to reevaluate with the best political climate is to manufacture their products? Well, I mean, it's not just in the last 30. We've since 1947, we, as I speak as a former trade diplomat, trade official for Canada, we spent literally decades trying to de-risk trade, trying to bring predictability, predictability, and security to global supply chains so that essentially businesses can find products where they may, invest where they may, I myself teach international investment law at Ottawa U. And so that's what we've been trying to do.

6:15We've been trying to put a framework around all of this so that businesses can invest and produce and export and buy and sell wherever the market tells them. Takes them. Now, it is true that our biggest trading partner is right now disrupting that. But I think the rest of the world, even though there are, you know, there are, we now have tariffs on European goods and Chinese goods and so on, the rest of the world is, I think, moving on. And at some point, there will be a new equilibrium, and that new equilibrium will be that we will still see to invest and to produce where it makes most sense to produce and to buy and sell and to establish supply chain. It just will not necessarily be the United States as a first choice. Right.

7:15What advice then can you give Canadian business right now? Maybe they've got a lot of their work tied up in the US. What would you tell them to do? Well, the most important, the most important thing that a company can do that a business can do is manage risk and to do that, you need to identify risk. So if you have business in the United States, you identify, first of all, how that business is going to be effective. If you can mitigate it by finding new supply chains or by finding new markets, if you can manage it by, for example, seeking specific remissions from the Government of Canada, some release is available in the United States, although it's not a lot. And then, you know, try to keep an open mind about opportunities. I think one of the challenges for us as Canadians over the last 100-some years has been that

8:21we have a giant mix to us, but we also have a consumer society, a sort of with huge appetite to buy whatever everyone has had to sell. That's been, we all know that about the US society. They thrive on consumers. That's fine. Now, that's no longer going to be the case. So we have to find other markets. And we should not discount the fact that in China, whatever challenges there are with China, it is objectively the case that in the last 14 years, 800 million people have been lifted out of poverty and are in the comfortable middle class. You've got 1.4, 1.5 billion people in India and there too, a middle class of about 5 to 600 million. And so on. So there is a big world out there.

9:22So that's what we should be looking for. All right. Well, thank you so much for your time this morning. My pleasure. There's a lot of concern right now about the state of the Canadian economy. And that is understandable, given what we hear in the news that Canada, as of midnight last night, has retaliated against American tariffs that were imposed on Canadian goods. Our retaliatory tariffs include things like, let's say, 50% tariff on dairy products, 25% tariff on fresh cheese, curd, 25% tariff on softwood, lumber products, 50% on steel and aluminum. So as you can tell, there's a pattern here. Essentially, we are tariffing in response what America tariffed against us. Can any Prime Minister Mark Carney out this morning with a message saying this will make Canada stronger that we have to stay steady on this. But how do we do that? What are some of the things that we can see that might be impacted? So let's break a little bit more of this down.

10:22Lachlan will foolishly with us now, global head of indirect taxes for KPMG. Lachlan, thank you so much for being here. Right to be with you. Thanks for me. What kind of an impact do you think we're going to see in the world? What kind of weeks, months ahead with these tariffs? Yeah, so Canada's effectively retaliated with tariffs just under $28 billion on just over 600 products that will basically be imported from US into Canada. And that's designed to be precisely the same amount as the US tariffs that were imposed on Canada very recently. The short answer in terms of the impact, probably not much for the first couple of weeks. And the very simple reason why that's the case is that businesses knew that this was coming. They had a little bit of lead time and one would expect that many of them built up supplies into Canada in advance of the tariffs kicking off. But obviously in the weeks and months ahead, that's going to change quite a bit.

11:25If I kind of break it down for your listeners a little bit, I'd say it kind of looks a little bit like this. The broader macroeconomic impact will be fairly measured. We're expecting the impact on GDP to be around 0.4 to 0.5% reduction in GDP because of these tariff measures. However, at a microeconomic level, you're going to see impacts right across the Canadian economy in particular sectors. Hit hard. We've seen the auto sector that's been seriously impacted. In the UK, we've seen that as well, still in aluminum along the same lines. But from the perspective of Canadians paying the tariffs that have now been imposed, the impact will be relatively minor only because the government sensibly chose products that by and large, they can substitute American products for either other Canadian products or products from other countries with relatively limited impact.

12:27Okay, so, Lachlan, what you're saying there is that for us, buying things going on about our daily lives for the most part, we shouldn't be too impacted in terms of choice and what we pay. That's exactly right. Obviously, the bigger concern lies is more what it means for jobs and the economy in the particular parts of the country where the tariff measures are obviously most severely impacted. That's kind of the story of what this means. So from what you can see then, Lachlan, is Canada diversifying, for instance, if we're not going to send steel to the United States because of these tariffs, do we have other markets? So we do. I think the important aspect to realize here is that diversification is not an overnight experience. I think the Canadian government laid out some time ago that diversification is expected to be a decade long exercise to reduce the dependency. What we've seen is businesses have started along that pathway, but we're still very, very

13:32heavily dependent on the US market as the major market for our products. That's exactly why you see the Prime Minister out there. In Europe a couple of weeks ago, he was in the Middle East recently as well, basically trying to negotiate agreements and solidified trade relationships with those regions as part of that diversification strategy. This is exactly why the US strategy with tariffs is not particularly successful because what businesses need is certainty, long-term certainty. Businesses don't simply decide that they're going to uproot and leave Canada and suddenly start producing in the US or they're not suddenly going to start manufacturing in other countries and diversify their supply chain unless they know that this is a long-term measure that governments are engaging in and that they'll be supported as part of that long-term measure.

14:33When you start to have tariff policies, particularly south of our border, shopping and changing by the day, that doesn't create the environment in which these longer-term business decisions are made. Right. So then how do you think Canadian businesses should respond to all of this uncertainty? Okay. So I think the first thing is, don't panic. This week, I have a sense that this week is going to be pretty rough and why I say that because there is talk of the US instituting retaliation or further retaliation against the tariff measures that took effect from Canada this week. So you're starting to see the potential for tip-for-tap retaliation. That's going to look pretty bad. So the first thing I'd say is, you know, recognize this for what it is, which is that you've got a period of uncertainty, but I think most people, and certainly the financial markets, reflect this, are expecting this is a little bit like two siblings engaging in an argument

15:36or a fight where they all need a five-minute time out in the corner, had that time out and they'll come back together and realise why the relationship is valuable. And so I would say we've got to look beyond sort of the immediate news headlines to the longer term. The longer term, very much what we see is Canada is still amongst the lowest tariff to countries in the world. And in fact, if we do reach a deal with the US, we would reclaim effectively that status is in fact being the lowest. So it certainly is painful. And again, if you're working in the auto sector, you probably don't agree with my comments because you're more severely impacted. But the broader economic effect of this is fairly measured. And so part of what businesses need to be doing is number one, there's a number of things that they can do to lessen the tariff impact through things like transfer pricing arrangements and measures designed to reduce the value of the product that's going into the US.

16:40If that's the direction that they do, they clearly need to be looking at exploring different markets as much as they can and reducing their reliance, but that takes time. And thirdly, we need to be taking a longer term business perspective on this and say, well, the next three months, perhaps, we look pretty rough, but what does it kind of look like beyond this? Because you have a US administration very much looking at tariffs as the forefront of their economic agenda. Right. What about softwood lumber? For BC, that's a pretty critical factor here. How should we be dealing with that? So softwood lumber is an interesting one because the impact is significant. Equally, there was a number of rumors that came out of the tariffs and trade negotiations that said that there was going to be compromise in that area. And I am confident that that will happen. So again, impacts short term are going to be more significant, longer term, where we're

17:40expecting to see a trade deal reached in that area. And softwood lumber would be, in fact, BC is probably amongst the provinces most likely to gain from a trade deal that would be reached. I think there's a sense that the parties are going to come back together. There's already a little bit of noise to that effect, but I think it's going to take a few months before that happens. And we'll see. We'll be watching closely. Lachlan, thank you so much for your time. I appreciate it. Thank you so much. If you were sending your child off to school this week, you have thought about a lot of things. What to pack for lunches? Making sure they have what they need, school supplies, backpack, like all of those things and more, but have you stopped to think about artificial intelligence in the classroom? More and more parents are, they call it tech lash, where there is growing pushback against tech tools and screen time in schools. There's actually a movement back towards physical textbooks in countries like Sweden.

18:43And then of course, there is AI. Look at New York City. The mayor and city officials last week announced a one year ban on the student use of generative AI in all public schools through eighth grade. And they've launched literacy lessons for high schoolers. I mean, isn't this what we should be thinking about too? What should we be doing here? Well, Alex Olson is a director of the Center for Analytics and AI Engineering and the faculty of Applied Science and Engineering at the University of Toronto and joins us now. Alex, thank you for being here. Good morning. Is something that we should be thinking about as well? How are elementary school students are going to be confronted with AI? So we're living in a really disrupted time, right? This is a completely new technology that just didn't exist a few years ago. And unfortunately, it's entered our world without a lot of planning or ability to figure out how this would be rolled out in classrooms and also in our lives beyond that. And so it does mean that we're kind of scrambling now to catch up to the technology that already exists. It's interesting that New York is what I would call it a moratorium or a pause given that

19:48it's one year. But I think it's an interesting way of giving the schools a little bit of time to try to plan out and catch up to what they would do once that one year ban expires. Right. So you don't think it's too late because I feel like schools have already got it there. The kids are using it. Like everybody seems to be using it already. It's really difficult to manage what kids are going to be doing outside of the classroom, but there is control that can be done about what happens inside of the classroom, right? And I think particularly for those younger students, it's not a bad idea to at least for a little bit of time take those tools away and use that as an opportunity to figure out how we can helpfully engage students with using things like AI. Because the reality is that eventually this is going to be part of the world that they go out into. So they do need to understand it to some extent, not just in terms of where it's useful, but also in terms of where it's not useful. And I think the best way to do that is ultimately by playing around with the tools, by experiencing it. So you get that experience first hand. Now Alex, this feels like something we should have done with social media and we didn't

20:51do that either. Have we learned our lessons? Well, it doesn't feel like it, right? I think that there are a lot of parallels there where unfortunately these companies have been largely trusted to do what they will in terms of rolling out these technologies. And we've seen with social media that many, many countries around the world are starting to impose restrictions or other kinds of qualified access for younger users. And I suspect that that is what we will eventually see with these public AI tools. Although the question is, do we see that soon or is it going to take some time for that to be caught up too? And also we're talking about it like kids live in the vacuum. They can go home and learn about this stuff. They're going to learn a lot about it outside of the home too. Unless we bring parents fully on board with this. Absolutely. And that is part of the problem, right? We can't just say kids are not allowed to use these tools at all because they'll find ways around. It's a concern, what the social media bands, right, is that kids are very resourceful in terms of working out how to get around those bands.

21:54And invariably they will figure out and then share amongst them ways that they can do that. So while I'm not opposed to a band in terms of trying to get a handle on the relationship with the technology, we do need to recognize that. It is a part of our world and that we want kids to learn about this in a way that we are responsible for and that we control so that hopefully they'll have a healthier relationship to the technology in the future. What do you think that looks like, like bringing it in on that elementary level, getting it to the kids, helping them understand and think about this critically? What does that look like? Well, I mean, what I do in my own practice is that I have people at U of T, students and faculty use the tools in controlled lessons that we run where we see how those tools actually fail. And that's really important, I think, because it's one thing to be told this doesn't work or it's not useful in this current situation. But it's another thing entirely to actually experience that. And when we do that, we find that people walk away with a much better understanding of the kinds of tasks that AI can actually help them and where the technology just isn't quite

22:58dirty at. And it be helpful, though, or I mean, we've talked about some countries like Sweden going back to physical textbooks. Do we actually need any of these tech tools in the classroom? It's a great question. I mean, I would say that by the time these kids are leaving school, it's very likely that some of the work we do today is automated, largely or entirely. It's very difficult to know exactly what that would be. But I remember when I was in school being told that we could never use Wikipedia or Google because they weren't trustworthy sources. And I don't think that that gets taught to students today. So there is a shift over time. And again, understanding how these tools work, better empower students to see when those changes happen and make those decisions for themselves, rather than just being told, never use this. There's so much irony, I think, Alex and what you're saying there, too. Like if we're the one thing that kind of separates us from AI is that we can think critically, we know when things are right versus wrong, and we're not even starting to teach that

24:01about, like that's what we should be kind of teaching kids, isn't it? I completely agree. And that's what I'm advocating for here is that by using these tools in a controlled environment where we can see what they do and what they don't do, students will be better equipped for that critical thinking that's really necessary, not just in terms of using AI, but really, you know, throughout their entire life. Do you see any jurisdiction that's actually doing this? Like is Canada prepared for this? Are any provinces prepared for this? I haven't seen much yet. I know that a number of provinces are working on AI guidance that will touch on education. You have key. We do have a strategy around how we want students to interact with AI. It's largely deferred to individual professors. So one of the advantages of that is that over time, seeing how different professors approach this and what seems to work and what doesn't work. Do we have an idea of what seems to work? Well, it's early days, but again, I think that classes where it's outright forbidden,

25:01what we often see is that students still use these tools, but they just aren't honest about it or they keep it secret. And that can in many ways be worse. In other classes, when students are allowed to use these tools, but they're told, you know, we're going to grade it based on the quality of what you provide and the AI may not do a very good job. Students actually start to think a little bit more about, well, could I get a better grade if I do this work myself? Well, this is what I don't understand. Alex, when it comes to talking to kids about this, like, why aren't we just explaining to kids? Listen, here's why we think it's not a good idea for you to use this. We think you're going to benefit if we do it this way. This is what we're going to grade. Like, why don't we just have that conversation with kids? I think that is happening. Obviously, you know, there is a risk that kids think it's a bit of a holy grail in terms of, you know, here's who will like an access for free and it will do my work for me. And you know, throughout history, kids have looked for ways to get their assignments done easily. You know, even before AI, people could pay at university to have someone write their essays for them and things like that.

26:02The thing that's changed is that it's a lot easier to access that than it used to be. But that's why I think that having the students work with these tools and see the quality of what they're able to produce and where that quality is actually not that high, it shows them that, hey, maybe if I did this work myself, I would actually end up with a better grade. And that we need to show them the value of that, right? Like, they have to see the end results. Absolutely. Absolutely. Hmm, see Alex, thank you so much for having that discussion with us. My pleasure. Thanks for listening to The Mornings with Simmy Podcast. Don't forget to subscribe to the show on Apple, Spotify, Amazon, Google Podcast or wherever you get your podcasts. And you can always listen to us live in the morning, Monday to Friday from 5.30 to 9 on 7.30 CKNW.