Trade tensions play out in a U.S.-Canada border town

Summary

Marketplace Morning Report: Trade Tensions Play Out in a U.S.-Canada Border Town

Release Date: April 25, 2025
Host: David Brancaccio

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Overview

In this episode of the Marketplace Morning Report, host David Brancaccio delves into the escalating trade tensions between the United States and Canada, focusing on their impact on the border town of Thunder Bay, Ontario. Through on-the-ground reporting and expert insights, the episode explores how tariffs and shifting trade policies are affecting local businesses, agricultural sectors, and cross-border relations. Additionally, the report touches on broader economic indicators, such as stock market movements and shifts in global manufacturing strategies.

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Agricultural Struggles and Bankruptcy Surge

The episode opens with a discussion on the dire state of the farming sector in the United States. Savannah Peters reports on a Bloomberg Law analysis indicating a 55% increase in farm bankruptcies in 2024, a trend that is worsening as higher tariffs take effect.

Key Points:

• Rising Bankruptcies: Bankruptcy attorney Don Swanson highlights, “I’ve got a chapter 12 going right now” (01:02), emphasizing the personal impact on farmers.
• Economic Pressures: Farmers are grappling with high input costs and declining crop prices. The potential implementation of new tariffs could exacerbate these challenges, leading to further financial strain.
• Expert Insight: Agricultural economics professor Rabel Chandio warns, “Negative pressure is just going to intensify” (01:29), underscoring the uncertain future for farmers.

The segment underscores the vulnerability of the agricultural sector amid international trade disputes and the critical need for relief measures akin to those provided during previous trade conflicts.

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Stock Market Fluctuations and Corporate Shifts

David Brancaccio transitions to discuss recent movements in the stock market, noting a three-day upward streak for the S&P 500, despite futures indicating a slight downturn.

Highlights:

• Market Performance: “The S&P is down 2.2% in April so far. The Dow is down 4.5% month so far” (01:55).
• Corporate Strategies: Apple’s strategic pivot to produce iPhones in India marks a significant shift away from China, as reported by the Financial Times.
• Consumer Electronics Demand: The Nintendo Switch 2 sees robust pre-orders despite tariff-induced delays, signaling strong market demand (02:30).

These developments reflect the broader economic uncertainties and the realignment of global supply chains in response to shifting trade policies.

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Impact on Thunder Bay: A Case Study

The core of the episode focuses on Thunder Bay, a pivotal border town between Minnesota, USA, and Ontario, Canada. Senior economics contributor Chris Farrell provides an in-depth look at how trade tensions are reshaping this community.

Key Discussions:

• Community Relations: Contrary to expectations, Chris Farrell reports, “Mr. U.S. citizen people were incredibly nice, David” (03:34), highlighting the generally positive interpersonal relationships despite economic strains.

• Economic Dependency: With 30% of Canada's economy export-oriented and three-quarters of its exports directed to the U.S., the imposition of tariffs has severe repercussions. Charlotte Robinson, president of the Thunder Bay Chamber of Commerce, indicates a strained relationship due to President Trump’s tariffs: “They’re unhappy with Trump’s insistence that Canada should become the 51st state” (04:38).

• Consumer Market Shifts: Canadian retailers like grocery stores are adapting by sourcing products from alternative countries. Livio de Matteo notes, “We found oranges from Morocco and Egypt. We’d never really seen that before” (05:09), illustrating the immediate adjustments in supply chains.

• Business Adaptation: James Folds, founder of Border Giant, explains, “Pretty much every business right across Canada, they’re going to start looking at other options in the supply chain rather than USA” (05:55). This sentiment reflects a broader move to diversify trade partnerships and reduce reliance on the U.S. market.

• Trust and Economic Decoupling: The conversation emphasizes that rebuilding trust is challenging once broken. Chris Farrell states, “Trust isn’t easy to measure like land or capital” (06:22), highlighting the intangible yet critical nature of trust in economic relationships.

Notable Quotes:

• “Every debtor has their own issues that are unique to them, but 2024 was a terrible year for farming.” – David Brancaccio (01:15)
• “Negative pressure is just going to intensify.” – Rabel Chandio (01:29)
• “We need to cut out like the ties as best we can and move on to a more certain path.” – James Folds (05:55)

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Conclusion

The episode concludes by reaffirming the significant impact of U.S.-Canada trade tensions on local economies, particularly in border towns like Thunder Bay. As Canadian businesses proactively seek to diversify their trade relationships and reduce dependence on the U.S., the long-term implications for North American economic integration become increasingly complex.

David Brancaccio wraps up by acknowledging the resilience and adaptability of affected communities, yet underscores the profound challenges that lie ahead in restoring and redefining cross-border economic ties.

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Additional Segments

While the primary focus is on U.S.-Canada trade tensions, the episode also briefly touches on other economic stories:

• Corporate Changes: Announcement of Blackstone Group acquiring Jersey Mike’s Subs and the transition of leadership to a new CEO from Wingstop Chicken Wings.
• Financial Advice Plug: A nod to Financially Inclined, a Marketplace podcast dedicated to personal finance, hosted by Janelie Espinal.

These segments, though peripheral, provide a broader context of ongoing shifts in the business landscape influenced by trade dynamics and corporate restructuring.

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For more detailed insights and daily economic updates, tune into the Marketplace Morning Report on APM American Public Media.

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Timestamps Reference

• 00:30 - Introduction to trade tensions and their impact on Minnesota and Ontario
• 01:02 - Don Swanson discusses Chapter 12 bankruptcy for farmers
• 01:15 - David Brancaccio comments on the dire state of farming in 2024
• 01:29 - Rabel Chandio on intensifying negative pressure due to tariffs
• 01:55 - Stock market updates and Apple’s production shift
• 03:34 - Chris Farrell on community relations in Thunder Bay
• 04:38 - Charlotte Robinson on the strained US-Canada relationship
• 05:09 - Livio de Matteo on grocery store supply chain changes
• 05:55 - James Folds on businesses seeking alternatives to the US supply chain
• 06:22 - Chris Farrell on the importance of trust in economic relationships

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Note: All timestamps refer to the minute and second marks in the podcast transcript provided.

Transcript

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[David Brancaccio]

Amid trade tensions what happens when Minnesota Nice meets Ontario Nice? I'm David Brancaccio in Los Angeles. First farmers are struggling to pay their debts. This is clear from an analysis by Bloomberg Law of bankruptcy filings. And this is before the new higher tariffs started to kick in, Marketplace's Savannah Peters reports.

[Savannah Peters]

Bloomberg found farm bankruptcies were up 55% in 2024 and they're trending even higher this year. That tracks with what bankruptcy attorney Don Swanson is seeing.

[David Brancaccio]

In fact, I've got a chapter 12 going right now.

[Savannah Peters]

That's the section of the bankruptcy code for farmers. And Swanson says his firm Coley Jessen in Omaha has a few more of those cases in the works.

[David Brancaccio]

Every debtor has their own issues that are unique to them, but 2024 was a terrible year for farming.

[Savannah Peters]

Farmers have been dealing with high input costs and low crop prices, and if all the proposed tariffs go through, that.

[Rabel Chandio]

Negative pressure is just going to intensify.

[Savannah Peters]

Rabel Chandio is a professor of agricultural economics at Iowa State University. She says whether farm bankruptcy rates rise even faster depends on how long steep tariffs on China last and whether the Trump administration offers relief payments to cover affected farmers losses like it did during the last trade war. I'm Savannah Peters for Marketplace Markets.

[David Brancaccio]

It has been three up days in a row for the S&P 500 stock index. S and P futures are down a quarter percent now. Nasdaq futures also just turned down 2. 10%. The S&P is down 2.2% in April so far. The Dow is down 4.5% month so far. A published report says Apple is moving to produce all the iPhones sold in the US In India, a pivot away from China. Remember, it says designed by Apple in California. Doesn't say made. The Financial Times has the India scoop today. Now to video gaming. It was delayed for several weeks because of the Trump administration's tariff announcements. But overnight retailers started taking pre orders for the Nintendo Switch 2 console, Walmart, best Buy and others that are part of this rollout report. Major demand. The boxes are set to start selling in earnest on June 5th. You say legend of Zelda, Tears of the Kingdom, I say animal Crossing new horizons. Now to the nexus of the US And Canada. At a time of fraught trade relations, Marketplace's senior economics contributor Chris Farrell forded the chasm between Minnesota, USA and Ontario, Canada, to the Canadian border town of Thunder Bay. Hi, Chris.

[Chris Farrell]

David.

[David Brancaccio]

So you get just across the border to Canada. Did you get the stink eye?

[Chris Farrell]

Mr. U.S. citize people were incredibly nice, David. I just have to emphasize that, you know, Thunder Bay, it's this port city, it's a railway hub. People from Thunder Bay, they cross over into Minnesota, northern Minnesota, and people in northern Minnesota, they go do their shopping in Thunder Bay.

[Rabel Chandio]

We have a lot of sort of back and forth, you know, whether it's business or whether it's individuals, you know, just going to Grand Marais for the weekend, those kinds of things. Going to Duluth, going that back and forth, activity, hockey teams, soccer teams, et cetera.

[Chris Farrell]

Charlotte Robinson is president of the Thunder Bay Chamber of Commerce. And as you could hear, we met in a diner.

[Rabel Chandio]

Certainly from a business perspective, it's also been a close relationship. We do a fair bit of trade between some of our larger industries with.

[David Brancaccio]

Minnesota specifically, she said it's been a close relationship, but now with President Trump's tariffs, 25% on a lot of things, 10% on some energy products, and Canada responding. What's it now? I don't know. Testy, this relationship.

[Chris Farrell]

You know, the word that we heard a lot, David, is betrayal. You know, they're unhappy with Trump's insistence that Canada should become the 51st state. And the way they're expressing their displeasure is with their wallets. Cross border travel is down. Vacation plans to the US Are canceled. American liquor, wine and beer, it's been pulled off the shelves in Thunder Bay and Ottawa. And Livio de Matteo, he's an economics professor at Lakehead University in Thunder Bay, notes that even groc grocery store aisles have changed.

[Rabel Chandio]

We found oranges from Morocco and Egypt. We'd never really seen that before.

[David Brancaccio]

So even the retailers are already making the effort. You know, the broccoli has been coming from Mexico.

[Rabel Chandio]

We've noticed the blueberries from Peru.

[David Brancaccio]

All right, so some agility there. But can the Canadian economy decouple itself.

[Chris Farrell]

From the U.S. 30% of Canada's economy is export oriented, and 3/4 of its exports go to the U.S. but in the interviews we had, David, Canadian business owners seem determined to reduce their reliance on the US they're creating stronger business ties within Canada, and they're forging direct economic relations with other countries. So James folds. He's the founder of Border giant. It's based in Thunder Bay. And the company's software smooths cross border transactions for small businesses and individuals.

[James Folds]

Pretty much every business right across Canada, they're going to start looking at other options in the supply chain rather than usa, even for, you know, distributors and everything. So between the pricing going up and the uncertainty and even the emotional response to like, you know, the, the rhetoric with the 51st state and everything like that is okay. There's really not a path forward. So we need to cut out like the ties as best we can and move on to a more certain path.

[David Brancaccio]

Chris Once trust goes away, not easy to get back.

[Chris Farrell]

No, it isn't. And it's, you know, it's. Trust isn't easy to measure like land or capital. It's more like a, a recipe that allows for all kinds of economic activity and innovation. Again, James folds Once that trust is.

[James Folds]

Broken and you have to go somewhere else, you've done the work to look for something else. You've formed another relationship and you don't tend to go back to that.

[Chris Farrell]

No one knows how deep the rupture between the two economies is, but Canadian entrepreneurs and businesses, they aren't waiting to find out. They're acting now.

[David Brancaccio]

Marketplace's senior economics contributor Chris Farrell back in Minnesota after a reporting trip to Thunder Bay, Ontario. Chris, thank you very much.

[Chris Farrell]

Thanks a lot.

[David Brancaccio]

And I'll have the global investment management firm with provolone, banana peppers, private equity and a hedge fund. Did you know Blackstone Group now owns Jersey Mike's? Subs. Taste the portfolio. In every bite, there's news. The founder of Jersey Mike's Peter. Not Mike. Peter Cancro is leaving the CEO position. Now that it's Blackstone, a guy also not named Mike from Wingstop Chicken Wings now takes over. Our executive producer is Kelly Silvera. Digital producer Dylan Mietanen, engineers Brian Allison and John Brewington. You're listening to the Marketplace morning report from APM American Public Media.

[Janelie Espinal]

If there's one thing we know about social media, it's that misinformation is everywhere, especially when it comes to personal finance. Financially Inclined from Marketplace is a podcast you can trust to help you get serious about your money so you can build a life you've always dreamed of. I'm the host, Janelie Espinal, and each week I ask experts important money questions, like how to negotiate job offers, how to choose a college that you can afford, and how to talk about money with friends and family. Listen to Financially Inclined wherever you get your podcasts.