‘We’re not like some small country you can push around’

Summary

POLITICO Tech Podcast Summary

Episode Title: We’re not like some small country you can push around
Release Date: March 13, 2025
Host: Stephen Overle
Guest: Francois Philippe Champagne, Canada’s Minister of Innovation, Science and Industry

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1. Introduction

In this episode of POLITICO Tech, host Stephen Overle delves into the escalating trade tensions between the United States and Canada. The discussion centers around recent tariff implementations, Canada's strategic responses, and the broader implications for technology and industry sectors. Chiefly, Francois Philippe Champagne, affectionately known as "Frankie Bubbles," provides insights into Canada's robust economic standing and its resolve to navigate the complexities of international trade amidst political upheavals in the U.S.

2. escalating Trade Tensions Between the U.S. and Canada

The episode opens with a brief overview of a tumultuous week for Canada, marked by the inauguration of a new Prime Minister, imposition of steel and aluminum tariffs by the U.S., subsequent retaliatory tariffs by Canada, and ongoing diplomatic efforts to avert a full-scale economic war. Stephen Overle underscores the shift from collaborative endeavors in semiconductors and AI to contentious disputes over electricity, metals, and computer exports.

Key Quote:
“We're not like some small country that you can push around. This is a huge country with natural resources, with water, with critical minerals.”
— Francois Philippe Champagne [00:01]

3. Minister Champagne's Defiant Stance

Champagne articulates a strong defense of Canada’s economic resilience and strategic assets. He emphasizes Canada's extensive industrial base, natural resource wealth, and leadership in technology sectors such as AI and quantum computing. Addressing the uncertainties introduced by tariffs, he warns against the destabilizing effects on supply chains, economic security, and national security.

Key Quotes:
“Uncertainty cannot become the new certainty in North America.”
— Francois Philippe Champagne [01:54]

“We buy more from the United States than China, Japan, the UK, and France combined.”
— Francois Philippe Champagne [03:35]

4. Impact on Industries and Economic Dynamics

The conversation pivots to the immediate repercussions of the tariff impositions. Champagne highlights the retaliatory tariffs on U.S. goods amounting to approximately $21 billion and discusses their potential to disrupt Canadian industries. He reassures listeners of Canada’s ability to diversify its trade partnerships, leveraging existing free trade agreements with other G7 nations to mitigate dependency on the U.S. market.

Key Quotes:
“The steel that we're exporting is helping the defense industry and the auto industry.”
— Francois Philippe Champagne [03:35]

“We're going to diversify. You know, we've been there.”
— Francois Philippe Champagne [03:11]

5. The Semiconductor Sector and Technological Collaboration

A significant portion of the discussion addresses the semiconductor industry, where Canada plays a pivotal role. Champagne reveals that 80% of semiconductors manufactured in North America undergo packaging and testing in Canada, underscoring the country’s integral position in the tech supply chain. However, he expresses concern over political discourse threatening this collaboration, particularly with proposals like the U.S. CHIPS Act being reconsidered.

Key Quote:
“80% of semiconductor that are manufactured in North America are packaged and tested in Canada.”
— Francois Philippe Champagne [06:26]

6. Leadership Changes and Future Outlook

With Canada poised to welcome a new Prime Minister, Mark Carney, Champagne outlines the anticipated shift towards a more strategic and respectful engagement with the United States. He contrasts the current administration’s approach with previous administrations, advocating for a reset in relations that fosters competitiveness and stability. Champagne envisions a partnership built on mutual respect, leveraging Canada’s strengths to contribute positively to North American resilience.

Key Quotes:
“Mark Carney will have the respect of President Trump.”
— Francois Philippe Champagne [08:33]

“We're going to stand up, we're going to defend our country, we're going to defend our workers.”
— Francois Philippe Champagne [09:55]

7. Diplomatic Relationships and Internal Alliances

The minister touches upon the nuanced relationships within the U.S. administration, noting that while some voices support maintaining strong ties with Canada, the overarching political climate poses challenges. He emphasizes that many American business leaders and policymakers recognize the detrimental impact of instability on investments and economic growth, advocating for fair and predictable trade rules.

Key Quote:
“There are many. Some are more vocal than others for the reasons that are their own.”
— Francois Philippe Champagne [11:17]

8. Challenges to Technological Collaboration

Highlighting the broader implications for the tech industry, Champagne expresses concern that the deterioration of trust may hinder future collaborations in critical technological areas. He underscores the importance of stable and clear trade policies to maintain the flow of investment and innovation, particularly in sectors that are foundational to national security and economic prosperity.

Key Quote:
“The fact that somehow the administration has turned its back on us is raising questions.”
— Francois Philippe Champagne [15:58]

9. Conclusion and Path Forward

In wrapping up, Champagne reiterates the necessity for a strategic reset in U.S.-Canada relations. He calls for a return to predictable and fair trade practices that honor existing agreements and support mutual growth. Emphasizing Canada's capacity to adapt and thrive, he advocates for continued partnership and respect to navigate the evolving global economic landscape.

Key Quote:
“We're going to fight for... to work together. And that's what we're going to fight for.”
— Francois Philippe Champagne [18:47]

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Key Themes and Insights

• Economic Resilience: Canada’s robust industrial base and strategic resources position it as a formidable trade partner.

• Strategic Diversification: In response to U.S. tariffs, Canada is prepared to pivot towards other G7 nations, leveraging existing free trade agreements.

• Technological Interdependence: The integration of Canadian industries in critical tech sectors like semiconductors underscores the importance of collaborative stability.

• Leadership and Diplomacy: The transition to a new Canadian Prime Minister signals a potential shift toward more respectful and strategic U.S.-Canada relations.

• Mutual Impact of Tariffs: Both nations face economic setbacks due to the uncertainty and instability introduced by tariff wars, affecting investments and industry growth.

Conclusion

This episode of POLITICO Tech offers a comprehensive examination of the strained U.S.-Canada trade relations, highlighting Canada's strategic responses and the broader implications for technology and industry sectors. Francois Philippe Champagne presents a determined stance against unfair trade practices, advocating for a reset in diplomatic relations to ensure mutual economic stability and growth. The discussion underscores the intricate balance between national interests and international partnerships in an increasingly interconnected global economy.

Transcript

[Francois Philippe Champagne]

We're not like some small country that you can push around. This is a huge country with natural resources, with water, with critical minerals. We make planes, we make ships, we make cars, we produce oil. We're a leader in tech. We have Nobel Prize in AI. We do quantum computing, we do cyber. You know, you're picking up on the wrong guy.

[Stephen Overle]

Hey, welcome back to POLITICO Tech. I'm your host, Stephen Overle. And what a week it has been for Canada. On Sunday, a new prime minister. On Tuesday, steel and aluminum tariffs. On Wednesday, retaliatory tariffs. And now on Thursday, Canadian officials are in Washington trying to halt a full blown economic war. Among them is Francois Philippe Champagne, Canada's Minister of innovation, Science and Industry, who for my money has the best nickname in politics, Frankie Bubbles. But Minister Bubbles is striking a somber tone these days and as you heard at the top of the show, a defiant one as well. Just a few months ago, the US And Canada were looking for ways to partner on semiconductors, on critical minerals, on artificial intelligence and energy. Now they're fighting over electricity and metals and computer exports. On the show today, Minister Champagne is warning President Donald Trump that Canada can take its business elsewhere. Here's our conversation. Minister, welcome back to POLITICO Tech.

[Francois Philippe Champagne]

It's good to be with you again.

[Stephen Overle]

So you're scheduled to make the trek to Washington today. How are you going to smooth things over?

[Francois Philippe Champagne]

Well, my message is very, very, very simple. Uncertainty cannot become the new certainty in North America. You know, the markets have spoken. We've seen hundreds of billions of market valuation being wiped out. CEOs have spoken. You've heard the CEO Ford, the CEO of Alcoa Unions have spoken as well. I mean, this is going to hurt the American people. We've said it time and time again that the tariff on Canada, let alone a tariff on the world, is a tariff on Americans. And now you have more and more voice. Governors, mayors, CEOs. You know, I'm a business guy and I told Secretary Lutnick is as well and the president, we all know that if you want business to drive, you need to provide stability and predictability. You need to know the rules of the game. And now that kind of uncertainty is really affecting the supply chain, which then erodes economic security, which eventually will affect our national security. We don't want that. We need to be more competitive in North America, not less competitive.

[Stephen Overle]

Well, with, as you said, the back and forth on tariffs and just yesterday you imposed retaliatory tariffs on the US to the tune of about $21 billion. I mean, you mentioned consumers and supply chains, but is this a make or break moment for Canada's economy?

[Francois Philippe Champagne]

Well, I would say we're going to diversify. You know, we've been there. I'll go back to a moment after 1945. You know, Canada has a huge industrial base. Canada is a G7 country, a NATO ally. By the way, we buy more from the Americans. That's a. I'm sending. I'm going to tweet something today. You'll see that I have a chart. We buy more from the United States than China, Japan, the UK And France combined.

[Stephen Overle]

So you're really the biggest trade partner.

[Francois Philippe Champagne]

No. But you're getting at your best client. I don't know. Where I come from, you tend to treat your best client in a good way. Canada is by far. Two thirds of the United States depend on trade with Canada. They have Canada as their first customer. So I think what more and more you hear from the American people is that why would you pick on your best ally? Let's change the channel. I was Secretary of State during the first Trump administration. I've been in the room with President Trump. The tone was very different. So I'd say to my American friends that this is a moment for reset. We have a new prime minister to be sworn in within the next few days. And I would use that opportunity to really change the approach and a more constructive approach that would help both sides.

[Stephen Overle]

You talked about diversifying. What does that mean exactly? Does that mean more trade with China, more trade with the eu? Is Trump pushing you towards other countries as trade partners?

[Francois Philippe Champagne]

Well, I hope that my American friends are watching your show because it's a good show. But one thing they should know is that Canada is the only G7 country which has a free trade agreement with all the other G7 nation. So it's very easy for us to pivot to other markets. You know that. I mean, nothing is easy, but you can do it over the midterm to the long term. But the question is, why would we do that? The aluminum we're exporting is making construction more affordable in the United States. The steel that we're exporting is helping the defense industry and the auto industry. I mean, why would you want your best partner and friend to diversify? We can do it. You know, we're blessed by geography. We have a Pacific coast, we have an Atlantic coast. We have strong aerospace industry, strong steel industry, aluminum. We do cars. We have natural resources. We have water. We have critical minerals. But what makes us unique is proximity why you have had these supply chain on both sides is to make us more competitive, more resilient. And now it's really an awakening from the American people and say, why would you want to disturb that? I mean, we get calls from the governor of Kentucky, Illinois, Michigan. People say what's going on? Why should folks on the factory floor now start wondering about their job? You know, in the same day we went from 25 to 50 to 25 to 0. I mean people can just manage their business. So my message to Secretary Lutnick, he's a business guy, he understands market, he understands business. I'd say, hey, let's get together, let's fix that. You know, so you're going to be more competitive. You're going to achieve the golden age of America. And by doing so, we're going to help you to achieve that with critical minerals, with semiconductors. I must say, you know, Steven, there's been a lot of things being said that do not match the reality. You know, 80% of semiconductor that are manufactured in North America are packaged and tested in Canada.

[Stephen Overle]

Right.

[Francois Philippe Champagne]

The titanium done in Canada is going into nuclear submarine in the us. This is the reality.

[Stephen Overle]

You know, Minister, I was looking at the list of American products that are going to be hit with tariffs and I saw computers on the list. Being a tech guy caught my eye. Is the tech industry a particular target for you?

[Francois Philippe Champagne]

Well, listen, it's not by choice. It's not because we wish to do that. You know, we didn't ask for it. You have to go where you can find products, you know, to be dollar for dollar. So the more you put tariffs, the more you need to expand the list of products which would be. And now you've seen the European Union. This is so sad, I must say.

[Stephen Overle]

It'S so sad because now you sound disappointed.

[Francois Philippe Champagne]

No, no, it's sad because I'm not angry.

[Stephen Overle]

I'm just disappointed.

[Francois Philippe Champagne]

Yeah, because I've built businesses and you see businesses being destroyed now. That's why I say I feel sad because it's not by design, it's not by wish. It's just like a natural response. It doesn't need to be that way. We're put in a position that we have to respond. And that's not just Canada. You see the response, Stephen, the European Union, Japan, I mean long standing allies, Germany, Japan, France, the uk. The world is kind of responding to that. Do we need to get there? I mean, Canada is not the problem. Canada is part of the solution with Mexico. So it's kind of unfortunate that we're lumped in with other countries where honestly, our situation is very different. Trade between Canada is very balanced. You know, those who are winning today, Stephen, it's not the American, it's the Chinese. Because if you say no to Canada, you're basically saying yes to China and Venezuela for all. I don't think that's what I, I listen, I studied in Cleveland, Ohio, right. I know none of my friends in Ohio. We say, oh great, we're picking on Canada because we'd rather to do with China. I didn't hear anyone talking like that.

[Stephen Overle]

You know, last time you were on the podcast, I asked you whether Prime Minister Justin Trudeau should resign. And I remember exactly what you said. You said, you don't change the pilot in flight. Canada has a new pilot now, Mark Carney. How does that change the flight?

[Francois Philippe Champagne]

First of all, we're going to be a great partnership. You know, Mark and I have decided to partner together. There was a time I was considering running myself. We decided to team up together and now we are on a very strategic course. We said that, you know, we're going to beef up our military, we're going to invest in infrastructure and Canada is going to regain its leadership on the international stage. We're going to be working differently. I think you know the reality, Stephen, in that six weeks, the world has changed. The administration has turned its back on countries like Canada. And honestly, folks here can't understand. So we said Mark's message, the upcoming Prime Minister was very clear. We're going to engage with our friends in the United States. We get along with the American people, but it has to be on the basis of respect. I think Mark Carney will have the respect of President Trump. They've seen each other before. Prime Minister Carney to be is a very well respected international banker. He was the governor of bank of England during their crisis. He was governor of bank of Canada. So I think you'll see a very firm one which demands respect, but at the same time, you know, a constructive engagement with our US Partners.

[Stephen Overle]

Constructive engagement is definitely the polite way to put it. I know when Carney was giving his victory speech, he said, the gloves are off, you know, Canada and asked for this fight, but here you are. What does that mean exactly? I mean, how do you see his approach different from Trudeau's approach, for instance?

[Francois Philippe Champagne]

Well, he's gonna demand respect from day one. Canada deserve to be respected, our workers deserve to be respected and our industry deserve to be respected. And one thing, you know, that needs to stop is really this Thing that you heard President Trump describing Canada in a way which I've never heard before, you know, for us, it's almost unbelievable. And you know what he has done? He's galvanized Canadians in a way we've never been so united. We're going to stand up, we're going to defend our country, we're going to defend our workers. And I think we're going to become more resilient. And like you said, we'll diversify market. If you say no to Canada, you know, well, we're a G7 country. We're not like some small country that you can push around. This is a huge country with natural resources, with water, with critical minerals. We make planes, we make ships, we make cars, we produce oil. We're a leader in tech. We are Nobel Prize in AI. We do quantum computing, we do cyber. You know, you're picking up on the wrong guy.

[Stephen Overle]

I was reading a story from my Politico colleagues about Howard Lutnick, the US Commerce Secretary, and it mentioned in there that he texts with your colleague, the Canadian finance minister, Dominic LeBlanc. Do you have a relationship with Lutnick or others in the administration? I mean, are there folks you feel are allies of Canada still, or is it really adversarial at this point?

[Francois Philippe Champagne]

There are many. Some are more vocal than others for the reasons that are their own. But, you know, there's a lot of people who in the background understand the dynamic of markets, understand the dynamic of supply chain, understand the dynamic of how you build resiliency and competitiveness. Some of them, like you said, are more outspoken than others. But you know what? I think that from unions to business leaders to folks in the Senate, in Congress, even in the administration, I think there's been many voices who are a bit puzzled about picking up on Canada at the time. We're. The president is trying to make America more resilient and talking about the golden age. So for me, this is a time for reset. And really, let's look at what you know, because today there's a real nexus between energy security, food security, water security, economic security, and national security. And when you put all that together, you said, okay, we have created something unique and we're the envy of the world. I mean, everyone wish to have a neighbor like Canada because that makes you more resilient. You know, you can trust us. But now that stress has been eroded because, you know, you've basically turned your back on Canada at a time where the world is going to a lot of turbulence, where it seems to Me that we would be stronger together.

[Stephen Overle]

Watching this all play out. There's a lot of barking, right? Especially from Trump calling Canada the 51st state and, you know, imposing all these tariffs. When you actually get in the room, you have, you know, private conversations or private phone calls. Is the bite as bad as the bark?

[Francois Philippe Champagne]

Well, I mean, you know, when you meet people, that's where you build relationship. I mean, when people see us, they say, okay, really, these are real partners, you know, and we've been constructive. We stand firm, and we know that President Trump respect, you know, people who stand firm. You know, he's someone who's very apt at negotiation, and I don't think he respect weaknesses, he respects strength. That's what we've demonstrated. So clearly in private conversation, people would be perhaps a bit more outspoken about their feelings. They respect, obviously, the voice of the president. But I can tell you that a lot of people have been talking, Stephen, they just wish we would get on with that. You know, they feel that this is destructive and they feel actually that it's hurting American businesses because, you know, without that kind of stability on these tariff fronts, it's very difficult for people to invest. And by the way, when I saw these hundreds of billions dollar of investments and when you're cutting steel and aluminum from Canada, well, you know what, I've been in this energy construction business, it's just going to make costs higher. These costs are going to be passed on. And, you know, at the end of the day, for me, why I said I was sad is that we're doing that to ourselves. We don't need to do that. We've been working hard for both of us. And now it's like in this partnership when one is turning its back.

[Stephen Overle]

Minister, let me ask you a question on microchips. You mentioned factories and building. You know, Trump recently called on Congress to end the CHIPS act here in the US the big bill for semiconductor funding. Canada was expecting to be a big partner on that, you know, connected supply chains and all. Is that partnership now dead?

[Francois Philippe Champagne]

Well, you should ask your colleagues across the street. You know, they knew no more than me. I mean, for us, there is the political discourse and the manufacturing reality. The reality is that Canada package and test about 80% of the semiconductor which are manufactured in the US and packaged in North America.

[Stephen Overle]

Why?

[Francois Philippe Champagne]

Because we did that. You know what, you always have to go back to the history. This has been done, I think, during the Cold War to make sure that we would be more resilient. Same thing with aluminum. You know, why is the smelter of aluminium in Canada, Quebec. I'll tell you because believe it or not, during the Second World War, the Saguenay, which is a region in Canada, was the largest supplier of aluminium for the Allies around the world. It was so big that we built a military base with a squadron of jet fighters to protect it. And we had 3,000 soldiers to protect the plant. We did that because we wanted to be more resilient, to care about our national security. You can unwind these things, but at the end of the day, these things have been made for a reason.

[Stephen Overle]

I just wonder if this erratic trade fight makes it impossible to collaborate on tech. That's an area Canada and the U.S. seem to be getting along. And it seems like that may be out of reach now.

[Francois Philippe Champagne]

Well, listen, I don't have a crystal ball. It's true that trust has been eroded. You know, we will always do things together. We are bound by geography and values and a lot of things. But I think, I'm afraid that Steven and I don't say that lightly, I think that there's kind of a post moment and an after moment where when you roll the trust and Canadians have been burned, I think people will be worried to say, are we really what you say we are, your best friend, ally and partner? Because if you treat us like that. When I said I was sad, Stephen, it's just not Cat. The world is watching, I can tell you. I talked to European, they say if this is the wave coming to Canada, we're going to be hit by a tsunami because we are so big and so integrated with you. If you think about smaller economies around the world and far away economy, you know, it's not just us. Today you hit like Australia where you're doing things on the military side, you've hit the UK which is also a partner in intelligence. You've heard like Germany, Japan, South Korea, I mean those are like, you know, the folks we used to be in the room and do things together. So the world is watching and say, wow, if that's how you treat the Canadians, and I would say the Mexican, wow, let's wait until how we're going to be treated. And that's what I'm saying.

[Stephen Overle]

In five, six weeks, when you're talking to businesses there in Canada, especially sectors like manufacturing and tech right now, what are you hearing from them? Are they hesitant to invest? Are they worried that they're not going to have access to the US market? And how is that affecting your economy?

[Francois Philippe Champagne]

I think that it's affecting both sides because Uncertainty is the enemy of investment. When you don't know what the rules of the game will be. We're not asking for preferential treatment, we're asking for fair treatment. We just say let's agree on the rules of the game and let's each other compete. You know, on hockey, when the rules are clear, sometimes we win, sometimes you win. That's okay. You know what, we happened to win the last time. And this is a good feeling. The fact is that when the rules are not clear, Stephen, is that it's really affecting people long term view about their investments. And you know this, when you talk about tech, it talks about data. Some people may want to pull out their investment to say, okay, well if today it's still aluminum, it might be data next. And therefore should I really have my data in North America? Should I have a different supplier than an American supplier for that? That's the kind of thing. To be honest, Steven, we didn't used to ask ourselves these questions. The fact that somehow the administration has turned its back on us is raising questions.

[Stephen Overle]

You said this is like a hockey match. I have to ask what's the score and what's your next play?

[Francois Philippe Champagne]

Listen, I'll just go back to the last one. We won this one. But the reason we want and the reason we can play is because it's fair. Because we both know the rules of the game. Now it seems that the rules keeps changing and the goalpost keeps changing. So that's why it's very difficult to play.

[Stephen Overle]

There aren't a lot of rules these days.

[Francois Philippe Champagne]

Exactly. So it's tough. It's tough on both sides. Imagine if we had that hockey game and we change the rule 20 times during the game. That's kind of the thing. Or you change the goalpost all the time. I think that we need to take a deep breath and get back to something where we can work together. And that's what we're going to fight for. We're going to stand up for Canada. One thing our friends in the US realize is Canada can bite. We're friendly, we're nice, but we can bite, you know, and therefore we're going to be standing strong. And hopefully this is a moment for reset in Washington. How to engage with Canada and the new Prime Minister.

[Stephen Overle]

Well, Minister, great to have you back on Politico Tech.

[Francois Philippe Champagne]

Thank you very much, sir. You have a great day.

[Stephen Overle]

That's all for today's Politico Tech. If you enjoy Politico Tech, be sure to subscribe and recommend it to a friend or colleague. For more tech news, subscribe to our newsletters, Digital Future Daily and Morning Tech. Music in our show comes from the mysterious Breakmaster Cylinder. Our managing producer is Annie Reiss. Philip Frobos helped produce today's episode. I'm Stephen Overle. See you back here on Monday.