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Front Burner Transcript for July 3, 2025

Guest Host: Elaine Chau

ELAINE CHAU: Hi, I'm Elaine Chau, in for Jayme Poisson.

[Music: Theme]

EC: When Mark Carney won the election back in April, he promised to drastically transform Canada's economy so that it could stand up to Donald Trump's tariffs and annexation threats. The goal was to move fast and solve big problems by Canada Day. That deadline's now passed. Has he done it? My colleague Catherine Cullen, host of The House, is here to talk about what's been accomplished in these first two months in office. Hi, Catherine.

CATHERINE CULLEN: Hey, Elaine.

EC: We're also going to talk about Conservative leader Pierre Poilievre's upcoming byelection, and the whiplash from the latest round of trade talks with the U.S.

[Music: Theme]

EC: Catherine, the trade talks with the U.S. fell apart last Friday over the Digital Services Tax and then got put back on after Ottawa decided to drop the tax late Sunday night. And just to remind our listeners, this was the tax that was going to affect tech giants like Amazon, Apple, Airbnb, Google, Meta, Uber. You know, companies that offer online services and advertising. They were going to be taxed 3% on the money that they make from Canadian users and customers. It was going to start collecting payments on Monday and bring around two billion dollars at first and an estimated seven billion dollars over the next five years. And, you know, the tax didn't have fans in the White House. The Biden administration was not into this. Trump even less so. And now that it's gone, the White House is really painting this as a big win for Trump.

SOUNDCLIP

PRESS SECRETARY LEAVITT: It's very simple. Prime Minister Carney and Canada caved to President Trump and the United States of America. The president made his position quite clear to the prime minister, and the prime minister called the president last night to let the president know that he would be dropping that tax, which is a big victory for our tech companies and our American workers here at home.

EC: And Catherine, like what kind of reaction have we seen to Mark Carney backtracking on the tax so quickly? I know that not everyone was a fan here either.

CATHERINE CULLEN: Yeah, certainly the reaction has been mixed. It's funny, Elaine, because these negotiations had been underway, and of course the stakes are so high for Canada. But we've known so little about what's going on. And suddenly we get this window with the Digital Services Tax, which, while, as you say, this is something that's been in the works for a long time, it's not something most Canadians have thought about. And suddenly this is the little piece of perspective we're getting on this deal. So Mark Carney has come out and defended the decision to, um, to rescind the tax. He said:

SOUNDCLIP

MARK CARNEY: It's part of a bigger negotiation. It's something that we expected in the broader sense that would be part of a final deal. We're making progress towards a final deal. There's more to be done, to be clear.

MARK CARNEY: As I just said, it's a question of timing in terms of the date for the final negotiations and when the tax was coming in, into effect. And, you know, it doesn't make sense to collect tax from people and then remit them, uh, remit them back. So it provides some certainty, and as I just said...

CATHERINE CULLEN: Some folks have said though, listen, if you were going to drop something like this that was going to bring in billions of dollars to government coffers, shouldn't you get something out of it? For instance, convincing the U.S. to drop steel and aluminum tariffs. We don't actually know whether there was some [EC: Mm-hmm.] sort of quid pro quo. Neither side has said. But if there was, it's not obvious to most people. And in terms of like real detractors, Pierre Poilievre is out there saying, listen, this, this sounds like elbows down. It's worth noting that even in Canada, there were folks who didn't like the Digital [EC: Right.] Services Tax. People like the Canadian Chamber of Commerce called the tax discriminatory and damaging, and they said it was going to drive up prices for consumers. They worried that it would lead to more tension in the trade agreement. But again, the Canadian government had said this was about fairness, this was about getting Facebook and Meta and all these big companies to not just be profiting off Canadians' information but providing money to the Canadian government if they were going to do that.

EC: Mark Carney has really campaigned as, you know, the guy who's willing to be tough on Trump. You know, telling Trump that Canada is not for sale ever and, you know, "elbows up," right. And have his actions as prime minister, you know, matched that tough talk?

CATHERINE CULLEN: It's such an interesting question, because this was so central to his election campaign, right, was the way he was going to deal with the United States. And certainly the Conservatives have been very quick to say the flattery, for instance, he has offered Donald Trump and certainly this concession, do not match with "elbows up."

SOUNDCLIP

MARK CARNEY: Mr. President, welcome to Canada.

DONALD TRUMP: Thank you very much.

MARK CARNEY: It's a great honour. Happy birthday. A few days short.

DONALD TRUMP: A little bit. That's okay.

MARK CARNEY: A few days short, but uh, didn't have a chance to see you on the, on the day. Happy birthday to the U.S. Military...

CATHERINE CULLEN: Again, we don't really know what's going on inside these trade talks. We know that Carney seems to publicly, to some extent, have charmed Donald Trump. That's what we saw in the White House visit. But then you only have to think back to the weekend. Donald Trump saying:

SOUNDCLIP

DONALD TRUMP: People don't realize, Canada is very nasty to deal with.

CATHERINE CULLEN: I think at the end of the day, the, the judgment here from Canadians about whether Mark Carney really is living up to "elbows up" is probably going to come when we find out whether or not we get a deal with Donald Trump. The deadline we're looking at now is July [EC: The 21st.] 21st.

EC: Yeah.

CATHERINE CULLEN: Yeah. So is there a deal, and if there is a deal, do Canadians feel like it's a good deal for them? Mark Carney has said over and over, he's only going to sign a deal if it's good for Canadians. So I think we're, we're in this space right now where there are questions, but in terms of what the verdict is really gonna be, it's TBD.

EC: One of the issues that Trump has really taken aim at is around Canada's supply management system, right, which, you know, controls the import of items like eggs, dairy, poultry, and the overall supply of those products to stabilize pricing. And really, it's meant to protect Canadian producers. And Trump has been just on and on about this for a long time. And what do you think, you know, Carney giving in on the DST might tell us about how he'd approach supply management?

CATHERINE CULLEN: I mean, I guess it leads us to wonder whether if he did, as the White House press secretary said, "cave," if he caved here, would he cave on this? But I will say, I do think those two issues are pretty different politically. You know, supply man-- like, the Digital Services Tax didn't come up much, if at all, during the last federal election. Supply management did. And again, it is sort of a jargony term, but Canadians are familiar with the milk and eggs on their breakfast table. Like this has very visceral implications for folks, and it's particularly politically potent in Quebec where there are a lot of dairy farmers. So Mark Carney said this was something he has vowed to protect. That said, when Justin Trudeau's government and Donald Trump's previous government came to a new trade deal -- CUSMA -- there were some adjustments to supply management. So, it's conceivable. Those adjustments were ultimately pretty minor. It's [EC: Right.] also, though, sort of an interesting side story in all of this because Trump continues to rage about these tariffs that Canada can put on American producers if they try to sell some of their goods. He agreed to this stuff when CUSMA was negotiated. So he's angry about a deal that he signed off on.

EC: I do know that there is a bill that was just passed last month, C-202, that forbids the use of supply management as a bargaining chip in trade negotiations, right?

CATHERINE CULLEN: Yeah. And this is an initiative of the Bloc Québécois, because as I said before, dairy farmers are a very powerful voice in Quebec. But it passed the House of Commons unanimously. Now, I'm hosting Power and Politics this week, and the U.S. ambassador told me, the U.S. ambassador to Canada told me on Monday, he does think that if Mark Carney really wanted to, he could, you know, there is some wiggle room there.

SOUNDCLIP

PETE HOEKSTRA: I have a strong belief that if we negotiated a trade, that if the prime minister and the president got to a trade agreement, okay, and for whatever reason it included something that Parliament said ‘You can't do that,’ that the prime minister probably could find a way to get Parliament to do its will. Just like the president today...

CATHERINE CULLEN: He doesn't necessarily have to be bound by the [EC: I'm guessing--] will of Parliament. [laughter]

EC: I'm guessing that Canadian counterparts may feel differently about that.

CATHERINE CULLEN: Indeed. Well, interestingly, the same day, I had Mark Carney's Quebec lieutenant on the show, Steven Guilbeault. And guess what? He says, yeah, not so much. So I do think, like, watch that space. Supply management is a hot topic. If it's making Donald Trump hot under the collar, then it's worth watching in these negotiations. But I think if there's any movement on this, if it's more than minor, that is gonna be like a heck of a headline to come out of all this. I certainly-- I'm not a betting person, but if I was, I don't think I'd bet on supply management being, you know, the thing that decides this. But goodness gracious, we should never make predictions around Donald Trump, so who knows? [Elaine laughs]

EC: Um, I was thinking about how, like, even if, you know, they do reach a deal, is there a scenario here where, you know, some U.S.-imposed tariffs actually get to stay, for example, you know. Especially if Ottawa runs out of bargaining chips.

CATHERINE CULLEN: Well, and that's the way it's been with other countries. So on the one hand, you ask yourself, well, why should Canada be so different? Now, Mark Carney keeps talking about this is an economic and security partnership. It's supposed to be bigger picture. And we are different. We share a border with the U.S. Maybe there's a different case to be made. But again, like when we ask ourselves what the bar is here, will there still be some tariffs in place but just a better situation than we're currently in, that... you know, watching Mark Carney try to make a case to Canadians that that is the best we can hope for, I think that would be a very interesting political moment. The Liberals have been cagey about this. The Globe and Mail reported last week that some business leaders were being asked to what extent, you know, what would be a tolerable level of tariffs. I was talking to Dominic LeBlanc, who's heavily involved in these negotiations, and Minister LeBlanc, he would not engage with that question at all. So, like we have to wait and see, but I think it's a critical question.

[music]

EC: So on the domestic front, Prime Minister Carney's really been moving very fast. The government announced the removal of all remaining federal exceptions to inter-provincial trade barriers on Canada Day. He made some big promises during the campaign to get things done in these first couple of months. And can you walk me through some of those accomplishments?

CATHERINE CULLEN: He did put in place a tax cut that took effect on Canada Day on the lowest income bracket. He hasn't actually passed the legislation to go along with it, but the point is that the money will flow. I think his biggest challenge so far has been getting past this legislation that I know you've talked about on the program before about national interest projects, right? To sort of get moving [EC: That's right.] on some of these big new infrastructure projects, be it electricity grid, be it the contentious subject of a pipeline, critical minerals, you name. Um, and dramatically changing military spending, ramping that up. Certainly, that's been a signature, I would say, of these first couple months.

EC: Mm-hmm, mm-hmm. Um, is there-- You know, there were a number of things that were promised to get done by Canada Day. Is there anything off of that list that still kind of is up in the air?

CATHERINE CULLEN: Yeah, for sure. Certainly when it comes to military spending. It's true Mark Carney just had a meeting with some European counterparts and said, yes, Canada, Europe, closer together on military spending. You know, you buy more stuff from us, we're closer to you folks. But fundamentally, what came out of that meeting was basically a framework for getting things going with Europe. He had promised something concrete by Canada Day, so folks can make up their own mind about whether he met that bar. But there's more work to do there for sure. Um, the one other pledge that he made, something he wanted to get done by Canada Day, was a review of federal departments. This is to cut red tape. That's actually just getting started now and it's certainly not going to be done by Canada day. And when it comes to inter-provincial trade barriers, which has somehow become this like very hot topic, it's fascinating. It's been burbling in Canadian politics for literally decades. Um, I was at the Canada Day celebration in Ottawa and that was like one of the biggest applause lines for the prime minister. It blows my mind that people are so into this.

SOUNDCLIP

MARK CARNEY: Together, we will break down barriers so that you can buy Canadian anywhere. And you can work in Canada, everywhere.

[Cheers, whistling, applause from crowd]

CATHERINE CULLEN: The pledge there was just to deal with the federal part of it, and the federal government would acknowledge most of the work on inter-provincial trade barriers. It's inter-provincial -- the provinces [laughs] have to do the work. So there's work to do there.

EC: The provinces have a big role to play. [laughs] Yeah.

CATHERINE CULLEN: Indeed. And so, you know, that's not all his work. Chrystia Freeland, who's in charge of this file, is going to have a meeting with provincial counterparts to talk about it. But there's work to do there even if the bulk of it isn't federal. To like actually get to the good stuff, to get the work done, to, to get more of this stuff moving, that's gonna come down to the provinces.

EC: Mm-hmm. Um, you mentioned kind of ramping up military spending. Um, in that vein, Carney's also joined the NATO pledge to increase defence spending to 5% of the GDP by 2035. This would cost the country around $150 billion a year. And what has he said about, you know, how he plans to pay for the increased defence spending?

CATHERINE CULLEN: Yeah, or like fundamentally have us pay for it [laughs]--

EC: Yes. [laughs]

CATHERINE CULLEN: --is the fascinating question here. Um, I think it's clear that it's not going to be like a straight line upwards. He's talking about backloading a lot of this money. And I do just want to put it into context for people because I think it's easy to get lost in the numbers here. $150 billion, we know that's a lot of money. What are we talking about? Well, right now, if you looked at the amount of money that the federal government transfers to the provinces for health care -- so that's all the federal money that goes to the province for health care -- you have to multiply that by 3 to get to about $150 billion. So this-- like, think about what a shift in mindset this is for this country. Spending, um... it is 10 years out, I acknowledge, but spending so much more on the military than we ever have before. Mark Carney's pitch is: we're not going to do it all right away. It's essentially going to be to some extent backloaded. But there are questions about the-- where the money is going to come from, what the sacrifices are. He is talking about how more defence industry in this country is gonna grow the economy. There's also, as we talked [EC: Right.] about, his national interest projects of growing the economy there. But it, you know, it isn't all just gonna fall from the sky or come from growth in the economy. At some point there are gonna have to be choices made. He sort of alluded to questions about the role of just what the federal government can do by the time those 10 years are up. I will also, though, point out, that is very far in the future, Elaine. The Liberals, um, have been in power for quite some time. Um, I'm curious who will be running the country when those decisions about spending at that remarkable level are made, and whether those questions are up to Mark Carney or not.

[music]

EC: I want to talk a little bit about the reaction to these big moves that-- and big commitments, right. You know, we talked a bit about Bill C-5 earlier. You know, that has obviously drawn widespread pushback from Indigenous groups for giving the government power to essentially bypass federal laws for certain projects that are designated as nation-building projects. There's also the border bill, which critics have said give the authorities unchecked powers. And um, how has Carney handled these criticisms?

CATHERINE CULLEN: I think by and large it is by standing his ground. If you look at the nation-building projects, for instance, he has said:

SOUNDCLIP

MARK CARNEY: Consultation, cooperation, engagement, participation are at the heart of this Bill C-5. That is how we build our nation. Being a reliable partner to Indigenous peoples is not just about upholding the duty to consult. It's about enabling the creation of long-term wealth and prosperity for Indigenous peoples through full equity ownership.

CATHERINE CULLEN: That said, he did, after the law passed at the House of Commons, announce that he was going to do more consultation. He's going to have meetings now with Indigenous stakeholders over the summer. It's too late for them to change the law that's passed, but an opportunity to hear them out and have a say. So I think that does point to the fact that there's some awareness about the criticisms there. Border bill, interesting to watch because it hasn't passed yet. This is not something he campaigned on compared to C-5, these new powers for police. It's a less progressive Parliament right now, right? The House of Commons. The NDP and the Bloc, they take up less space. A big, big chunk of that seating chart is either red or blue. So, it may not be that hard to do politically to actually get this border bill passed, because it seems like the kind of things we would think the Conservatives would be on side with. But I think it's going to be interesting to see how much pushback there is from civil liberties groups, and whether the government is willing to take a step back because this wasn't a cornerstone of what they ran on. Or whether they just think this is part of like, you know, making things happen quickly in this country and dealing with things that are overdue. Which is what police services have argued when it comes to access to people's data.

EC: Catherine, do you think that Carney's like handling on these issues tell us something so far like about just the kind of leader that he is, that he's showing us to be? Like there are some kind of real CEO vibes here, right? Like bringing that business sector ethos to a lot of what he's doing in government.

CATHERINE CULLEN: Yeah, I mean, I think we would say he's pretty decisive. Um, and he is trying to make things move quickly. He is still building his team. Some of the key staffers around him are actually really only gonna come into their roles next week. [EC: Mm-hmm.] So I think there are questions about like... He's driving a lot of this, um, with all due respect to the people around him who've helped him through these past few weeks, like, he's driving a lot this from his own mind. He had this vision and he is trying to make it a reality now. He needs the machinery of government to be able to pull this stuff off. And he needs, you know, the team to execute it as well.

[music]

EC: The Globe and Mail reported recently, citing Liberal insiders, that, you know, Carney is ready to dismiss any high-level bureaucrats that don't meet his expectations. Can you walk me through a bit of what people have been saying kind of in the Ottawa bubble, I guess? Like of-- like how he's being described, you know?

CATHERINE CULLEN: Yeah, I mean, I think people understand that as a boss, he can be a bit of a tough customer. Not, not someone who shouts, but someone who doesn't suffer fools. That's an explana-- a description that comes up a lot. If you are not prepared, you hear that he is going to let you know. You know, you're briefing him and he's asking you questions. You don't have the answers. 'I already know that. You need to learn your brief a little bit better.' There's even this idea that there's like kind of an unspoken dress code at the Prime Minister's Office now. He wants people briefing him--

EC: A professionalism, right? Like kind of in...

CATHERINE CULLEN: Well, like, where's, where's your suit? You know, perhaps like, that T-shirt is not gonna fly, what colour are your shoes, gentlemen, um, speaks to this level of professionalism. And you have to think about where some of these folks are coming from, right? Which is Justin Trudeau, like the big hugger, [laughs] the guy who got very emotional. Um, so I just think tonally, this shift is quite dramatic. To be fair, Canadians made it pretty clear they were tired of the old tone. The other thing I will say is Carney, from everything we hear, really likes to get into the weeds on policy, right. That like, you know, know your brief, having specific questions he wants answered. Reading documents that are sort of like deeper down the food chain than you would expect him to get. And so demanding all of that from the staff around him as well.

EC: Mm-hmm. Um, Carney's promised to like bring in like outsiders to reach these big goals that he's, that he has. One of them is Michael Sabia, the former chief executive of Hydro-Québec, who's now going to be the clerk of the Privy Council Office. And, you know, he's someone who's moved pretty fluidly between the private sector and the government. There is quite a bit of like speculation about how he might, like, really light a fire under the federal public service. And, like, what are you hearing about Michael Sabia and what he's been brought to do, brought in to do here?

CATHERINE CULLEN: Yeah, we-- I mean, he, again, he is somebody who does have some government experience, although a lot of corporate experience. So again, it speaks to this like CEO of Canada bringing in a bit more of a pro-market view of things. Michael Sabia is talked about as somebody who is unorthodox, relentless. Is he a disrupter? Is he somebody who is just too corporate? Um. It's not actually that long ago that he was a part of government. He um, he was part of the civil service under Chrystia Freeland. Uh, deputy minister of finance between I think 2020 and 2023. Um, and he wound up leaving. So I think we will see. It does seem to speak to this deep focus on results that Mark Carney is trying to institute. To what extent that works within the civil service, which is, you know, the government is a big machine. Um, the clerk of the Privy Council's Office is kind of like the conductor of a very enormous orchestra. [laughs] So can he get all these, you know, cross-government instruments playing the tune he wants, because it might sound a little bit different than the tune they're used to.

[music]

EC: Catherine, just switching gears here for a bit. So Pierre Poilievre, the temporarily exiled Conservative leader, will finally have his chance to regain a seat in the House in a byelection for the Alberta riding of Battle River—Crowfoot. That's coming up on August 18th. Um, it's really expected to be a cakewalk for him. But, you know, this is also a guy who really rose to prominence as like a ferocious opposition leader, and how is him like not having a seat, you know, being absent from question period, how's that all playing out right now?

CATHERINE CULLEN: We're not hearing as much from him, I think has been a big piece of this. And that's particularly when Carney is in this sort of like honeymoon period I think with the public. You do see some polls suggesting a pretty big gulf in public opinion from Poilievre's popularity to Carney's. I think to me what is the most interesting is what has it meant for the Conservative caucus to not have the actual leader of the party there. You hear MPs speaking their minds on a variety of issues, things perhaps the Conservatives would have kept a bit more buttoned up before. Whether it's, you know, views on immigration issues or vaccine policy, things like that. Um, and and fewer slogans! Less rhyming! There's less rhyming on Parliament Hill. Less, you know, Axe the Tax, Stop the Crime. Pierre Poilievre loves, like he loves language and trying to make language as potent as possible. And it did mean that there were a lot of sort of catchy slogans. We're not hearing those nearly as much. I am very interested to see, again, whether we're just in this sort of, like... Is it an interregnum if it's Pierre Poiliever to Pierre Poilievre? I don't know. [laughter] But this interim, this liminal period, busting out the dictionary here, um, you know, does it stick? Presuming he comes back in the fall.

EC: I was watching this interview that Poilievre did with The Hub's Sean Speer, and he really frames the campaign as one of:

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PIERRE POILIEVRE: Great gains. A couple million more votes -- two and a half million to be precise -- and about 25 more seats.

EC: But not everyone in the party feels that way. There was a caucus meeting on this issue back in May where there was talk of campaign errors made by Poilievre and his campaign director, Jenni Byrne. And Catherine, from the people that you are speaking to, is there a sense that any genuine accountability has happened given the election's outcome?

CATHERINE CULLEN: Yeah, it's so interesting, right? Because I mean, there's a truth to what he's saying. Like, they really did gain some ground. But the question of lessons learned from this, to me, is so interesting. Normally, when you don't win an election, there's a real post-mortem. Not just a meeting, but somebody is tasked with looking into what the party could have done better so that they don't make the same mistakes again. No one appears to have been formally tasked with this. Except Pierre Poilievre, from everything I've heard, is calling around people. That's what he's doing right now. And he, you know, he's sitting there and watching, I guess, CPAC and missing the House of Commons. Maybe CBC News Network, who knows? Um, and missing The House of Commons when it was still up and running. Um, but he's calling folks. He's talking about how great the last election went, asking for a little bit of advice. But the challenge is, it is awkward if the leader is the one saying, what did we do wrong? Because, you know, people don't necessarily get all that much face time with the leader. Maybe they want to make a good impression. Maybe they're a bit nervous. Maybe they don't want to be critical of him to his face. It's been suggested to me this is not the best way to figure out how to make things run better. But is that really what Pierre Poilievre wants or is what Pierre Poilievre wants right now to consolidate his leadership? He's got a leadership review coming up at a party convention in January. He's got this byelection. Um, maybe he does not want to stir up some of the more negative sentiment, or maybe he feels that the lessons are best learned if he is making these calls.

EC: Obviously, lots to watch out for, still. Catherine, thank you so much for your time today.

CATHERINE CULLEN: Thank you.

[Music: Theme]

EC: That's all for today. I'm Elaine Chau. Thanks for listening to Front Burner.

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