Trump’s Tariffs BACKFIRE as Japan Dumps the U.S. and Bets BIG on Canada | George Conway

Trump’s Tariffs BACKFIRE as Japan Dumps the U.S. and Bets BIG on Canada | George Conway

What you probably saw in the headlines was another loud trade fight, another round of tariffs, another politician promising that this time manufacturing is really coming back home. But what you likely did not see and what I want to slow down and walk through with you today is how those same policies are quietly doing the opposite of what they claim. Because while the rhetoric is all about strength and self-sufficiency, the actual economic incentives are pushing companies to leave, workers into uncertainty, and entire supply chains to reorganize in ways that ordinary people never voted for and never benefit from. That gap between the story we are told and the reality underneath it is where this whole thing begins. Here is what officially happened. A 25% tariff on imported autos and key industrial materials was announced with the promise that it would revive American manufacturing. The idea was simple on the surface. Make imports more expensive, force companies to build at home, and bring jobs back to American workers. If that sounds intuitive to you, that is because it is designed to. But capitalism does not respond to speeches or intentions. It responds to cost structures, margins, and risk. And once those tariffs went into effect, companies did exactly what the system trained them to do. They recalculated. Subaru is a useful example because it cuts through the abstractions. This is not a fly by night company. Subaru has been building vehicles in the United States for years. It has invested in American plants, American workers, and American suppliers. Yet, when tariffs drove up the cost of steel and aluminum inside the US, building cars domestically became more expensive than producing them elsewhere. not just slightly more expensive, but structurally less predictable. So Subaru made a decision that stunned a lot of people. It stopped producing vehicles in the US for Canadian buyers and shifted that production away. Not because it wanted to punish anyone, not because of ideology, but because the numbers stopped working. If you work in manufacturing, logistics, or any kind of supply chain, you already understand this instinctively. When input costs spike overnight and policy shifts without warning, planning becomes impossible. A factory is not a light switch. You cannot just turn it on and off based on a tweet or a press conference. You make multi-year investments. You sign long-term contracts. You build entire communities around those decisions. And when that stability disappears, companies do not dig in out of loyalty. They look for exits. That is where the deeper story begins to matter for you. Because this is not just about one automaker or one tariff. It is about how power actually moves in a global economy. When policies are designed to look tough rather than function coherently, they often create what economists call reverse localization. Instead of pulling production inward, they push it outward. Instead of anchoring jobs, they make them more fragile. And the people who feel that first are not executives. They are workers who suddenly find themselves in limbo. communities watching plants slow down and consumers paying more for older cars because new ones just got more expensive. At the same time, something else was happening just across the border. While Washington was escalating trade battles, Canada was doing something far less dramatic and far more consequential. It was offering predictability. No shouting, no sudden policy lurches, no performative chaos, just clear rules and long-term signals. And in a system like capitalism, predictability is not boring. It is power. And this is the part most people miss because it does not come with a spectacle. Canada did not announce a trade war victory. It did not posture about winning or losing. It simply made itself usable. While US policy was lurching from one tariff threat to the next, Ottawa focused on something far more attractive to global capital and to long-term industrial planning, which is stability. And when you are a multinational company deciding where to put your next billion dollars, stability beats bravado every time. You might be wondering how that actually plays out in practice. It starts with very basic questions. Can we forecast our costs 6 months from now? Can we ship goods without sudden border disruptions? Can we plan a supply chain without worrying that a single political announcement will blow up our margins overnight? Under tariff driven volatility, the answer inside the United States increasingly became no. Inside Canada, it remained yes. That difference sounds abstract until you realize it determines where factories get built and where they do not. So when Subaru adjusted its strategy, it was not acting alone. Other automakers were watching the same numbers. Toyota, Hyundai, and major electric vehicle producers began reassessing where North America fit into their long-term plans. And instead of seeing the United States as the obvious anchor market, they started treating it as a risk factor. Not because American workers are unskilled or because the market is small, but because the policy environment became unpredictable in ways that made long-term investment dangerous. Canada stepped into that vacuum without making a show of it. It did not need to threaten anyone. It lowered friction. It streamlined logistics. It kept its trade relationships boring and consistent, which in economic terms is exactly what serious investors want. And that is why you saw Japanese and Asian automakers quietly redirecting shipments through Canadian ports, using Canada as the entry point to the continent while bypassing US customs uncertainty altogether. If you live near an auto plant or work anywhere in that ecosystem, this is not an academic shift. This is jobs that could have expanded but did not. This is overtime that disappeared. This is younger workers being told to wait and see while capital flows somewhere else. Tariffs were sold as protection, but protection without a plan often turns into isolation. And isolation in a globalized system does not bring production home. It rroots it. What makes this especially telling is that Canada did not win this position by out competing the United States on wages or by racing to the bottom. It won by offering a policy environment where companies could make 10-year decisions without fear of sudden reversal. That is a lesson that cuts against a lot of political messaging. Strength in an economic system is not just about imposing costs on others. It is about making yourself reliable. There is also a consumer side to this that hits closer to home. As new vehicles become more expensive due to tariffs, demand shifts. People hold on to older cars longer. Used car prices rise. Financing gets harder in a high interest rate environment. So even if you never set foot in a factory, you still feel this policy choice every time you try to replace a vehicle, manage household debt, or stretch a paycheck that is not keeping up with costs. What we are watching here is not a sudden collapse. It is a slow rebalancing of economic gravity. Supply chains are like water. They flow around obstacles. When the United States raises walls without coordinating a broader industrial strategy, capital does not stop moving. It just finds a different route. And right now, that route increasingly runs north. Now, let me widen the lens because if you only look at this as an auto story, you miss the real engine underneath it. Autos are just the most visible product in your driveway. The deeper issue is that tariffs on finished goods and tariffs on industrial inputs collide in ways politicians rarely explain honestly. You cannot say you want more domestic manufacturing while also making the raw materials for domestic manufacturing more expensive. That is like saying you want to bake more bread while doubling the price of flour and then acting surprised when the bakery cuts back. Steel and aluminum are not optional. They are embedded in the cost of nearly everything that gets built at scale. So when tariffs push those prices up, you are not only taxing foreign producers, you are taxing your own industrial base, you are raising costs for the very factories you claim you want to revive. And then because corporations are structured to protect profits first, they pass those costs through to consumers, squeeze workers, or relocate production to where the cost structure is cleaner and the policy risk is lower. This is where you and your life come in again. Because when prices rise, people do not respond by becoming more patriotic shoppers. They respond by adjusting their budgets. They delay purchases. They take on more debt. They buy used instead of new. They keep a car that should have been replaced 2 years ago because the monthly payment on a new one is suddenly out of reach. And that is not some moral failing. That is a rational response to a system that keeps shifting costs downward onto households. So when someone tells you tariffs will bring back jobs, you should always ask the next question. Which jobs where and under what conditions? Because bringing back jobs is not just about making imports expensive. It is about building an ecosystem that makes production viable. That means stable policy investment in infrastructure, training, research, and a serious industrial strategy that does not treat workers as disposable inputs. Tariffs alone do not do that. In fact, if they are imposed in a chaotic way, they often do the opposite by making the ecosystem less investable. Canada understood that distinction. And this is where the narrative about a northern shift starts to make sense. Canada did not have to become the cheapest place on earth. It just had to become the place where rules stayed steady long enough for capital to commit. That is why ports become busier. That is why logistics networks shift. That is why distribution centers pop up. It is not romance. It is spreadsheets. And those spreadsheets determine whether a community gets a new plant or gets layoffs. You may have also heard a story floating around in political commentary that this proves we should simply stop trading with the world and become fully self-sufficient. But I want you to sit with that for a moment. In a modern economy, self-sufficiency is not a switch you flip. It is a rebuilding project that takes decades. And if you were serious about it, you would start with public investment, not sudden tariffs. You would focus on reducing corporate power over supply chains, not giving corporations a new excuse to raise prices. You would treat workers as the center of the strategy, not as collateral damage while executives reposition assets. Instead, what we got was a policy that sounded like protection but functioned like disruption. And disruption is not evenly distributed. Executives can move capital. Investors can diversify. Politicians can pivot to a new talking point. But workers cannot move a mortgage as easily as money moves through a supply chain. You cannot just pick up and follow the factory to wherever the next tax advantage shows up. Your kids are in school. Your parents might be nearby. Your community is not a line item you can relocate. And that is why this story matters beyond Subaru, beyond Canada, beyond Japan. It is about who gets to make the big decisions in a capitalist economy and who is forced to live with them. It is about how policy gets marketed to you as national pride while the actual results look like higher costs, more uncertainty, and capital quietly flowing to whichever jurisdiction offers the most predictable deal. So when you hear that Japan is pivoting toward Canada, do not hear it as a cultural realignment or some dramatic geopolitical breakup. Hear it as a business response to volatility. Hear it as a signal that the United States is being treated as an unreliable partner. Not because Americans cannot build things, but because the political class keeps confusing performance for strategy. And once you see it that way, you can spot the pattern everywhere. The tariff story is always told as if it is a fist on the table, a show of dominance, a message to outsiders. But in practice, it lands like a tax inside the domestic economy. And then it triggers a game of avoidance among the people with the most mobility. Capital finds loopholes. Companies reroute shipments. Supply chains redesign themselves. Meanwhile, you are left paying more at the dealership or watching your local plant slow down or hearing that the next expansion is happening somewhere else. This is also where the politics gets slippery because people will argue endlessly about whether tariffs are good or bad. in the abstract. That is not the right fight. The real question is what kind of political economy you are building. Tariffs can be part of an industrial policy, but only if they are paired with serious public investment, worker protections, and long-term planning. Otherwise, they become a blunt instrument that raises costs and spreads uncertainty. And then the same politicians who impose them point at the chaos and say, “See, the system is broken. We need even more punishment.” It becomes a self-feeding loop. Now think about the specific claim that these tariffs would bring manufacturing back. Even if we accept that as the intention, the mechanism does not automatically follow. Manufacturing returns when the full stack makes sense. That means energy costs, transportation, supplier networks, skilled labor, stable regulations, and predictable trade access. If you create one incentive pointing inward, but five incentives pointing outward, the outward incentives win. And steel and aluminum tariffs are exactly that kind of outward incentive because they raise the baseline cost of producing anything inside the country. There is another layer here that rarely gets discussed honestly which is who benefits from tariff driven inflation. When costs rise, firms with market power can widen margins under the cover of policy. They can say the tariff made us do it. They can raise prices beyond their actual cost increase because consumers cannot easily tell the difference. If you are a household trying to buy a car, you do not get an invoice breakdown showing what percentage came from tariffs, what percentage came from financing costs, and what percentage came from a strategic pricing decision. You just see the monthly payment, and you either sign it or you walk away. Meanwhile, the labor market effects are uneven. Some sectors might see short-term demand spikes, but others see long-term contraction because investment slows. And in a high interest rate environment, which we have been living in, higher prices collide with higher borrowing costs. That is a double squeeze. The same policy that makes new cars more expensive also pushes people into higher payments if they finance. And if they cannot finance, they drop into the used market where prices get bit up, which hits lower inome households hardest. So when you hear someone claim this is about helping workers, ask yourself why the worker is always the one absorbing the shock. Why is the response never wage supports, retraining guarantees, or public investment tied to strong labor standards? Why is it always this vague promise that the market will magically reshuffle and deliver good jobs while the actual policy environment is designed to protect profits and keep labor weak? Now, about Canada. The reason Canada can become a gateway is not because it has some secret industrial genius that the United States lacks. It is because global firms want a route that reduces friction. If shipping through Canadian ports and then distributing across North America avoids unpredictable US tariff enforcement and political whiplash, that route becomes more attractive. And once a route becomes established, it builds momentum. Logistics firms invest in it, warehouses get built, skilled workers cluster around it, the path dependency sets in. And then even if US policy later stabilizes some of that network has already migrated. That is what makes this so consequential. It is not just a temporary diversion. It can become a structural shift. And structural shifts in capitalism are hard to reverse because they are embedded in physical infrastructure and institutional habits. Ports, rail links, distribution hubs, supplier relationships, investment pipelines. These are not just lines on a map. They are power. If you are sitting at home thinking, “What does this have to do with me?” I want you to consider how often your life is governed by supply chains you never see, the price of your groceries, the availability of parts for your car, the stability of jobs in your region, the tax base for your schools. These things are downstream of decisions made in corporate boardrooms and policy offices. And when those offices treat the economy like a stage for political theater, the downstream effects show up as stress in your household budget and instability in your community. The quiet truth here is that the center of gravity in North American industry can shift without a single dramatic announcement. It shifts shipment by shipment, investment by investment, plant by plant. And if the US wants to remain a serious manufacturing base, it cannot do it through chaos. It has to do it by building a system people can trust, especially the people who actually do the work. And this brings us to the human side of what often gets reduced to charts and trade statistics. When a company like Subaru shifts production or reroutes its logistics, there are workers on the other end of that decision who have no vote in it. These are people who trained for specific jobs, built routines around shift schedules, uh raised families in towns that grew up around factories. When production slows or pivots away, the disruption is not theoretical. It shows up as anxiety, delayed plans, and a creeping sense that the ground is moving under your feet again. What makes this especially bitter is that many of these workers were told the tariffs were for them, that this was about restoring dignity to industrial labor, about reversing decades of offshoring and decline. And then they watch as the same policies help justify new rounds of restructuring, not because management suddenly became cruel, but because the system rewards flexibility for capital and rigidity for labor. Money moves easily. People do not. You can see how this erodess trust not just in markets but in institutions when policies are sold as worker- centered but deliver instability instead. People stop believing anyone is acting in good faith and that distrust becomes fertile ground for more extreme promises, more simplistic solutions, more anger directed sideways instead of upward. That cycle is not accidental. It is what happens when economic policy is designed without accountability to the people who bear its costs. There is also a generational dimension here that matters. Younger workers looking at manufacturing careers see uncertainty layered on uncertainty. Will this plant still be here in 5 years? Will this skill set still be valued? Is it worth committing to a trade when the political environment can upend the economics overnight? That hesitation is rational. And when fewer people enter these fields, the skills pipeline weakens, which then gets used as another excuse to avoid domestic investment. It becomes a self-fulfilling prophecy. Now, step back and think about what Canada offered in contrast. Not perfection, not some worker utopia, but coherence. A sense that if you invest, the rules will not change midstream for political theater. That matters not just to executives, but to workers, too. Stable investment environments make it easier to negotiate better conditions, to plan training, to build careers instead of just jobs. Stability gives labor at least some leverage because it slows down the exit ramps. This is why the shift toward Canada is not really about nationalism at all. It is about governance, about whether the state sees its role as creating a predictable framework or as staging constant conflict. Capital prefers the former. workers need it even more. And when the United States chooses volatility as a governing style, it is effectively exporting opportunity to places that choose steadiness instead. There is a deeper irony here that is worth sitting with. The same political forces that claim to distrust globalization are often the ones empowering the most mobile global actors. By destabilizing domestic conditions, they make it easier for multinational firms to justify moving pieces of their operation elsewhere. And because those firms are legally obligated to maximize shareholder value, they can present these moves as unavoidable even when the instability itself was a political choice. So when you hear about new investments flowing into Canadian ports, battery plants, or logistics hubs, do not frame it as Canada stealing something. Frame it as capital responding exactly as designed. It is choosing the environment that minimizes risk and maximizes planning horizons. The real question is why the United States keeps making itself harder to choose, especially when it has all the ingredients to be a manufacturing powerhouse if it wanted to be. And that brings us to the bigger structural lesson. Industrial policy is not about slogans. It is about alignment. Aligning trade, labor, climate, finance, and infrastructure policy toward a shared goal. You cannot threaten your way into industrial renewal. You have to build it. And building it means accepting that markets alone will not do the job, but neither will chaotic intervention that ignores how markets actually behave. As long as workers are treated as afterthoughts and stability is sacrificed for political spectacle, the outcomes will keep looking like this. Production drifting, costs rising, trust eroding, and the people who were promised a comeback being told to wait a little longer while the system rearranges itself yet 10.

George Conway breaks down how Donald Trump’s aggressive tariff policies are triggering a massive shift in global trade, causing long-time allies like Japan to pivot away from the U.S. and bet big on Canada.

In this video, we analyze the unintended consequences of the new trade war and why Japan’s “dumping” of the American market could spell disaster for the U.S. economy while boosting Canada’s standing on the world stage.

🔥 IN THIS VIDEO:

The Tariff Fallout: How Trump’s latest economic policies are alienating key Asian allies.

Japan’s Strategic Pivot: Why Japanese automakers and investors are moving billions from the U.S. to Canada.

The Canadian Advantage: How Canada is positioning itself as the stable alternative for Indo-Pacific trade.

George Conway’s Take: A legal and political analysis of why this protectionist strategy is backfiring on the Trump administration.

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CHAPTERS: 0:00 – Intro: Trump’s Tariff Strategy Explodes 1:30 – Japan “Dumps” the U.S. Market 4:15 – Why Canada is the New Favorite 7:45 – The Economic Impact on American Consumers 10:20 – George Conway’s Final Verdict

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