The House

The House: The influences of trade and Trump on votes in Kentucky

This week, The House is in Kentucky for a special episode focusing on Canada-U.S. trade, as well as a key Republican-Democrat showdown in a swing district. We talk to Ambassador Kelly Craft, Republican Governor Matt Bevin, Kentucky businesses with Canadian connections and analysts about what trade and Trump mean for Canada's relationship with Kentucky.
U.S. Ambassador Kelly Craft spoke with CBC Radio's The House in her home state of Kentucky. (CBC)
Listen to the full episode53:16

The U.S. ambassador to Canada is now dealing with the fallout of the uncertainty caused by over a year of tense NAFTA negotiations.

Kelly Craft told The House she and her Canadian counterpart will embark on a series of townhall meetings with businesses on both sides of the border to listen to their concerns about the investment climate.

"I understand your frustrations," she told host Chris Hall.

"This was a negotiation, negotiations are going to be tense."

As President Donald Trump repeatedly threatened to axe the deal, which eventually evolved into musings about leaving Canada out of a bilateral deal with Mexico, companies hit pause on investments because of the volatile business environment.

Craft says she understands the difficulties the negotiations created, especially when it comes to the tariffs.

"We need to be patient, we need to trust this will change."

The ambassador is a Kentucky native — a state that relies heavily on trade with Canada. As the dust settles from the negotiations, companies in Kentucky are concerned about the residual damage to the Canada-U.S. relationship.

Hundreds of thousands of jobs and billions of dollars in trade each year depend on Canadian business in the Bluegrass state.

Ambassador Kelly Craft discusses the Canada - U.S trade relationship after a long NAFTA renegotiation. 8:37

Tariffs: National security consideration or money grab?

Kentucky Governor Matt Bevin at his swearing-in ceremony on Dec. 8, 2015. The Republican politician spoke about tariffs with host Chris Hall. (Timothy D. Easley/Associated Press)

A trade deal may have been reached between the three North American countries, but tariffs on Canadian steel and aluminum remain — and so do the retaliatory duties on American products. 

Why? Kentucky's governor says it's a cash grab by the Canadian government. 

"People can say it was for tit-for-tat, and maybe arguably so, but it's a straight up money grab," Matt Bevin said.

The governor expanded on his theory, saying the Trudeau Liberals have realized Canadians like Kentucky bourbon, and have used it to raise money. 

For Bevin, there are only two rationales for tariffs: national security and raising funds.

After President Donald Trump introduced duties at the beginning of the summer, Canada responded in kind with equal dollar-for-dollar tariffs, targeting very specific U.S. products. Included in that list of affected items are bourbon and playing cards, both an integral part of Kentucky's economy. 

The goal of those tariffs, according to Ottawa, was to protest Trump's duties and their national security justification. 

Canadian negotiators managed to secure an effective exemption from auto tariffs, but the ones on steel and aluminum remain. 

Despite that, Bevin says the new USMCA is still a win-win-win. 

"Any time there's a negotiation of any kind, nobody ever gets everything they wanted."

The governor says he has regular communication with Prime Minister Justin Trudeau and other members of his cabinet. 

Kentucky Governor Matt Bevin talks trade and midterms. 9:24

How a midterm race in Kentucky could have implications for a nation

Kentucky's former Democratic 6th Congressional District representative Ben Chandler says it's time for the voters to replace his successor Republican Andy Barr with new Democrat Amy McGrath. (Timothy D. Easley/Associated Press)
Trade isn't the only topic on the minds of Kentuckians.

The US midterm elections are less than a month away and one of the most interesting races for the House of Representatives is in Kentucky's sixth congressional district.

Retired Marine combat pilot Amy McGrath is trying to unseat three-term Republican Andy Barr.

Kentucky, and the sixth district, are solidly Republican. Donald Trump took the district by 16 percentage points just two years ago.

Still, Democrats believe that unhappiness with the president and his agenda provides an opening to take back control of the House. McGrath is one of their best hopes.

She's campaigning on promises to make health care more affordable, and to ensure economic growth benefits everyone one. Barr's trying to paint her as "too liberal" for Kentucky.

Former Democratic Congressman Ben Chandler, who lost to Barr in 2012, says the tactic won't work.

"Amy McGrath is a war hero. Amy McGrath is a mother of three who's killed terrorists. Now I don't know too many people who have that profile."

Former Congressman Ben Chandler discusses the battle between incumbent Congressman Andy Barr and challenger Amy McGrath in the battle for Kentucky's 6th District in the upcoming midterms. 7:06

Kentucky businesses stockpile products subject to tariffs

ATech Automotive builds training modules for vehicle manufacturers. The company is concerned about what tariffs and trade will mean for their industry with the imposition of the USMCA. (Elise von Scheel/CBC News)
Kentucky is best known for horses, bourbon and a certain brand of fried chicken.

What most people don't realize is that the state is an emerging manufacturing powerhouse south of the border.

Janet Harrah is the senior director of economic analysis and development at Northern Kentucky University.

She says the state ranks third behind Texas and Louisiana in total exports, with Canada as its primary customer.

Cars and lights trucks, auto parts and machinery are the biggest contributors to the nearly $8-billion in exports to Canada in 2017.

Professor Janet Harrah, the senior director of economic analysis and development at Northern Kentucky University looks at what is at stake in the trade war between Canada and the United States. 9:50

But Harrah worries that the impact of the tariff battle between the US and Canada hasn't been fully felt. That's because companies stockpiled steel and aluminum in advance of Donald Trump's decision to impose the so-called national security tariffs on Canadian steel and aluminum under section 232 of the US Trade Expansion Act.

ATech Automotive Technology is one of those Kentucky companies that pre-ordered raw materials in anticipation of the tariffs.

The company in Walton, Kentucky employs about 50 people who build auto repair simulators to train mechanics in the increasingly sophisticated computer systems built into vehicles.

Bruce Breitholle is the company's vice-president of operations. He says the company brings in parts from Canada, and the Canadian military is one of its biggest foreign customers.

Breitholle worries that Donald Trump's style of negotiating has hurt business ties with both Canada and Mexico... even though a provisional deal has been reached.

"I don't negotiate or deal with people the way my president does," he says. "I don't want to get into all that but we're definitely concerned with how it affects our business with Canada or anybody else."

Edwin Webb is the CEO of Kentucky World Trade Centre.. his group works with hundreds of others Edwin Webb is the CEO of the Kentucky World Trade Centre. 

His group represents hundreds of businesses in the state that do business with clients overseas.

He says the economic relationship with Canada is "second to none" and just too important to be derailed by the tone of the talks, or the rhetoric used by the president.

And he warns the deal the new USMCA trade deal needs to be ratified before anyone starts making investment and other decisions.

Ed Webb, CEO of the World Trade Center Kentucky, talks about the effects of the NAFTA talks on Kentucky businesses looking at expanding their export markets. 10:31