Interview with Melanie Raymond, Chief Economist and Director General for Global Affairs Canada

 

We had the pleasure of interviewing Melanie Raymond, Chief Economist for Global Affairs Canada, at a 2025 event at the Gatton College of Business and Economics.  She underscores the deeply integrated trading relationship between Canada and the United States, which reached nearly $920 billion in goods and services last year. She highlights that Canada is the top export destination for 35 U.S. states, including Kentucky, which sent $7 billion in goods to Canada to support various supply chains. She points out that the automotive industry remains a hallmark of this integration, with some vehicle parts crossing the border six times before a car is completed. However, she notes that recent 50% tariffs on steel and aluminum have increased costs for American buyers, as Canada is the largest supplier of these materials to the U.S. These higher input costs have a tangible impact on American families, contributing to rising prices for home construction and everyday items like canned food and beverages.

Melanie observes that while U.S. imports of Canadian oil have seen a recent decline, there has been an increase in trade for aerospace products and electrical equipment. Despite these challenges, she emphasizes that the economic ties remain enduring and that finding a mutually beneficial solution is essential for future prosperity.

Chapters

• Welcome and Guest Introduction
• The $920 Billion Partnership: Canada, the U.S., and Kentucky
• Shifting Patterns: Aerospace, Electrical Equipment, and Oil
• The Real-World Impact of Steel and Aluminum Tariffs
• Protecting Integrated Supply Chains and Future Solutions
• Conclusion

Episode Transcript 

Welcome and Guest Introduction

Jim Ray:

Friends, we are here at the Gatton College of Business Economics in Lexington, Kentucky at the UK campus. And we are very fortunate to have a huge contingent from Canada who's come in and we're talking trade, we're talking international relations, we're talking business, we're talking trends that are going on and we're talking moving forward together as partners. With that being said, I'd like to welcome to the podcast Melanie Raymond, who is the Chief Economist for Global Affairs Canada. Melanie, welcome.

Melanie Raymond:

Thank you very much. Happy to be here.

Jim Ray:

I'm so glad to have you here. Now, luckily you've got a presentation that's not going to be right after this, so you've got a few minutes to relax, but you'll be getting on the stage later on today. And could you give us a little bit of background about yourself, first?  Let's learn about who you are and how you actually got to become the Chief Economist.

Melanie Raymond:

Thank you. Well, I studied economics, surprise, surprise. Did a PhD here in the US, at UC Berkeley. And then after that I went back home and got a job with the federal government as an economist, first as a researcher, and then through the years I got various positions and I finally landed in this job. I'm not sure how I did it, but I got there.

Jim Ray:

So when you say you went home to Canada, what province? What area of Canada?

Melanie Raymond:

Well, I'm originally from Quebec, but I live and work now in Ontario, in Ottawa.

Jim Ray:

Okay, fantastic. Fantastic. And in this role as the chief economist, could you unpack that for us a little bit? What does that do? What's your day-to-day life look like?

Melanie Raymond:

So I lead a team of about 30 economists that do analysis on various topics, mostly international trade. Canada is a very trade dependent because we're a small country.

Jim Ray:

But you guys export a lot of stuff.

Melanie Raymond:

We export a lot of stuff, and that's the reason trade is so important for us. So we analyze trade. We do research on various topics. For example, we have look at groups that we don't think about as exporters, so women-owned businesses that export. We have looked at immigrant-led businesses that exports or that kind of research. We also do research to understand how useful the free trade agreements that we have with various countries are. So the benefits we get from them, we have an annual report called the State of Trade. So we are in our 26th year if you're interested. And then all this work is used to support policymaking and decisions by ministers and the government of Canada, obviously.

Jim Ray:

And so even though you're based in Ottawa, you're actually supporting Canada at large, right?

Melanie Raymond:

Yes, indeed. So we have over 130-140 missions around the world, and our material is used by all these missions for different purposes. Sometimes talk with local business associations. Sometimes it's to support incoming visitors from Canada that are in the market to make new deals.

Jim Ray:

Exactly. Trade is what it's all about these days.

Melanie Raymond:

Exactly.

The $920 Billion Partnership: Canada, the U.S., and Kentucky

Jim Ray:

Perfect. Well, let's talk a little bit about what's going to happen later on today. So you're going to take the stage and you're going to talk about economics obviously, but can you give us an overview of what the key topics are for this presentation?

Melanie Raymond:

Sure. I think one of the main messages I'd like your listeners to get is that Canada and the US have an incredibly important trading relationship. Last year, the two countries traded almost $920 billion in goods and services. We're just shy of a trillion.

Jim Ray:

Yeah, it's crazy. We're knocking on the door. We're knocking on the door.

Melanie Raymond:

But we say it's an incredible relationship because Canada is the top destination for US exports and Canada's second largest suppliers for American businesses of inputs and services. So sometimes you hear these statements and you go, huh, well what does it really mean? Well, there's tangible business going on there. Canada is also the top destination, the top destination for 35 states of America, including Kentucky. So, $7 billion worth of goods and services left Kentucky last year to find their way to Canada, either as inputs or final goods. So it's really important.

Jim Ray:

It's so amazing. We had Consulate General Colin Bird on a few episodes ago, and we were just talking about the sheer numbers involved with the trade, not Canada-US, but rather Canada-Kentucky. And it's amazing. It's absolutely amazing. The aerospace that we do, the agricultural goods, the petroleum, there's so many things, and as you said, the inputs, Ben Lau was on here and he's representing Alberta obviously, and he talked about the fact that a car can cross the border between Canada and the US several times before it actually makes it to a showroom floor because of all the different parts and things that are going into this vehicle.

Melanie Raymond:

There was a report that was done by a university professor a few years ago that said that a part in the car can have crossed six times the border before making it into the final vehicle.

Jim Ray:

That's amazing.

Melanie Raymond:

And those deep trade linkages means jobs. So there is 8 million jobs in the US that exist because we have such a wonderful trading relationship.

Jim Ray:

Well and beyond trade, it's also the investment. Canada has significant on the ground investments here in Kentucky. I know you guys have a very large agricultural presence here. Again, some of the chemicals that are being sent in, we both are developing the SK Blue Oval facilities, which is for the electric battery. We've got some Toyota Mutual relationships obviously. So it's really much more interconnected than I think we might consider on just a given day. We may not realize all the connectivity between Kentucky and the entire nation of Canada.

Melanie Raymond:

Yeah, that is absolutely true. If I may, I'll just add, so not only 32 states have Canada as their top export destinations, but 45 states, 45 out of the 50, have Canada as top three destination for exports.

Jim Ray:

Unbelievable.

Melanie Raymond:

So we buy a lot of American stuff.

Jim Ray:

I was going to say, we were talking exports, but it's also imports for you all as well. Yeah, the interconnections and just, there's a common language there. There's a very well-aligned culture. I mean, yes, we're different countries, but the culture's very similar. I think we come from roots that are fairly homogeneous at times, and it's just fantastic to have you guys in town and to really understand. And sometimes we need to remind ourselves that these relationships have existed for so long, for distinct reasons. We generally get along pretty well and we're doing a lot of business together. And I think that's going to be one of the outcomes of today's conversations is the fact that we do a lot of business together and together we're going to grow together, we're going to succeed. It's our hemisphere and let's take care of it.

Shifting Patterns: Aerospace, Electrical Equipment, and Oil

If you don't mind, if I could ask you this, as far as the sweeping tariffs that were there, what kind of patterns, how are you seeing that play out at this point? And not all of them I guess, have been fully implemented. I think we talked about maybe some lumber things have not really come to play yet, but there have been some that have been implemented at this point. And from an economic standpoint, what are you seeing?

Melanie Raymond:

What are we seeing? Well, so unfortunately, but not unsurprisingly, Canadian exports, goods of exports I should say, to the US is down or are down since January. So we're looking at the 3% decline since January (2025). But the good news is that on the other side, Canada has continued buying from American businesses. The ties are enduring. That's how I want to see it. And so they have even increased, not very much, but they have increased by a 0.5%. What has been surprising though is that we are seeing some shifts in terms of products.

Jim Ray:

Interesting.

Melanie Raymond:

Yeah. So American businesses are buying a little less Canadian oil, and I'm like, but what oil already buying then? So we've seen since January, we've seen a decline of 6.5% and it's always, when I say since January, I mean compared to the same period last year (2024).

Jim Ray:

Okay, it’s year over year.

Melanie Raymond:

Yes, year over year. But American businesses are buying more Canadian electric equipment and aerospace goods or products. So that's interesting. Right. I like it because in a way, it's kind of breaking a little bit of the aura of oil.  Canada does other things in oil.

Jim Ray:

Exactly. And other than maple syrup, which is one of the things.

Melanie Raymond:

Absolutely.

Jim Ray:

We suffer the same issues down here in Kentucky when people realize that it's actually, aerospace is our largest export. People are astounded. They're like, no, you're Kentucky. No, no, really. We have a very significant infrastructure in aerospace. And between the two of us, we do a lot of trading in that arena as well.

Melanie Raymond:

Indeed. And in fact, the largest exports, Kentucky export to Canada is vehicles. So it is an interesting one, right, because we're not attached to the hip like Detroit with Ontario, and yet that's the largest line of business between the two.

The Real-World Impact of Steel and Aluminum Tariffs

Jim Ray:

Well, and that begs the question then. Can you talk a little bit about steel and aluminum, kind of how that impact has really manifested itself? As you said, some of the exports have been down a little bit, and I've always wondered, okay, does that mean Canada is now able to offload that to other markets, other countries, or is business just down? Because I mean that's painful. We've gone through those downswings as well, and we understand that. But the tariffs I believe on the steel and aluminum are quite significant.

Melanie Raymond:

They are. So yeah, the tariffs are at 50% since June on both commodities and Canada is the US’ largest supplier for both, short from what they're producing. So 80% of imports, American imports are coming from Canada for aluminum and 22% for steel.

These are really important inputs for US industries because you need still aluminum to build houses, cars, ships, military equipment. I mean the list is long, right? So let me give you some examples of what it means when you talk about less steel aluminum for construction, it's construction and home appliances in general, the impact of higher costs, because that's really what the tariffs does. What the Canadian is charging is the same. What the American buyer is paying is the Canadian price plus the tariff that has been applied. So the cost in the US is higher, and those higher costs will translate and possibly in delay in construction projects of homes and other types like manufacturers, like you need buildings to manufacture things. And it also will translate in higher prices for houses. So, you can think of the young American couples who are hoping to buy their first home and it might just not be in their reach now, or it'll be a much longer process for them to achieve that dream.

Jim Ray:

Well, we've been struggling with that nationally for quite a while now, and it's just a matter of trying to figure out what is really driving it. Is it the cost of the inputs, of the supplies of the raw materials? Is it inflation? Just what is it? And right now it's been quite difficult, especially for the younger couples trying to get a start. There's a lot of apartments being built.

Melanie Raymond:

And I mean the reality is that it's the cost. It's definitely not just that reason, but it's contributing to the problem.

Jim Ray:

Absolutely.

Melanie Raymond:

And I'd like to talk about another example, which is more an aluminum-based example, but think about when you walk down the aisles in the grocery stores, you have aisles, complete aisles of tin cans, whether it's your canned pea, your canned peaches.

Jim Ray:

Exactly.

Melanie Raymond:

Or soda cans, right? Or depending, I don't really know what it is here in Kentucky, but you might have also the beer in your stores.

Jim Ray:

Hopefully so. Hopefully so. Yeah.

Melanie Raymond:

And so the input for an aluminum can is aluminum. Obviously you've just increased the cost for these cans. And actually the beer institute estimated that the US beverage industry paid more than $1.7 billion between 2018 and 2022 because of the tariffs that had been imposed a few years ago. And we're now raising these tariffs. And at the time Canada had been exempted. So again, we are the largest supplier of aluminum in the American market, and now the tariffs apply to Canadian aluminum.

So when you think about people worried about the cost of living, the cost of food, being able to serve a nice nutritious meal to their family at night, you kind of wonder how the impact of these tariffs for family, it's a direct impact for these families. And all of it in this particular case is because the packaging is more expensive. It's not even what's in the cans,

Jim Ray:

It's not the direct material, the in-direct material and everything around it.

Protecting Integrated Supply Chains and Future Solutions

Jim Ray:

That makes a lot of sense. Well, let me do this. The other key area that I really wanted to talk about is, obviously we touched on it, Kentucky and Canada do a tremendous auto manufacturing trade, whether it's inputs as components and parts and things like that, or it's the finished goods. The tariffs have had to have had an impact on that because again, we're moving a lot of metal back and forth. What are you seeing from an economic standpoint?

Melanie Raymond:

Well, what we're seeing is that clearly the tariffs are making, they're being effective, basically. So we're seeing that the exports are, both sides are going down. So the US imports of Canadian made cars is down by 12% since the beginning of the year. Parts are not as affected. They're just shy of 1%. But the US exports of cars to Canada has also declined, as well as auto parts. And that one I think is probably because we use American auto parts to build cars that we sell then to the US. So if the US is buying less of our cars, then we buy less of your inputs.

Jim Ray:

Exactly. Exactly.

Melanie Raymond:

So clearly the two sides of the border are really just one integrated industry. That's just the reality of it. As we said earlier, a part can cross six times the border. This integration has been created over time. It comes back from the auto pact of ‘65. So it's not something that just happened and sprung up. But this integration really takes advantage of the strength that each side can provide and they collaborate. And this collaboration makes the companies stronger because they're able to face competition from the world, right? By being more efficient, having access to more efficient supply chains, keeping their costs low. And as well too because they collaborate and they're part of the same supply chain, then they're innovative.

If we try to break these linkages, which will be very difficult to be honest, because we're talking about investments companies make not for one year, they make these investments for a 10, 15, 20-year horizon. We're hurting our own companies, not the foreign competitors, the companies that are established here in Kentucky and companies established in Canada and that are doing excellent work together. So it's really unfortunate, but that's the state of the world we're in. And the Canadian Prime Minister, Mark Carney has said he's ready. He's ready to work with the US administration and find a solution that's beneficial to both parties.

Conclusion

Jim Ray:

Good. And I think eventually we're going to arrive there. I mean, we just have to, the relationships are too deep and too broad and the financial impact on both of us, if it goes on much further, it's just going to be too painful. So hopefully, fingers crossed, we get to a solution here fairly quickly. So Melanie Raymond, if I'm not mistaken, this was your first podcast?

Melanie Raymond:

It was my first podcast!

Jim Ray:

Yeah. I think you did pretty well. That was fantastic. I think you did pretty well. So friends, I hope you got a lot out of that. I hope you enjoyed the information and I wish you could be here. We're going to have a little bit over 80 people in the room later on this afternoon to listen to Melanie and her comments, as an economist from Canada, on what's going on and where we are right now, where we're going. And I can't wait to sit down and listen to more of those insights. I know this was just a taste of it. So I guess part of that is the next time the World Trade Center Kentucky sponsors a Global Executive Forum, you ought to be here. There are a lot of interesting conversations going on.

In closing, I hope you found the information helpful, insightful, and when you're ready to do business internationally, just remember at the World Trade Center, Kentucky, we're connecting businesses globally.

 

To Learn More: 

Website:  https://international.canada.ca/en/global-affairs

 

Upcoming WTCKY EVENTS: 

• 02/03/26 – Global Executive Forum: Expanding Kentucky’s Reach in the UAE Market
• 02/10/26 – Kentucky Industry Legislative Reception
• 04/14/26 – 04/16/26 – International Trade Certification
• 10/12/26 - 10/21/26 – Discover Beautiful Ireland with WTCKY

 

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