♪♪ >> CATHY: WE'RE GOING TO SHIFT OUR FOCUS NOW TO WHAT HAS BEEN HAPPENING IN WASHINGTON, D.C. AND HOW THAT MIGHT IMPACT MINNESOTANS.

PRESIDENT TRUMP SPENT PART OF THIS WEEK IMPOSING STIFF TARIFFS ON CHINA, MEXICO, AND CANADA... AND THEN WALKING BACK OR PAUSING SOME OF THEM.

HOW MIGHT THESE TARIFFS IMPACT MINNESOTANS?

LET'S ASK LOUIS JOHNSTON.

HE TEACHES ECONOMICS AT THE COLLEGE OF ST. BENEDICT AND ST. JOHN'S UNIVERSITY.

IN COLLEGEVILLE.

MINNESOTA.

GOOD TO SEE YOU AGAIN.

>> THANK YOU.

>> Cathy: SO IT LOOKS LIKE WHEN -- WE'LL JUST TAKE CANADA AND THE U.S.

I MEAN, IT LOOKS LIKE THE BIGGEST IMPACTS MIGHT BE -- INCLUDE MEXICO IN THAT TOO -- THE AGRICULTURAL SECTOR?

>> DEFINITELY.

SO BASICALLY WE'RE GOING TO PUT TARIFFS ON ANYTHING COMING OUT OF CANADA.

SO, FOR EXAMPLE, 90% OF THE OATS THAT WE CONSUME IN THE UNITED STATES COMES FROM CANADA.

SO IF YOU'RE EATING A CHEERO, IT'S PROBABLY CANADIAN OATS.

OIL FROM ALBERTA, PLACES LIKE THAT.

ALUMINUM, WE'RE THE -- THAT'S THE BIGGEST SUPPLIER OF ALUMINUM FOR THE UNITED STATES.

SO THAT'S ALL GOING TO GET MORE EXPENSIVE.

CANADA IN TURN IS SAYING, FINE, YOU'RE GOING TO DO THAT, WE'RE GOING TO START TAXING SOME OF STUFF THAT WE IMPORT INTO YOUR COUNTRY WHICH IN PART IS AGRICULTURAL PRODUCTS.

ANOTHER ONE THAT I DIDN'T MENTION THERE IS LUMBER.

FINISHED LUMBER PRODUCTS ND THINGS LIKE THAT.

SO WHAT REALLY AMAZES ME IS THAT WE HAVE BEEN TRYING TO LOWER THESE TRADE BARRIERS FOR THE LAST 70 YEARS, ACROSS THE BORDER BETWEEN CANADA AND THE UNITED STATES.

AND NOW WE'RE BLOWING THE WHOLE THING UP.

>> Eric: IS THE UNCERTAINTY PART OF A NEGOTIATING STRATEGY ON THE PART OF THE ADMINISTRATION?

>> WELL, THAT'S MY GREATEST FRUSTRATION IS I WOULD LIKE TO KNOW WHAT IS THE POINT F DOING THIS SO THAT WE CAN ANALYZE IT.

IS IT A NEGOTIATING STRATEGY?

IS IT TO RAISE REINHARDT?

IS IT TO PROTECT JOBS?

I HAVEN'T HEARD A COHERENT RESPONSE TO THAT QUESTION.

IT SEEMS TO BE ALL OF THE ABOVE.

>> Cathy: AND IT MATTERS BECAUSE THE UNCERTAINTY AROUND ALL THIS.

>> EXACTLY, SO BUSINESSES ARE KIND OF LIKE FREEZING UP RIGHT NOW.

THEY'RE DELAYING WHETHER THEY'RE GOING TO BUILD NEW BUILDINGS, WHETHER THEY'RE GOING TO HIRE PEOPLE.

THEY'RE THINKING ABOUT THEIR FUTURE PLANS AND STAYING, LET'S JUST STAND PAT.

AND THAT'S GOING TO AFFECT EMPLOYMENT, THAT'S GOING TO AFFECT WAGE RISES.

IT'S GOING TO AFFECT EVERYTHING IN THE ECONOMY.

>> Eric: ARE WE PROTECTED A LITTLE BIT IN THAT WE'RE KIND OF NET CONTRIBUTORS TO THE FEDS?

WE DON'T HAVE A BUNCH OF MONEY COMING BACK?

ARE WE A LITTLE BIT CUSHIONED?

>> IF YOU'RE THINKING ABOUT THE STUFF THAT THE FEDERAL GOVERNMENT MIGHT CUT OFF, YEAH, WE DEFINITELY IN A GOOD POSITION THAT WAY.

BUT, YOU KNOW, AS YOU WERE MENTIONING IN THE EARLIER SEGMENT, MEDICAID, FOR EXAMPLE, IS A REALLY IMPORTANT FLOW OF MONEY OUT OF WASHINGTON, BECAUSE IT'S A PROGRAM THAT'S JOINTLY RUN BY THE STATES AND THE FEDERAL GOVERNMENT.

AND WE'RE COUNTING ON A CERTAIN AMOUNT OF MONEY COMING AND IF THAT DOESN'T COME THAT'S GOING TO HURT THE BUDGET.

>> Cathy: WE HAVE A LARGE HEALTHCARE INDUSTRY HERE IN THE STATE OF MINNESOTA.

HOW MIGHT THAT BE AFFECTED BY ANY OF THIS?

>> WELL, IT COULD BE HURT A LOT OF WAYS.

SO, FOR EXAMPLE, THE MEDICAID CUTS AND THINGS LIKE THAT, THAT AFFECTS THINGS LIKE MEDICAL DEVICES THAT MIGHT BE IMPLANTED IN PEOPLE.

ALL THAT KIND OF STUFF, KIDNEY DIALYSIS, ALL OF THOSE KINDS OF THINGS, NURSING HOMES, THAT'S THE ONE I'M REALLY WORRIED ABOUT IS THAT IT'LL AFFECT FUNDING FOR NURSING HOMES, AND SO THAT AFFECTS NURSING HOME EMPLOYMENT, INCOME HAT'S COMING INTO SMALL RURAL -- SMALL TOWNS AND RURAL AREAS.

THAT'S KIND OF MY BIG WORRY.

>> Eric: THE PRESIDENT DID SAY, QUOTING HIM, THERE WILL BE A LITTLE DISPUSHANCE, BUT WE'RE OKAY WITH THAT.

IT WON'T BE MUCH.

>> I DON'T AGREE WITH THAT.

I THINK IT'S GOING TO BE A REALLY BIG DISTURBANCE, IF YOU ACTUALLY DO THIS.

THAT'S THE PROBLEM, THOUGH.

ARE YOU CTUALLY GOING TO IMPOSE THESE TARIFFS OR NOT.

HE SEEMS TO COME UP TO THE EDGE AND STOP.

>> Cathy: OR FLIP FLOP?

> >> Eric: THE FED AND INFLATION?

>> THE FED RIGHT NOW IS SAYING THAT THEY MIGHT CUT INTEREST RATES TWICE OVER THE COURSE OF THE YEAR.

I'M STARTING TO THINK THEY MIGHT NOT CUT AT ALL, GIVEN THE WAY THE INFLATION PICTURE IS, BECAUSE WITH THE UNCERTAINTY THAT'S GOING ON, WITH INFLATION CERTAINLY NOT GOING ON AND PERHAPS GOING UP, IT'S STEADY AS SHE GOES T THE FED RATHER THAN TRYING TO ADD TO THE UNCERTAINTY.

>> Cathy: GOVERNOR WALZ TALKED WITH THE ONTARIO PREMIERE EARLIER THIS WEEK.

IS THERE ANYTHING THAT COULD BE DONE ON THE IS STATE END?

>> NOT REALLY.

BECAUSE I MEAN, THAT GOES BACK TO THE CONSTITUTION.

FOREIGN TRADE IS GOVERNED BY THE FEDERAL GOVERNMENT.

AND ONE OF THE THINGS THAT'S ACTUALLY INTERESTING IN ALL OF THIS IS THAT U.S.-CANADA TRADE IS BEING RESTRICTED.

ONE OF THE FUNNY CONSEQUENCES OF IT IS THAT THEY DON'T NECESSARILY HAVE FREE TRADE ACROSS CANADIAN PROVINCES, THEY'RE TALKING ABOUT DOING IT NOW SO THAT THEY CAN TRADE MORE FREELY SINCE THEY CAN'T COUNT ON US.

>> Eric: 30 SECONDS ON THE STOCK MARKET.

>> IT'S BEING HURT BY THIS UNCERTAINTY AND THESE ARTIFICIAL INTELLIGENCE TECHNOLOGIES DON'T SEEM TO BE AS EXPENSIVE AS WE THOUGHT THEY WERE GOING TO BE, AND SO THE CHIP COMPANIES THAT THOUGHT THEY WERE GOING TO MAKE A LOT OF MONEY, THEIR