One Board, Competing Games

[00:00:02]Donald Trump imposes 50% tariffs on selected Canadian products. Mark Carney says that they're illegal and vows to fight back. And Pierre Polyv says Mark Carney is failing us and making Canadians poorer.

[00:00:18]Three different narratives applied to the same set of events. We're watching three games be played on the same uh playing board. The Red Enen special starts now.

[00:00:38]May the Lord show his mercy [music and singing] upon you.

[00:00:46]May the [music] light of his presence be [singing] your God.

[00:00:53][music] May he guard [singing] you and up all you.

[00:01:03]May his spirit [music] be ever [singing] by your side.

[00:01:13]>> Years that lie ahead will be a challenge to all of us. It will be a challenge to our skill. It will be a challenge to our ingenuity. And it will be a great challenge to our ability to provide the economic atmosphere uh to encourage the industry which is so much a part of our economy and which will be so important if we are to continue uh in the vanguard of Canada.

[00:01:40]>> Focused watching taxpayers money and we're going to put an end to the gravy train.

[00:01:47]>> Cooperation must take precedence [music] over competition. People before profits.

[00:01:55]>> Smell it. What do you What is that?

[00:01:56]>> Smells like money.

[00:02:01]>> You like that smell?

[00:02:02]>> I love that smell. I wouldn't be here if I didn't.

[00:02:06]>> All right. Well, it is it's been six months, maybe more than that, maybe a year of this story back and forth. And here we are again as the trade negotiations regarding the Canada US Mexico agreement uh begin to pick up steam again. Uh Donald Trump has uh threatened to impose in 30 days 50% tariffs on selected Canadian products.

[00:02:37]Um, these tariffs will be imposed under a novel legal theory, arguing that the treatment of selected American products in Canada is palpably unfair and that therefore the executive branch has a duty to respond. Um, this is the first time that this legal theory has been employed by a a a US president in order to impose tariffs. uh we're going to see it tested at the at probably at the Supreme Court in relatively short order.

[00:03:09]Um but it's worth uh noting that uh particularly with regard to alcoholic beverages, there is a pretty reasonable case that the Canadian government has in fact treated US products unfairly.

[00:03:27]um particularly Rob uh Doug Ford, but also other Canadian premers have used the monops the monopsiny power of the liquor control boards uh in order to privilege the purchasing of products from jurisdictions other than the United States. Um, so it's it's quite reasonable to think that the legal theory at least has a kind of bas basic level of merit to it. Um before we get into the way that this event has been framed by uh Trump, the Trump administration, the Carney government and Pierre Polyv in opposition.

[00:04:20]I want to come back to the actual situation, the fundamental dynamics between the two parties.

[00:04:29]Canada and the United States have a very asymmetric trading relationship. a trading relationship that has that is a that has a substantial net surplus uh for Canada right at the moment but a net surplus that is um defined by certain products. Canada has a huge trade surplus with the United States in oil and gas related products as well as certain other critical minerals and a huge trade deficit uh in manufactured goods and various services. Um and if we look at the actual announcement, the set of tariffs that are being considered explicitly exclude energy, pot ash, critical minerals and fish. So if you look at only the set of products that the US government is seeking to make in scope for tariffs in a reciprocal contest of tariffs, a traditional trade war, Canada is at a very substantial advantage uh because it run Canada runs a huge trade deficit with the United States in these product categories. So if you see reciprocal tariffs of comparable levels on the product categories in question, uh the tariffs collected by the Canadian government will be much larger than the tariffs collected by the US government. uh the Carne government has observed this and is uh and I I think it's one of the reasons why the Carney government has been pretty free with its efforts to respond reciproc reciprocally uh to this point. It's also worth noting that um if we look at the transportation geography of North America um alternative markets, alternative routing for goods is uh a very unlikely eventuality of these tariffs. Um, you have two huge physical barriers uh on the Canadian side of the border. The Canadian Rockies and the country on the north side of Lake Superior and Georgian Bay. Both of which are not impassible but are uh pretty extreme cost barriers to transportation.

[00:06:56]uh whether it's trucking, whether it's rail transport, whether it's pipelines, it is much more expensive to route traffic east west across either of these two barriers than it is to route traffic north south through the United States.

[00:07:11]In fact, a substantial majority of the trade between Western Canada and the Toronto Montreal corridor actually runs south of the Great Lakes through Chicago, even if the final destination doesn't ultimately cross a border. Uh this was a fact noted when uh there was a a fight with the Michigan government over Nbridge line 9 which runs south of the Great Lakes uh in order uh to deliver natural gas to the GTA. And it runs south of the Great Lakes for reasons which are very obvious to anyone who's ever driven north of the Great Lakes uh between uh central Canada and Winnipeg. uh the country there is some of the most difficult country to negotiate anywhere on the planet. Um a fact which might be remembered by those who critique uh Canadian forestry policy um as it has evolved through the wildfires.

[00:08:13]Um so it's very likely that whatever the tariffs are between Canada and the United States uh they will be paid by both sides. And so in this reciprocal game because there are no alternative markets for the um there are no alternative markets for the product and there are there is there's very limited alternative routing certainly no alternative routing or alternative markets that are accessible in the kind of time horizons we're talking about.

[00:08:47]Uh the Mark Carney government uh continues its strategy of appealing to alternative centers of sovereignty within the United States. Um the prime minister released a statement indicating that the tariffs the Trump administration is seeking to impose are a violation of KOSMA looking pretty explicitly for American courts to restrain the president in this action.

[00:09:14]um a strategy which is not unreasonable especially since the courts have a long history of staying uh executive actions while the courts go through their process. uh Mark Carney uh correctly assesses that he has a long political mandate within Canada in order to pursue his strategy. And Donald Trump is an 80-year-old man with three years left in a term and one year left before he very likely loses the House and Senate and uh becomes a somewhat isolated force in American politics. Uh and so he's um executing a strategy intended to run out the clock on the American president uh and intended to appeal to other centers of sovereignty within the US government.

[00:10:08]Now uh it's worth um taking a minute here to listen to uh Donald Trump's comments with regard to these tariffs.

[00:10:18]Uh I ordinarily don't listen to him directly, but this is instructive. So let's let's give it a listen here.

[00:10:27]>> Last night, the Canada terrorists one, are those a response to the wildfires in >> No, no, no, that's separate. We're looking at that separately.

[00:10:34]>> And what is there anything Canada >> only response to the way they've treated our farmers and our people? You know, Canada's been very very tough on us over the years, for many years, and no other president's done anything about it. I I love Canada. I love the people of Canada, many friends that live in Canada, but their leadership from Trudeau to the current leadership. Um I mean, in all fairness to them, they need us to survive. Without us, there's no way they can survive. So, but they've been very very tough over a period of the last 50 years actually.

[00:11:13]that comment in the last third of the statement without us they can't survive.

[00:11:20]This is really the crux [snorts] of the strategy being pursued by the Trump administration. there's a like a propaganda element there where um whether it's the wildfires or whether it's uh the idea that Canada has been palpably unfair to American farmers and American manufacturing industries.

[00:11:42]Couple of ideas that are pretty frankly pretty ridiculous but uh normal for trade negotiations between two oo between two parties. Um it's really the last statement even though in the trade relationship between Canada and the United States uh Canada can in absolute terms probably impose more cost through reciprocal tariffs than the United States can. Um Donald Trump is looking at the fact that the United States is a an economy that is more than 10 times the size of Canada's.

[00:12:21]Um and uh the trade in goods between the two countries is more dispensable to American industry than the other way around. And he um is making the presumption that the United States is more able to endure the pain of a trade conflict between the two nations than Canada is. And so uh he thinks that he if he escalates uh the Cardi administration will come under intolerable intolerable pressure and be forced to make a deal which is favorable to the United States.

[00:13:03]This is one game that's being played in contrast to the game Carney is playing in which he uh holds the position that a attacks from the Trump administration reinforce his political position within Canada uh propping up his government making him stronger uh and so more able to endure the pressure related to a trade war. But second, that uh Carney believes he doesn't have to outlast the United States in a trade conflict. He only has to outlast President Trump. And so whether it's by appealing to other centers of sovereignty like the courts in the United States, whether it's other delaying tactics, uh whether or it's appealing to the political opposition that exists in the United States to Donald Trump, this is a strategy to isolate the problem to one person, one man, and then wait him out knowing that he has a finite window of opportunity in which to execute his strategy.

[00:14:13]So we have a completely asymmetric game being played between the two negotiating partners in this agreement. Um and it must be said this is a game which is very familiar.

[00:14:29]um repeatedly through Trump's administration, he has been convinced by uh members of his administration, members of his kind of media cohort that the United States is in a stronger position to uh leverage uh uh situation than it actually is in. And so he has escalated only to find that the advisers who um drove him in into executing a strategy overstated the position of the United States. And uh he now finds himself in a position where uh it is humiliating uh it is humiliating and a significant loss to deescalate but in which uh time is on the side of his adversary especially given the relatively short window that Donald Trump has to execute his domestic agenda.

[00:15:33]My favorite new example of this is the uh is the tariffs which he which the Trump administration has set down for the generic pharmaceutical in industry presumably which have been negotiated over a period of time.

[00:15:50]the the formula exempts pharmaceuticals uh generic pharmaceuticals from tariffs for a 2-year period between 2026 and 2028 after which there's an escalating tariff first to 100% then to 200% for every year thereafter.

[00:16:07]Now, the generic pharmaceutical executives who have negotiated this arrangement are betting that they can give the Trump administration a propaganda win to announce this framework and that Donald Trump and MEGA more generally will be politically impotent by the time 2028 comes around and the um framework for escalating tariffs will never actually be implemented and therefore they will never actually have to do anything. Um, you see the these asymmetric games being played around the president all over when you start looking for them. And it is a very interesting question to ask of the people around the Trump administration uh how what they expect to be getting out of it and their response.

[00:17:04]It's a very interesting question. To me, what this looks like is an empire in decay and a a central figure at the heart of the administration who has a very limited window of opportunity who is wasting it by being deceived.

[00:17:28]Now it's worth noting the third frame which is being applied to this particular event again completely orthogonal to the strategies of the two negotiating the actual agreement between the two parties. This is coming from Pier Polyv and the uh Conservative Party of Canada. Let's take a listen here.

[00:17:49]>> We should be the richest [music] country in the world right now by far. We have uh the fourth most farmland [music] per capita. We have about the fifth or sixth most natural gas, the fourth most oil, the third most uranium, the most pod ash, [music] the biggest oceanic coastline. Like we should be by far the richest country [music] anywhere on earth. You know, if your goal is to get back at President Trump, well, the way to do it is by unlocking and unblocking our own economy so that we [music] can compete with our American friends and compete with the rest of the world. uh [music] rather than just you know political theater.

[00:18:28][music] So there is Mr. Polyv attempting once again to leverage the trade situation between Canada and the United States in order to get his coveted cost of living election. Right? We should be the the richest country on earth. What does he mean by that? He means that Canadians are getting poorer and I want to fight an election on the basis of the Liberal Party's record of consistently making Canadians poorer and I want to be the party of making Canadians richer rather than poorer. Um, this is a really effective political frame if Pierre Polyv can manage to wrangle the propaganda environment onto this turf. though I highly doubt he will be successful in wrangling the political dialectic onto this turf because on this turf he can align the interests of the Alberta elite to which he is um inextricably tied who would like to see economic development particularly in the west of the country and the kind of uh middleclass voter uh who is ethnically diverse but subject to economic degradation in the areas around Toronto and Montreal.

[00:19:54]Right? by making the election about uh the declining standards of living for the overwhelming majority of the non-dependent people in the within Canada. He can um fight an election where he has a propaganda advantage. This is the the strategy of pure polyv. and uh if he had more media assets at his disposal, he might be able to win with this strategy. Certainly, if he could fight an election where the dominant narrative is the question of uh have Canadians gotten poorer over the past 15 years of Liberal governance, that's an election he could win. Uh but again, it represents no strategy at all in dealing with the actual negotiation between Canada and the United States. It's not a it's a view from nowhere strategy. It's not an actual um credible alternative for the use of sovereignty. uh from the point of view of somebody running the government of Canada, if you imagine yourself uh in the position of running the federal government of Canada, uh you're going to be faced with the shakedown tactics of the Trump administration and the very short-term thinking associated with that and you're going to have very limited options at your disposal. Um, there are some things that that Polyv could probably do in order to make Canada richer right away, but most of them have nothing to do with the trade conflict between Canada and the United States. Most of them have everything to do with reversing green policy. Um, an approach that Carney has been effective in speaking about but has not been very effective at actually acting on. Right. Under Carney, there has been some uh some reversal of green policy and the native veto on resource development uh projects, but it has been slow and it has been very limited. Uh and so you can see how in this frame pier is not only sort of politically ha happy but he also can kind of uh focus the policy discussion on things he could actually do as prime minister.

[00:22:32]All right. Well, we have one constellation of facts. We have three completely different frames associated with three completely different strategies for the future. Um I did this exercise to understand the uh kind of both the propaganda position of each of the three members, the actual strategy for policy of each of the three uh participants.

[00:22:59]uh and to remind everyone that uh one of the weird effects of broadcastonly media rather than putting these people in a room together where they have to actually have dialogue um is that uh the facts can be presented exclusively from their own frame at all times. This is one of the defining skills that makes politicians effective in the modern world. being able to inhabit only their own frame which is great from the point of view of maximizing your effectiveness in a popular sovereignty world. Uh but it is actually extremely negative in terms of the outcomes uh that it produces for governance. It would actually be better for everyone involved to deescalate this trade conflict uh to negotiate some through some of these difficult issues and come to a reasonable solution uh at least in the relatively short term. um given that the trade infrastructure of both countries um is set up predicated on this strategy a strategy which has been pursued by both nations for the last 50 years. Um but there's nothing that anybody c that anybody can do involved in politics or otherwise to bring the discussion into that frame.

[00:24:34]And so the incentives of power and the incentives of the declining American empire kind of lock in this uh difficult position and it's likely to remain difficult until uh that system of incentives uh can be changed by fundamental political change on one or both sides of the border. Thank you for your time and attention. I hope you learned something.

[00:25:01]Canada originally was put together by two groups of people who didn't have much in common but didn't [music] want to be American.

[00:25:08]>> The line just popped into my head. A bunch of the boys was a whooping it up and there I got my start.

[00:25:17]>> We have had a flag. Flags can be changed.

[00:25:22]that flags cannot be imposed the sacred symbols of a people's hopes and aspirations by the simple capricious personal choice of a prime minister of Canada. I have watched this country for half of my life from abroad and we have turned complacency into just that, a national sport.

[00:25:44]I I am resolutely opposed to all innovation, [music] all change, but I am determined to understand what's happening. I I don't choose as to sit and let the juggernaut roll over me.