Western Standard - Is Carney benefiting from Canada’s trade failure？

00:00:00.000 Good evening Western Standard viewers and welcome to Hannaford, a weekly politics show of the

00:00:21.160 Western Standard. It is Thursday, August the 27th, and for news it's all trade war all the time.

00:00:28.580 With us tonight is Yaroslav Baran, co-founder of the Pendulum Group

00:00:32.500 and strategic advisor to former Prime Minister Harper in the good old days.

00:00:37.500 Good to see you, Yaroslav.

00:00:39.160 Always good to see you, Nigel.

00:00:40.820 Thanks, Yaroslav.

00:00:41.960 Look, there's a lot that needs explaining here, and you're the man.

00:00:44.560 There are two things particularly we should talk about.

00:00:47.140 One is what just happened here.

00:00:49.020 Is this high-stakes negotiating, or has the world changed forever for U.S.-Canadian trade?

00:00:54.540 And the other thing is this. Does the prime minister have an agenda beyond trade? What is he really trying to do? Which one do you want to go with first?

00:01:04.940 Well, why don't we take them in that order?

00:01:07.000 All right. So what's really going on here? Has the world changed?

00:01:12.280 No, nothing has ever changed permanently. Donald Trump is a dealmaker. He's been trying to cut deals more preferential to the United States' interest than what he had before.

00:01:22.340 We can debate all we want about the tactics he uses, but he's trying to work in America's

00:01:29.800 self-interest and the trade partners that he's targeting, it's incumbent upon them

00:01:35.060 and their leadership, our leadership, to act in our self-interest.

00:01:39.060 So we've seen this all over the world.

00:01:41.740 He's been cutting deals left, right, and center, Japan, European Union, country X,

00:01:46.160 country Y.

00:01:46.720 We haven't done a deal yet, and this is just the latest in our trade war.

00:01:51.200 We have to respond in Canada's interest, just as he is introducing new punitive measures against Canada, ostensibly in America's interest.

00:02:01.580 So the way you're putting it, it's like the world has changed and we just haven't got the message yet that we think we're still Canada to the United States like it was in 1970.

00:02:12.200 So you saw what Mr. Carney put forward as a response to the situation on midnight of Friday when it all came to a stop.

00:02:22.580 What was that response?

00:02:24.560 And is it effective, given what you've just said about the dealmaking aspirations of the president?

00:02:31.300 Sure.

00:02:31.640 Well, first, let me qualify my earlier point.

00:02:33.840 When I say the world has not changed forever, I mean, this is not a fundamental breach.

00:02:40.000 This is not a rupture.

00:02:41.540 uh but there is certainly a different attitude for as long as as mr trump is in the white house

00:02:46.500 there is going to be a far more mercenary and and pragmatic and utilitarian approach to trade policy

00:02:52.100 there's no such thing as hey 25 years ago canadians embraced us in gander and welcomed

00:02:58.980 american flights during 9 11 and you know this is a a forever friendship no that is that does not

00:03:05.300 factor into the into the equation everything is practical and everything is deal making

00:03:09.800 But again, that does not mean that the world has fundamentally changed a seismic shift in geopolitics or anything like that.

00:03:16.640 Now, what actually, what was Canada's response?

00:03:19.520 Look, when you're responding to tariffs, there are generally two approaches.

00:03:24.900 One approach is a tit-for-tat approach.

00:03:27.220 You tariff my pork, I tariff your pork.

00:03:29.460 You tariff my beer, I tariff your beer, right?

00:03:32.080 You do this to me, I do this. 1.00

00:03:33.480 You punch me in the nose, I punch you in the nose. 0.99

00:03:35.580 Not the face, the nose, not the ear, the nose, right? 0.95

00:03:38.400 Then there's a different approach, tends to be a more strategic approach that I like to call it the bourbon and Harley-Davidson's approach.

00:03:48.360 So you tariff us on things that are sensitive to us.

00:03:52.940 We tariff you on other things, not necessarily pork for pork, but you're really protective about your bourbon and your Harley-Davidson.

00:04:02.160 These are iconic items that you like to export.

00:04:06.180 And particularly, these are things that are produced in Republican states, or if it's a Biden government, in Democrat states.

00:04:14.020 So it's a more strategic approach of equivalency, not a straight up one for one or A for A.

00:04:20.520 What we saw here was something of a hybrid of two approaches.

00:04:24.700 First, Canada's retaliatory tariffs were all drawn from the basket of goods that the U.S. just tariffed.

00:04:31.720 But within that basket, they were strategically selected.

00:04:36.180 So, for example, flatware, cutlery from New York State. Why? Because there's a big plant and Canada is a big importer of their stuff. My flatware, Oneida, is made by this New York State plant. Seafood from Maine, another swing state. We've got midterm elections coming up in the States.

00:04:57.640 So it's not one for one, A for A, tit for tat, but it is selective within there to try to maximize the political pressure on Trump allies.

00:05:09.800 So if they want to win New York, if they want to win Maine, if they want to win other swing states, we want to inflict a little bit of economic pain on the ground so that their congressmen, their senators, their governors start to complain to Trump saying, you know, ease up, give this a bit of a break.

00:05:25.680 So in tariff policy, the golden goose is really finding a commodity that you can tariff that inflicts pain on your trade partner while minimizing or eliminating trade at home.

00:05:42.980 Beer is a good example.

00:05:43.800 If we tariff American beer as a countermeasure, there are plenty of alternatives to Bud, Coors Light, et cetera.

00:05:52.540 You can switch to Molson Canadian, to Labatt Blue, whatever it is that you drink, Canadian products.

00:06:01.400 So you don't need to pay more for the American alternative.

00:06:05.540 You have Canadian products.

00:06:06.420 So that's the ideal kind of commodity that our trade experts try to find.

00:06:11.760 stuff that we could easily replace by Canadian products that hurts them doesn't necessarily

00:06:18.120 hurt us. The real golden goose, the golden goose sitting inside of a bullseye is if you can find

00:06:25.420 that kind of a totally replaceable commodity that we can counter tariff that happens to be produced

00:06:31.760 in a politically sensitive area. Again, Republican or Republican leaning geographical zones where

00:06:41.660 political pressure on the ground there is not going to be welcome in the White House.

00:06:45.600 So that's the kind of thinking that goes into determining what kind of things we counter tariff.

00:06:51.420 So do you think we did an effective job in choosing which items we would tariff?

00:06:56.080 They certainly did choose commodities through that lens. So it was from the basket,

00:07:03.100 so as to not be accused of escalating and spreading this trade war even wider,

00:07:07.240 but selectively from within that basket of U.S. tariff goods

00:07:11.220 to inflict maximum pain and minimize pain here at home.

00:07:16.240 One of the things that has puzzled me is the U.S. administration's determination

00:07:22.260 to place a tariff on Canadian-produced aluminum.

00:07:25.880 Yeah.

00:07:26.500 They need aluminum.

00:07:28.040 In fact, Mr. Trump, as recently as two days ago,

00:07:31.140 talked about how much they needed aluminum.

00:07:33.120 They don't have nearly the industry that we do. 0.99

00:07:35.720 how is that in their interest to yeah that one nigel has always baffled me a little bit and 0.98

00:07:42.340 so on the one hand yes i understand donald trump is trying to cultivate a bigger homegrown homegrown 0.93

00:07:50.580 aluminum production industry he has said as much he definitely wants to do that their entire

00:07:55.460 defense industrial complex really depends on aluminum they need tons of it um thing is you

00:08:02.140 can't do that overnight and the united states imports several times over from canada the amount

00:08:10.620 of aluminum that they actually make at home so in this case they are not punching us in the nose

00:08:16.720 they're punching themselves in the nose by tariffing aluminum i would i would think that

00:08:21.260 something like aluminum or potash for example uh required by all farmers is exactly the kind of

00:08:27.680 stuff that they should be exempting, not tariffing. And they should be, if you believe

00:08:32.160 in tariffs, tariffing the kind of stuff that they make at home anyways. Aluminum is not in that

00:08:36.040 category. So that one is a little bit puzzling to me. Well, puzzling also then is in reverse.

00:08:43.080 Apparently we, it seems trivial, but it's not. Apparently we import a lot of our toilet paper

00:08:49.140 from the United States. We're putting a tariff on it. Is that smart? We're punching ourselves now.

00:08:55.660 It is the kind of commodity that is actually produced in Canada. So it is replaceable by

00:09:01.840 Canadian sources. Maybe we do import more than we use, than we make, but it is the kind of thing

00:09:09.660 that can easily be substituted from other sources. It's not a complex item the same way that, say,

00:09:16.020 a jet engine is that, oh, suddenly it's going to take us 10, 15 years to find a replacement for

00:09:20.040 product so now in your view the clearly the americans were playing hardball uh is it actually

00:09:32.920 did they really want a deal i mean they have provoked canada they have provoked mr carney

00:09:39.080 not that mr carney hasn't also done some provoking himself but did they try to drive such a hard

00:09:46.360 bargain that they wanted the Canadian side to break off the agreement.

00:09:52.080 You know, I don't think the intent was for this to turn into an impasse.

00:09:57.360 I don't.

00:09:58.240 On the other hand, though, or rather at the same time, Americans do not obsess about the

00:10:04.820 U.S.-Canada trade relationship the way that Canadians obsess about the Canada-U.S. trade

00:10:09.820 relationship, and for good reason.

00:10:11.840 We are certainly each other's number one trade partners, but when all of this started a year ago, 76% of our exports were going to the States. They were more than half, well more than half of our entire export market. We are not the same to them. We are still their number one trade partner, but we are not nearly as consequential to their economy as they are to ours.

00:10:39.460 So I would say they would be more in the take it or leave it category.

00:10:44.360 They would like to get a deal.

00:10:46.280 Mr. Trump likes to boast about wins.

00:10:48.820 I signed another trade agreement and this is a better deal for America than what you had before under Biden.

00:10:53.300 We were getting ripped off.

00:10:54.300 We're not getting ripped off again.

00:10:55.680 Let's make America great again.

00:10:56.940 All that kind of stuff.

00:10:57.920 He likes to boast about a win.

00:10:59.780 He would have wanted a win.

00:11:01.100 But the stakes are so high for the Canadian side in this kind of a trade agreement that Canada cannot accept a very sub, not just suboptimal, but really subpar final trade agreement.

00:11:18.640 So, all that to say, the Canadians would have been the ones to walk away, but it's more reasonable for the Canadian side to walk away if they felt that they were not being treated fairly because the stakes are so much higher for Canada than they are for the US.

00:11:36.780 let's just talk about how high they are my understanding is that the the value of the trade

00:11:45.420 which is tariffed somewhere in the order of 28 billion dollars Canadian which is about four

00:11:51.760 percent five percent maybe of the total trade and eighty percent of it is still passing backwards

00:11:57.920 and forwards a tariff free so obviously it's got to do with the auto industry but what is it that

00:12:05.380 was so precious that we had to preserve it and indeed walk away from the deal. And now,

00:12:12.580 I guess we have nothing. So, could you unload on that a bit?

00:12:17.460 Sure. Yes. I mean, it's easy or it's tempting from a statistical point of view to say

00:12:22.740 this latest tariff hoopla is only about 5% of our trade relationship. So, what's the big deal?

00:12:31.060 everybody calmed down the problem though is that these new tariffs were kicking the very industries

00:12:39.780 that were already down so our auto sector for example steel steel made steel made manufacturing

00:12:48.900 products etc so there are a whole bunch of trade commodities that are sheltered and that have been

00:12:55.300 sheltered by the Canada-US-Mexico trade agreement. These new tariffs focused on some of those and

00:13:03.460 brought them outside of that protection and others it focused on sectors that already were not

00:13:08.340 protected by KUSMA that were already suffering, things like our auto sector. So it's not necessarily

00:13:14.660 the 5% of our bilateral trade that we should be focusing on, it's which sectors were involved

00:13:22.180 and that's the ones that were already hurting. All right. Let's talk about Mr. Carney's role

00:13:29.700 in this. I noticed that his popularity has soared. He's something like 65% in the polls at the

00:13:38.560 moment as Canadians rally around and say we have to, you know, have to retaliate dollar for dollar,

00:13:44.820 tariff for tariff, let's go, elbows up. That's a very nice position for him to be in, to think

00:13:51.760 that he has the country behind him, it strengthens his position, I would think, in Parliament.

00:14:00.980 There are a number of by-elections coming up. I have a feeling that he needn't worry about the

00:14:08.380 results in those. What do you think? Yeah, it's a double-edged sword. Yes,

00:14:13.300 he is benefiting from being Captain Canada, from being Mr. Elbows Up, and so on. On the other hand,

00:14:18.800 his entire brand, the reason he was elected was that he is the guy who can get a good deal with

00:14:25.520 the United States. His entire election really rests on that assumption. So the longer he goes

00:14:34.060 on without a deal and the more obstacles, frankly, the worse that the bilateral trading relationship

00:14:40.940 gets. I mean, you're not going to benefit forever from being Captain Canada. Eventually,

00:14:46.400 that's going to turn into we're two years in and there's still no deal you were supposed to be mr

00:14:52.000 you know get a deal for canada so um i certainly do not think that he is deliberately sabotaging

00:14:58.620 trade negotiations to bump up his poll numbers that the stakes are far too high is he benefiting

00:15:04.400 politically in the interim yes but that don't last forever and the longer this goes on the higher

00:15:12.560 the risks that that's going to very suddenly do a turnaround and affect his brand.

00:15:19.020 What do you think about the chances of an early election to cement in his support while

00:15:26.060 it is still there to be had?

00:15:28.840 It should be tempting for a traditional political animal, somebody like a Jean Chrétien, somebody

00:15:37.480 who was around politics their entire life.

00:15:39.980 I would say there'd be a much higher likelihood.

00:15:42.960 But from what I've seen, Mr. Carney appears to be relatively risk averse.

00:15:48.220 He doesn't want to introduce any more variables that he can't ultimately absolutely control into the equation.

00:15:55.760 So I think that risk aversion is probably going to extend into this.

00:16:00.260 Tactically, it might make sense to have an early election, but there are too many things he can't control at the moment that I think he'll probably err on the side of.

00:16:09.280 So stick to stick to my mandate, stick to trying to get a get a good trade deal and don't introduce more risk.

00:16:18.740 Now, I want to just challenge you a little bit on that business about being risk averse.

00:16:24.060 For a man who's risk averse, he has gone to great lengths to insult the Americans and in particular, Mr. Trump in the time that he has since he has become prime minister.

00:16:34.880 you know talking about a new world order which comes at their expense i mean this was the davos

00:16:40.320 speech and you can say you go to a place like that full of people who think grand thoughts well

00:16:46.800 maybe they maybe they're looking for that sort of speech but you know that got him a lot of support

00:16:51.860 and a lot of acclaim he's built this canada captain narrative and he's made no secret of

00:16:58.540 his disdain for donald trump on several occasions that was a classic time in south africa where

00:17:04.980 somebody a reporter asked him if he'd called mr trump and he said who cares you know later he

00:17:09.940 walked that back but he said it and he said a number of other things that would lead the

00:17:15.380 american president to think that there's something a bit personal here so those are risky things to

00:17:22.780 do that's this is a fair question you're asking nigel i would say the um the tone has definitely

00:17:33.660 shifted a lot from the times of justin trudeau justin trudeau would relish in what he thought

00:17:41.100 were his clever uh multi-layered you know insults at uh at donald trump we're definitely not seeing

00:17:49.080 that. Had there been several comments that probably were not kindly received in the White

00:17:55.780 House, yeah, I think there were. But by and large, I think Mr. Carney is trying to keep this

00:18:00.640 professional and trying to negotiate in good faith. Frankly, I think the Ontario Premier has

00:18:07.060 done more over insulting than the Prime Minister of Canada has. So I don't think that Carney is

00:18:13.760 trying to be provocative uh with the u.s i i i don't well i certainly want to echo your thoughts

00:18:22.400 about mr ford uh mr ford of course thinks that alberta oil should be on the table but on the

00:18:27.860 other hand supply management wasn't on the table so if we're going to go around the room and see

00:18:32.980 who really values something that couldn't possibly be up for negotiation we would have to start with

00:18:39.260 him and the premier of quebec they sure do like those those uh cartels and uh and butter and milk

00:18:46.340 and eggs they like that protected cheese don't they yeah yeah like ultimately the more we can

00:18:52.060 preserve canadian solidarity a team canada approach the better we're all going to be

00:18:56.120 nothing should be on the table uh i would say if the home premier the homegrown industry responsible

00:19:02.840 for that product isn't on side it's easy for one premier to say oh what you make should be on the

00:19:08.280 table, but, you know, leave me alone. That's probably not the best way to preserve Canadian

00:19:12.780 solidarity. I think Canadian solidarity among the premiers is probably one of the best things that

00:19:16.760 we should do, or one of the most important things to be focusing on right now. Do not allow them to

00:19:20.820 divide and conquer us. That said, if you were to take that approach, then you would say, well,

00:19:26.860 Alberta should be quite happy to see a tariff placed upon its oil exports, and

00:19:32.420 just for the sake of Team Canada

00:19:35.800 and solidarity.

00:19:37.540 That's not how we see it out here.

00:19:39.260 How do you see it?

00:19:40.280 Well, I see it thus.

00:19:42.060 If oil is Alberta's product,

00:19:45.620 Alberta should have a say

00:19:47.500 in whether or not oil

00:19:49.540 is in any kind of a tariff list or not.

00:19:53.500 If electricity is Quebec's product

00:19:57.020 or BC's product,

00:19:58.280 they should have a say

00:19:59.220 in whether that's in the mix,

00:20:00.500 whether that's in the toolbox,

00:20:01.440 not somebody else dictating for another part of the country.

00:20:05.240 I think that's just imprudent.

00:20:07.580 And I think everybody in Alberta would, you know, nod in violent agreement with you.

00:20:14.000 The other thing about oil is we have line five.

00:20:18.640 It carries Western oil to Eastern Canada, but it goes through the state of Michigan.

00:20:24.140 It seems to me that if anybody was trying to put a tariff on oil, then the obvious American response would involve...

00:20:37.800 Turn off the pipe. That's it.

00:20:40.400 Yeah, we don't want to start playing those kinds of games because we could think it's a clever escalation.

00:20:45.140 They can escalate even more and far harder.

00:20:47.540 If they decided to shut down that pipeline mid-pipe on their soil, then we would literally have gasoline shortages in eastern Canada.

00:20:58.160 You're going to have people queued up for miles and miles and miles.

00:21:02.200 That would be economic disaster and potentially even civil disorder.

00:21:06.560 Seems to me that the response for the government of Canada was,

00:21:10.320 say, right, we've had enough of this

00:21:11.820 and we're going to build cross-country pipelines

00:21:14.500 and we're going to build them out to the coast

00:21:16.080 and we're going to have an export economy

00:21:18.060 and we'll serve our own

00:21:19.520 without going through the United States.

00:21:21.420 I don't hear that kind of talk.

00:21:23.360 What do you think it's going to take to get there?

00:21:26.920 Yeah, look, our economies are still so integrated.

00:21:29.820 We're not going to instantly remap our supply chains

00:21:33.440 and our trade relationships.

00:21:34.860 Anything we change.

00:21:35.840 Should we diversify away from the U.S. as an export market?

00:21:38.940 Sure. We probably shouldn't have so many eggs in one basket as last year has shown us.

00:21:43.960 It's not going to change overnight, given the level of integration in our trade relationship.

00:21:48.740 So setting a new trajectory and being responsible about moving in that direction, probably a good approach.

00:21:55.000 We cannot hold our breath. This is not going to change instantly.

00:21:58.300 And let's face it, the U.S. is always going to be our biggest trading partner.

00:22:02.200 Last thing, Eris, in sort of the Grand Hannaford conspiracy theory, which is that under the situation that is now governing us all, Mr. Carney is expected to raise money and to support Canadians who are impacted by the tariffs.

00:22:22.960 he now has an excuse to borrow money on a massive scale to support canadians

00:22:29.260 in a fight that i think he could have avoided um am i just being too much of an alberta redneck

00:22:38.520 here no no not at all i and i honestly believe if uh mr harper were prime minister we would

00:22:43.940 have had a deal a long time ago i i honestly do believe that um does mr carney have ostensibly

00:22:52.360 license or a pretext to borrow much more money? Yes, he does. He'll get away with it saying this

00:22:58.540 is necessary. We've got to protect ourselves from this onslaught. That's a very unfortunate

00:23:04.000 consequence because we were all looking at his predecessor, Mr. Trudeau, as the guy who

00:23:09.620 doubled Canada's debt. Mr. Carney was supposed to be the reasonable businessman who got things

00:23:15.420 under control in a more businesslike environment, recognizing that carrying a debt burden is not a

00:23:20.720 great thing, but the debt is still heading in that up, up, up, up, up direction.

00:23:28.760 Well, we've got a lot to look forward to, haven't we? Well, look, Yaroslav, for the benefit of

00:23:33.360 viewers, I should just say that you were kind enough to duck out of a corporate mind meld and

00:23:38.460 give us your comments here. So thank you for doing that. Much appreciated. We'll let you get

00:23:43.060 back to it. But always good to hear from you. I think we'll hear from you more soon.

00:23:48.820 Thanks, Nigel. Always good to chat with you.

00:23:50.720 For the Western Standard, I'm Nigel Hannaford.

Western Standard - August 28, 2026

Is Carney benefiting from Canada’s trade failure？

Episode Stats

Transcript