The Munk Debates Podcast - Munk Dialogue with Andrew Coyne: Canada's two competing priorities and the new U.S. Fed Chair signals compliance to Trump

Episode Date: July 31, 2026

Andrew and Rudyard open the show by examining the competing priorities confronting Prime Minister Carney's government. On one hand is the immediate geopolitical imperative: reducing Canada's dependence on a U.S. trading partner that President Trump has shown a willingness to weaponize, making export diversification an urgent national priority. On the other is the growing threat of climate change, underscored by devastating wildfires in Canada and across Europe. Carney appears to have concluded that geopolitical security must come first, pushing climate policy down the agenda. But can he do so without alienating a significant portion of the Liberal coalition, for whom climate action remains a defining issue? In the second half of the show, Andrew and Rudyard turn to new U.S. Federal Reserve Chair Kevin Warsh's first significant decision: keeping interest rates unchanged for a seventh consecutive month. Markets reacted sharply, with investors selling off 30-year Treasury bonds and pushing yields to a 19-year high. While former Fed Chair Jerome Powell won praise for defending the Fed's independence in the face of pressure from President Trump, Warsh's decision has reinforced critics' fears that he is too closely aligned with the White House. Has the Federal Reserve begun to sacrifice its independence—or is Wall Street overreacting?Become a Munk Donor ($50 annually) to get 72-hour advanced access to the full length editions of Friday Focus and Munk Dialogues. Go to www.munkdebates.com to sign up. Hosted on Acast. See acast.com/privacy for more information.

And so the calculation has been in the Carnegie administration very clearly is we're going to put, for the time being, the geopolitical stresses and challenges at the top of the list and climate change is taking a back seat. Now, it's tough for them politically, as well as just as a policy challenge, because a good part of their coalition is extremely concerned about climate change and may desert them if they don't feel. the government is placing a high enough priority on that. Welcome to the Monk Dialogues for our regular Friday show with Globe and Mail Journalist and bestselling author Andrew Coyne. Andrew, great to see you. Nice to see it, Roger. A lot of different stories to check in on this week, but I want to try to kind of mash them

together, Andrew, because I feel like there's a bit of a trajectory or theme emerging over this summer. So bear with me. On one hand, we have a big national push to reawaken Canada's resource and kind of energy superpowers from pipelines to different types of extraction, the oil sands in particular. And on the other hand, there's a lot of politics and a lot of public concern, Andrew, I think, bubbling up around the environment. It's particularly around the wildfires that have really dominated the news and frankly have hit historic highs. in terms of the number of sites burning in Canada. And then the images coming out of Europe, Spain, France, Greece.

We're seeing an uptick in the polls, Andrew. Climate has suddenly leaped, almost doubled, according to a recent Angus Reid poll, from 11 to over 20% of Canadians identifying it as their top issue or priority. Let's go big picture here with you. How do you think these two themes are playing out? And can they be reconciled by policymakers, or are they inherently in conflict with each other?

The ambition by the government, the Kearney government, to make Canada into an energy superpower versus the realities of climate change and, more importantly, the growing public reaction to the symptoms of a warming planet. So we're faced with a couple of urgent priorities, and they're both equally valid and equally important. And it's a question of what you place first

in terms of the most immediate test. arguably the more immediate challenges that we're facing is that we now have a regime in Washington that is unlike anything we've ever faced is weaponizing our historic dependence in the United States against us

and we are having to scramble frankly to diversify our markets generally to become less dependent on them and that involves not just products in general but energy in particular so we are placing a priority on getting our energy to market so that we're not as heavily, to foreign markets, to Asian markets in particular,

so we're not as heavily dependent in the United States. So that's one urgent priority on one side of the table. Similarly, on that side of the table is you've got Europe that is trying to lessen its dependence on Russia, needs to be able to find other supplies of oil and gas, particularly the time when Russia is threatening to not just attack Ukraine, as it already has, but there are credible people who think they could well turn their attentions to the Baltic states. So those two geopolitical stresses are putting energy production

and transportation at the top of the list. Now, that doesn't mean that climate change has gone away. God knows. And whether you can attribute any one wildfire to climate change or not, that doesn't really matter. This is the kind of thing, I mean, there's no doubt that the world is warming, and this is the kind of thing we're going to see more and more of in the future is these kinds of extreme weather events, including these wildfires. And so that is also an urgent priority as a planet is to try to reduce our carbon dioxide emissions and try to slow the pace of global warming. We're only going to be able to slow it.

And even then, it's a challenge because you've got to get 162 countries all to contribute to this. no one country can do it on its own. Certainly Canada can't. We're only one small part of the puzzle, but we're part of it. And so the calculation has been in the Carney administration very clearly is we're going to put, for the time being, the geopolitical stresses and challenges at the top of the list, and climate change is taking a back seat. Now, it's tough for them politically, as well as just as a policy challenge,

because a good part of their coalition is extremely concerned about climate change and may desert them if they don't feel the government is placing a high enough priority on that. So they've got to be looking over their left shoulder at the NDP and the Greens, particularly, for example, in Quebec, who may make yards on them on this, or in the Black-Kivacour, of course, who may make yards on them on this. So I don't think it's causing them too many sleepless nights at the moment because they're way ahead in the polls. But it's the kind of thing that over time that can certainly come to bear on the government and having to be caught between these two competing very urgent priorities is going to be very challenging for them in the long run. Andrew, the kind of consensus around climate that existed, I think, in the run up to COVID,

that spawned, you know, the net zero movement, of which Mark Kearney was a ardent supporter and played a prominent international role in trying to push the world towards different types of industries, including extractive industries, towards these net zero emission targets, 2050, 2050, 2030. There were different dates that were thrown around. It all got kind of blown up, Andrew, did it nod on this so-called affordability crisis. The inflation hit that occurred, after COVID, it seemed as if the carbon tax suddenly was public enemy number one in the face of rising grocery bills and other cost of living expenses. Yeah, go ahead.

Well, yeah, which was bogus in terms of the actual facts. You know, it's not the carbon tax that led to higher prices. It was the energy shocks coming out of the Ukraine war. It was the COVID shocks. as you mentioned. But there's no doubt as a political matter that it all got kind of tied together, and particularly because Justin Trudeau himself became unpopular and that infected everything that he did.

And so, yeah, the first thing the Carney government came in, when Carney came in was to scrap the consumer carbon tax. Now, I think he would say, look, net zero is still the target, but we're going to be, we're not going to necessarily be, you know, be on the same timetable that we were at. in the past. Fair enough. You know, this is triage.

And if you're facing an even more urgent geopoliticals challenge in the short term, then maybe you do have to put off this important, but nevertheless, not as immediately urgent priority as climate change, particularly in Canada as a country. You know, what, as I say, what Canada does in the short, medium or long term is of relatively minor importance to the planet. But we have to do our- Andrew, I mean, you and I are not climate skeptics, neither of us,

but you would acknowledge that arguments, you know, that, oh, the oil sands are only X percentage of global emissions or 11% of Canada's toll emissions. The point is that each country has a responsibility, regardless of what their contribution is to total global emissions. If you're not curtailing your emissions, if you're not addressing this problem, And then how can you reasonably expect or argue that China, which is increasing emissions,

should follow course. So I know you agree with that. I just want to make that point for listeners and viewers so that they're clear here and what we're saying. Coming back to you, Florida a bit, yeah, go ahead. Absolutely, I do. But, you know, in the face of more pressing priorities, you can be flexible on timetables. You have to be. And it's not pleasant and we'll pay the price perhaps for it.

in terms of our relations with other countries. When and if the world turns its attention to climate change again in a focused way, if we're found to be laggards, then we will pay a price for that. To play devil's advocate though, environmentalists would say that this isn't a price that we can defer, that the cost has already been paid.

The carbon is already in the atmosphere. It's at concentrations that are now, according to environmentalists, at dangerous levels, that are, causing tens, hundreds of billions of dollars in present and future losses that will severely compromise living standards and will imperil the prosperity, the future, literally, of the next generation. Forget three or five generations from now. We're literally talking about young people who are alive today who will live materially different lives because of climate

change. So how do you respond to the environmentalist argument that it isn't it isn't a morally coherent argument to say, well, we have to deal with these geopolitical strategic things because that's the priority now. Let's roll the dice and we'll pick up the climate baton at some date in the future when, frankly, there's no hope of any reversal and we've internalized all the costs. and in fact, we've made them worse. I don't disagree with a lot of that. So this is not a comfortable tradeoff. But if you're talking about things like trying to prevent World War III,

that kind of comes to the top of the list, you know. And we are dealing with extremely dangerous situations. When you're now seeing the Iran War, the Ukraine war and China, all, you know, China and Russia and Iran and the United States and Ukraine, all these things coming together now in one conflict, the potential for this to spiral in really difficult and horrible ways is immense. Just even, as I say, even in Europe, where you have Vladimir Putin, you would think having been so burned by the Ukraine experience that he would be highly averse to any further adventuism.

In fact, the argument is that it's quite the reverse that he'll be more likely to want to start some other conflict so as to keep the ball in the air, to keep the troops from coming home, keep himself in power, keep himself alive. So we're in an extraordinarily difficult situation as an international community. So there's a tradeoff at the global level or the international level, and that's the architecture of that. And I don't disagree at all with the environmental arguments. I'm just saying I think there's also a really important,

really pressing priority on the other side. And then there's another tradeoff for Canada. And this is the point I've been making up until now, and I'll make it again. is the trade-off is not necessarily going to be exactly the same for Canada as it is for the globe. What we do, without taking away your point at all, that we have to do our part. But what we do on our own as a country is not as immediately critical to the future of climate change as what the planet does, what the world community does. We're only one part of that puzzle.

We should do our part. but if we're faced with our own existential dilemma of the United States potentially trying to annex us or certainly to turn us into a vassal state, then I think you can make an argument that we can be flexible without abandoning the fight. We can be flexible in our timetables. And certainly I would always say even as we're transitioning away from fossil fuels as a country and as a as a as a as a world, the world is still going to burn fossil fuels for some time to come. And if they are, they might as well burn ours. I don't think that there's any incompatibility between those two statements. And so that's also factors into the mix. Again, just to channel some people who really

care about climate who are listening to this or watching this discussion now, I think they would argue that it seems like we always have a reason to postpone dealing with this. It was the affordability crisis two, three years ago, and oh, now it's geopolitics, now it's Vladimir Putin, now it's Donald Trump. Here's another reason that's come along, which validates what we really want to do, which is to do what we really want to do, which is build pipelines, burn carbon, get in our cars, fly. lie in our planes, do everything that we've always done and not address the problem. So are you sympathetic, Andrew, to the frustration here, which seems to be, include elements of the liberal caucus in Ottawa, Stephen Gilbeau, the former environment minister, effectively striking out against the PM.

And, you know, the word is that there are others in the caucus who feel increasingly uncomfortable about, again, this seeming ability for us to suspend belief, I guess, that we have to deal with climate now, that we've already internalized so much damage to global ecosystems and ultimately to ourselves. And that after Vladimir Putin, after Donald Trump, there'll be another excuse. When do we stop with the excuses? And again, I have a lot of sympathy for that complaint. And I would agree that there have been things that have made have been mused as excuses not to take action. God knows there's been.

And excuses to take really bad actions rather than the actual useful action, which is carbon taxes. So and the pro, you know, dealing with climate change people have also been responsible for that. They've taken some of the easier paths politically that are actually or seemingly easier path politically, that were actually less effective, I think, hurt the public opinion in terms of the efficacy of the fight, you know, rather than the method that is cheapest and best and most effective, which is carbon tax. So I agree with that. But just because some excuses in the past were not valid for deferring action doesn't mean that every reason to defer action must necessarily be invalid. So I think there's a pretty fundamental difference between let's try to,

prevent World War III from happening, then, oh, you know, prices have risen a couple of ticks. So, you know, I always remind people, the story of the boy who cried wolf ends with the wolf devouring the boy. At some point, there is a wolf. And right now, the wolf is Russia and, in a different way, China. The threat of an actual spiraling conflict in Europe is enormous. It's enormous because of large part because of the actions of the United States that have weakened the NATO deterrent, weakened the credibility of NATO deterrent and have therefore attempted Putin into adventurism. If we had a more coherent and sane administration in the White House, then there'd be much less fear of that, and we wouldn't be faced with this kind of

excruciating dilemma that we're talking about today. Do you think it's striking, though, the prime minister has demonstrated. scene conversion on climate and energy, that this was someone again who was one of the key proponents of the net zero movement globally, who had said repeatedly up until the time he became prime minister that climate was the defining issue facing humanity, that there was nothing more important that should be addressed. And the intervening 14, 16 months now, he's abolished the carbon tax. He's building new pipelines. He's encouraging the expansion of the oil sands. He's pushed off Canada's climate targets, which had been agreed upon by his predecessor government.

It's quite remarkable, isn't it Andrew? I mean, it shows flexibility. I guess on the positive side, you could say it shows someone who's flexible and adapting to the current situation and results. It also maybe suggests that this is a person whose principles are rather flexible, too. And despite writing a book called Values, well, maybe in fact it was plural, not singular. He has many values, some of which come, some of which go, some of which at one time we're climate and now are something else. So let's wrap up this, the free complementary half of today's dialogue, just reflecting on, again, what you telegraphed earlier was a political risk that this prime minister is wrong. which is what does he really believe in? When it comes to these issues, is he flexible on everything?

Well, I think there would be two competing theories in this, and maybe there's some element of truth in both of them. One is, oh, his whole thing on climate change was opposed. It was just a fashionable stance. It got him in nicely with the liberals. And now that he's in power and he's, you know, he's just decided it's more fun to do this. and he's just completely, you know, flipped on his principles because this is a good way to dish the conservatives and to cement his lock on power.

I don't actually think that that's what's going on. There may be an element of that of certainly there's political, there would have been political temptations in both directions that would certainly be accentuated as. But I also think it's credible to argue and plausible to believe that he's a genuine and convinced, climate campaigner is very worried about where the planet is headed. But you can also see where the country is headed. And the country is facing unprecedented stresses in two dimensions. One is that we've talked about a bit already, which is we've got a president of the United States who talks about annexing us,

who is short of that is using and threatens to use every economic lever to press us into basically servitude, to make us a vassal state that is incapable of pursuing its own domestic and international priorities, but it always has to basically say yes or no, sir, to the United States. We've never, for all the paranoid fears of Canadian nationalists over the years, again, the wolf this time is actually at the door. This time it really is real. So that would certainly alter your priorities.

He's also facing not one but two possible referendums on secession. one that's coming up in Alberta, referendum on a referendum, but is nevertheless fraught with potential for damaging the country. And the other being the election in Quebec in a possible referendum if the PQ gets elected. So, and energy and the climate are both extraordinarily germane to those fights. if you're not seen as being sensitive to the needs of the energy sector, then you're going to pay a price in Alberta and not just for you, the Liberal Party, but for the country.

And if you're seen as being a cavalier about climate change, then you're going to pay a price in Quebec and possibly not just for your party but for the country. So there's enormous real policy pressures in terms of the trade-off between action on the climate an action on diversity or trade and building up our defense, et cetera. And there's also enormous political stress here, again, not just in conventional party political terms, but in national unity terms.

So in the middle of all of those pressures, frankly, he'd be foolish if he weren't adjusting his stance somewhat. As he said, we're in a different world than we were in 2015. The choices and the priorities that you might make in 2015 are not necessarily going to be the same in 2026, not because the climate situation has gotten any better, but because everything else has gotten so much worse. Yeah.

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