The Munk Debates Podcast - Munk Dialogue with Andrew Coyne: Carney walks away from Trump and turns his Davos speech into action

Episode Date: August 24, 2026

Rudyard and Andrew react to the intensifying Canada-U.S. trade war. Trump is threatening additional tariffs starting January 1, and it’s increasingly clear he was intent on escalating regardless of whether or not Carney walked away from the deal. Carney is putting his Davos message into action: middle powers need to free themselves from the grip of hegemons. It was the right call, with broad agreement in Canada that we cannot allow Trump to bully us into submission. There will be costs, but the cost of staying at the table may have been greater.Should Canada pursue retaliatory tariffs? Will other countries being targeted by Trump follow Canada’s lead? And finally, can Canada use the upcoming U.S. midterms to pressure Trump into a better deal?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.

Yeah, we're more dependent on trade with them than they are with us. But as we've seen in other types of conflicts, in asymmetric conflicts like this, the smaller party, if it's more unified, more determined, more solidly based, can do a lot of damage and can stand its own against a larger, less solidly based, less unified adversary. Welcome to a special monk dialogue today, Monday. We're getting together in the afternoon with our regular contributor, Global Mail Calmist. Andrew Coyne to break down the weekend's big news, the trade fallout between Canada, the United States, and a war of words taking place, at least from the president's side, on his true social account today Monday. Andrew, your top line thoughts on what we're witnessing.

Well, I don't think the prime minister had any choice. but to walk away. We were talking about it, you and I, before we knew, before any of that happened, before we knew exactly what was in the deal, not that we know precisely what's in even now. But I think there was mounting alarm at where the negotiations were going even before this. I mean, the official line from the Prime Minister's office is, oh, the Americans threw in all these last-minute demands, you know, in the final written text that we hadn't anticipated. And maybe that's true. But even before some of those demands, some of the terms that had emerged were pretty hard to understand why we would even be entertaining this.

For example, the Americans had agreed supposedly to reduce what were previously 50% tariffs on, I think it was steel, to 25%. Well, 25% is not particularly a good outcome for us to be accepting. It's one thing to have the Americans putting on a 50% tariff and us protesting it, but for us to sign on and agree to 25% tariffs basically locking those in would have been really tough to swallow. But what really made an absolutely intolerable outcome was the suggestion, and again, we don't know the details, but the suggestion the Americans were going to place limits in our ability to strike trade agreements with other countries or to have an independent trade policy. Now, there was an element of that in the original Kuzma agreement in 2018 that forbade the parties

to the treaty from striking free trade agreements with non-market economies. That was troublesome at the beginning, but you could sort of say, well, we don't have any intention of striking a free trade agreement with China any time soon. But if this is, as it's been presented, a more broad-ranging prohibition or limit, that just is utterly a non-starter. That just goes basically to our sovereignty at a time when that is our exit strategy from American domination is to be able to diversify our trade. via trade treaties with other countries.

So there was stuff even before the last minute, stuff I'm sure that came in at the last minute. It all added up to a very troublesome exercise to begin with. Because the premise of even negotiating was that we were with a negotiating partner who was bargaining in good faith. And how could that be when the president regularly announces

that he would like to annex the country, the Canada, that he would like to use, quote-unquote, economic force, meaning trade as a weapon to reduce our freedom of movement, to reduce us to a vassal state. The whole thing had much more of the exercise of negotiating with a kidnapper rather than honorable trading partners. And I'm not sure there was ever any really good reason for us to get involved in the first place. A lot of truth there, Andrew, especially as of today, when we're now finally starting to see,

as we probably could have predicted, a series of kind of. of angry truths from the president on his truth social platform, his comments this morning. And I'll just paraphrase here for our listeners. If you're watching this, you see the tweet up on the screen. He's claiming that we're ripping the United States off for years, completely misconstrues the balance of trade, claiming a $60 billion deficit. But then he goes on, Andrew, this morning to threaten more tariffs. 27, January 1st, 50% on all cars, trucks, large and small, automotive parts and steel.

Andrew, what do you make of this? I mean, it just seems as if this president has one gear, one speed. There is, I don't know, he has little credibility at this point. What do you make of it all? Well, you know, in the wake of the decision of the government to walk away and the announcement that we would be putting on retaliatory tariffs, you had some people saying, well, you can't do that, he'll just escalate. And I understand that concern. But the point is he's going to escalate no matter what. He's escalated even in anticipation of us escalating. And I could well imagine him escalating if we did what he wanted, if we yielded. Because what that would teach him, what that would, the lesson would be. is we can be ruled. All you have to do is threaten to get what you want. His demands are insatiable. He does not have a normal trade agenda. Usually when two countries sit down to strike a trade deal or to renew one, they both would like to trade with each other. They both broadly understand the benefits of trade.

They have certain sensitive sectors politically that they want to, if they can, protect and you get some arguing back and forth about how much and it's permissible for you to protect these protected sectors. That's normal. That's not what this is about. There's no, there's no agreement that we could reach with Donald Trump where he'd be satisfied. There's, there's no, you know, there may be there's people in his administration who just have a limited agenda of a few irritants that they'd like to use their bargaining leverage to force us to acknowledge, but that's not what is animating the president or so on as close to its advisors. They don't want a deal. What they want is continual leverage. What they want is to use our dependence

on America and for trade and use the tariffs, the weapons of trade policy, to force a whole bunch of different policy changes on this country, including limiting us from being able to strike trade agreements with other countries, including limiting our options when it comes to defense procurement, including demanding first right of refusal on our resources and critical minerals, and a whole range of other things besides. And I just don't see any end to where that goes. That once you start down that road of making concessions to buy peace,

you wind up getting all the concessions and none of the peace. Andrew, to play devil's advocate for a moment, though, Japan, Europe, a lot of other advanced economies have reached trade arrangements with the Trump administration. And those arrangements have largely seen them, you know, put aside at least, you know, the immediate threat of more tariffs and the economic instability associated with the type of open-ended negotiation or trade war that Canada is now in. settling for a kind of blended tariff rate on their imports into the U.S. of around 15%. Setting aside maybe some of the line. I disagree. I have to say I disagree that anything was settled by that. So the Europeans agreed to whatever it was, a 25% tariff rate.

And not long after they'd struck that deal, he put new tariffs on them. And that possibility or probability hangs over them all the time. This is not a president who honors his word. This is not a president who keeps his promises. And so what are you actually buying by making any concession, whatever? You are not getting peace. You're simply getting teed up for the next round of concessions. And that's what they've learned to their cost.

And so a lot of countries are looking at us right now. This is getting a lot of coverage in international media. Because this is, you know, this is the Davos. speech to some extent in action. This, you know, it was a nervy thing to have made the Davos speech in the first place to have talked about the need for middle powers to get out from under the thumb of the various hegemon's. He didn't mention the United States, but it was clear that that was where this was going. Because the United States is acting like Russia and China in in weaponizing its trade relationships with other countries. And the reason that the reason

that speech landed with what's for us. It wasn't that he'd reinvented the wheel. I think people understood this principle, but it was the prime minister of the country that he's most exposed to trade of any advanced economy on earth, depending on how you define Mexico.

So a country with 75% of its trade, the leader of that country saying we are not going to let that country bully us and use that 75% against us, that was noteworthy. And we're now doing this with this decision to walk away from the table on this. Now, as I say, I might have

preferred they never showed up at the table in the first place, but I certainly think it was the right thing to do, and there seems to be a pretty broad agreement in this country from left to right and from coast to coast, that we cannot allow them to bully us in this fashion. So we're all going to pay a price for this. Nobody should be pretending that there aren't going to be economic consequences from this, but there would be economic consequences and a much greater price if we didn't do this, if we didn't walk away from the table. So I think to come back to your question, I think the countries that did strike these ill-advised deals with Trump are looking at us and, in fact, may well be saying maybe we need to revisit these things and take more of a Canadian approach. Does that raise the stakes, though, for the U.S. administration in terms of a trade war with Canada, that, as you say, there's a danger here that if we're not made into an object lesson,

then the threats and the cajoling that they've used to wrestle much bigger economies than ours, the entire Eurozone, Japan to the proverbial mat goes away. So it means they're dug in, we're dug in, Andrew, I mean, it might feel good right now, but shouldn't we always be looking for off-ramps? Well, who's dug in more? So every Canadian, not every Canadian,

but most Canadians are up for this fight because we understand this isn't about tariffs or trade, this is ultimately about our independence. I don't think there's much disagreement on that. So there is a high willingness at this point in the country. Now, that may change, but there's at this point a high willingness to pay the price that is required to assert ourselves in this. There's no such willingness in the United States. Nobody in the United States is up for a fight with Canada. This is an entirely

invented thing out of the Trump White House, with a few special interests, perhaps, who decided to go along for the ride. And in particular, of course, there's no appetite for this in the border states. Now, as it happened, some of those border states, States are have senators to be elected in November. So there is political vulnerability that Trump has exposed in the United States for the Republicans. And a lot of those Republicans are not going to be happy with the president for picking this particular fight at this particular time. Secondly, the American economy is extremely vulnerable.

Price, you know, price increases inflation is much higher there than it is in Canada. it is a huge issue in the upcoming elections, and the president has just put a bunch of things to fuel that fire. At a time when the markets have been growing increasingly uneasy about American debt and American inflation, when interest rates have been rising, and there are real tremors in the credit markets right now surrounding U.S. debt.

We are more debt than I would like, but we're in a much more stable situation than they are. We're paying 4.2%. I think it is on our 30-year bonds. They're paying 4.1%. They're paying 5.2%. So, yeah, they're the bigger country. Yeah, we're more dependent on trade with them than they are with us. But as we've seen in other types of conflicts, in asymmetric conflicts like this, the smaller party, if it's more unified, more determined, more solidly based, can do a lot of damage and can can stand its own against a larger, less solely based, less unified adversary. So I'm curious, Andrew, to what end? And maybe you accept or don't that Canada will end up paying some tariff rate to access

the U.S. market and could well do that under a future Democratic president, as well as whoever succeeds Donald Trump, if in fact there is a Republican who will succeed him. I joke, but only partly. So, Andrew, the question is, again, what are we negotiating towards? Are we willing to accept, you know, what Jameson Greer put on the table, at least if you take aside the last-minute demands that supposedly were related to more mercurial figures in the administration, like Howard Lutnik, Commerce Secretary, or Peter Navarro. a close confident of the president.

I think he actually did some jail time for him at one point. If you accept and push aside those last minute demands and you look at the Greer package itself, which was as of Tuesday, something that the prime minister seemed genuinely interested in moving and acting on, is that the type of deal that we should push towards? In other words, can we peel back the Lutnik Navarro excesses

and land with Greer on something close to his original proposal that, again, the prime minister seemed to show real interest in as of earlier last week. I don't think we should. I don't think we should validate 25% or 15% tariffs within a free trade agreement. If they're going to do that, they're going to do that. I think we have very little ability to actually move them off that. I don't think we can appease them and I don't think we can threaten them in any effective way. So they're going to do what they're going to do. But we should not be validating that. We should not be ratifying or rewarding that. And particularly, we shouldn't be doing so if we don't think, and I don't think we don't think this case, if it's not actually going to solve anything.

So you can talk about there being, you know, a deal that was out there with some parts of the administration, but not the others. But the notion that if we were to sign on to it, that that would be the end of our troubles, I think is kidding ourselves. So we would be agreeing to things that we should not be agreeing to in terms of tariffs within a free trade agreement. And we would be facing the prospect of more to come. So I think we just, we have to get over the fantasy that there's something we can do to move Donald Trump off of his favorite instrument of tariffs or that we can, you know, permanently see off the threat to our software. that he seems determined to pose. The people around him who have his ear have sold him on an idea that's obviously very easy to sell to him of hemispheric dominance. That is their official foreign policy, and they've spelled that out in black and white,

and they've spelled out that trade is going to be one of their main weapons for doing that. So, no, I don't think there's a deal out there to be had. I don't think we should be chasing rainbows. I think that's a fantasy. I think we just have to live with the... idea that the President of the United States wishes us ill is going to try to inflict harm on us, that there's little we can do to prevent him from doing that, but there's lots we can do to mitigate. There's lots we can do to make ourselves hyper-competitive, to make ourselves so productive

and so welcoming to investment that we can survive and prosper even in the face of these tariffs. We've had as high or higher tariffs against us in history before. it didn't mean the end of the world. It's just a stupid, inefficient, costly way to prevent capital from flowing to where the capital should flow. Naturally, if you didn't have tariffs, et cetera, then capital will be allocated an efficient way across North America, and that in many ways should be the ideal that we still strive towards. But for a while, we're going to have to put aside that dream and just try to hunker down and persevere. What we should not be doing is making deals, making concessions to try to get a piece that isn't available and that would those kinds

of concessions would tend to get locked in and become a permanent thing. Maybe we can persuade a successor administration to go back to tariff-free trade. I don't think that's an illusion. I don't think that's impossible. There's lots of people in the United States in both parties who are still free traders. There's lots of protections around as well. But that's a better thing to place our bets on in terms of a long-term outcome, then locking ourselves into an accepting and ratifying 25% tariffs inside a free trade agreement. It just makes a mockery of,

makes you wonder why we even bothered to sign Cozma. Should we engage in retaliatory tariffs? I mean, our booze and liquor ban is itself illegal under the terms of Cozma. I mean, do two wrongs make a right? Sometimes. I love the old line. Two wrongs don't make it right, but three breaks a tie. Look, it's not an ideal remedy. It's not one I would usually prescribe.

Usually I would say, look, if they're bent on taxing their consumers, that's no reason we should tax our consumers. I think this is a little different. I see some room for retaliation, not because it will necessarily induce them to step down. and to reverse their existing tariffs, but simply as a demonstration of a willingness to endure pain. There's a larger kind of psychological game, if you will, going on here. There's a larger game than just this or that tariff

or this or that industry. This is about can we be coerced? Because that's the objective. The objective of the American administration is to subject us to a coercive relationship in perpetuity. That this isn't about, you know, should we have tariffs on steel or not? This is should Canada subject its economic defense, foreign policy, and trade policies to American approval. And I know that that makes me sound like Maude Barlow, circa 1987.

And there's been a long history of paranoia about American intentions that sometimes has done harm to our trade policies with them. But in this case, you know, I always remind people the story of the boy who cried wolf ends with the wolf devouring the boy. You know, there are such things as wolves. The wolf is here. This is the real deal. This is somebody who means to dominate us. He's out of his mind and he's surrounded by lunatics. But that is very much part of their foreign policy.

Remember, this is a guy who was literally threatening to invade Greenland to the point that Europeans were mobilizing soldiers to defend it. So we're not dealing with a rational actor here, and we have to be fully aware of that. And that ultimately has to be what drives our approach to this. Just as we start to wrap up, Andrew, the prime minister delayed our retaliatory tariffs until after Labor Day. Was that? And is it to create a window whereby, you know, there could be a climb down? I don't know. It could be. It's very hard to fully, you know, it's hard to, unless you're plugged into the prime minister's office and know exactly what their motives are. One possible

interpretation of all of this is that the whole thing has just been a stalling game and that we were only pretending to negotiate to drag this out because the closer we get to the midterms, the cost of this is going to be politically for the Republicans and for Donald Trump. And so, So continuing to negotiate right up until August 19th and putting out this thing where we'll put retaliatory tariffs, but they won't go into effect until September 8th. One way of interpreting that would be we're just drawing it out. And I don't know whether that's the case not. The other less encouraging theory would be that they were really intending to strike a deal

and the Americans just kind of overdid it and that they still want to get a deal. and that they're hoping the Americans will give them some cover between now and September the 8th that would allow us to capitulate and will allow us to accept a deal that isn't quite as bad as this one, but might be more tolerable at least to the prime minister's office. So I don't know which is the right interpretation. They each seem to me plausible and we'll just have to see. but I hope it's not the latter. I hope that they're not,

this is not, you know, we're not proposing to negotiate and make concessions between now and September the 8th. That would be the normal pattern. That would be the normal reason why you would put that window there. But it would be a mistake

for all the reasons we've been discussing in this particular context. Andrew, interesting and kind of strange parallels between the situation the government of Canada finds itself and Iran. For both countries, we're already seeing this really on full display with the Iranians in the last few weeks.

The midterms and the run-up to them, is it not, Andrew, a period of maximum leverage? That this president is now facing disasters on multiple fronts. A war in Iran that is an abject tactical and strategic failure, a bond market that you've talked about that's beginning to revolt at his. 6% of GDP deficits, his $40 trillion debt. Now, a trade war with Canada, his second largest trading partner. Should we, Andrew, if we're not interested in the next 14 days, should we be thinking about the period running up to the midterm elections and using that as a moment of maximum leverage to try to push through to an agreement? or is your advice you're thinking that this is all going to take a lot longer to play out?

This is something, as Doug Ford has said today, if you believe him or not, that he's ready to fight a trade war for the next couple years. I certainly lean towards that. I don't think the American threat is going to go away as long as this president is present. So I think you have to be thinking about the long run. I agree with your points, nevertheless, that he's in a very very important. weak position for the next little while. Not as weak as he would normally be as a normal president would be again because a normal president would be much more concerned about what was going to happen to his party in the midterm elections. Donald Trump seems strangely unconcerned

about that and I don't think that's unrelated to the multiple reports of the degree to which he and his people are preparing to, you know, tilt the pitch in the midterm elections or to invalidate them or control them in some way. And it's going to be a very interesting couple of months leading up to that election to see how free and fair they will actually be. But certainly, you know, having to deal, you know, he got into a war with Iran that they hadn't planned out and didn't have the cards that they thought they had and certainly don't have the public on their side. I think you can make a lot of parallels between that war and this trade war. And certainly, the latter point about he does not have the public on his side and people are not going to be up

for a fight this is going to add to their cost of living it's they're having a fight with people they actually like Canada has a very high rating amongst Americans including Republicans so I think there are parallels between them for him to be taking on both of these fights at the same time along with every other fight that he's taken on at a time when when when there's such concern about American debt such concern about American inflation and by the away, you know, we're one of the unintended beneficiaries of the Iran war that is driven up the price of oil. And as an oil exporting nation, we benefit from that. So, you know, if there were some prospect of us being able to use this leverage to drive a permanent settlement, sure. But, you know, we could,

we could get the best deal on earth in terms of what was written on paper, and we would have no assurance that the president would honor that signature a week after he'd signed. Just finally, Andrew, you know, just to be conspiratorial for a moment, I mean, it just seems so against the president's own interest to, again, have this failed war in Iran. we've talked about the bond market in debt, a revolt within his own MAGA movement, which is real and growing. And then he launches a trade war with Canada doubling down on it this morning in no uncertain terms. Andrew, at the back of his mind, is he thinking that it is inevitable that he and his allies will be contesting the results of the midterm election?

I would certainly lay whatever the proper connections, short odds, long odds, strong probability that that is part of his, part of his makeup. But also part of his makeup is he's not a rational actor. We talked about this, but it's in some ways a superpower of his

because it's impossible to map out his responses to any given situation because not only can you not count on him following the rule of law or basic ethics or norms of civilized conduct between nations, you can't even count on him following objective, rational self-interest. He's just simply not wired that way. And if you really push it further, I would say, you know, he seems bent on destroying and damaging every institution of American life for whatever reason.

My theory is he's a nihilist. It's tied in with his immense psychological disturbances, particularly his narcissism, that to make himself feel large, he has to make everything else small. Well, how do you model that? How do you war game? How do you map out a policy for dealing with a madman at the helm of a superpower who seems bent on committing state suicide? It's a problem that has no parallel in any of our experience.

experience going back hundreds of years, if not thousands of years. And so that's the difficulty in, among other things, in trying to form a strategy that one might otherwise in terms of trade deals and that kind of thing, or even trying to figure out the politics of this. So, as I say, that's a superpower in a sense in that it puts all of us on the wrong foot. It makes it, makes it difficult. It's like sometimes, you know, when it, when a really good. good hockey team plays a really lousy hockey team, they're flummox because the really lousy team

doesn't behave the way a normal team would. And it's very unpredictable. And they'll sometimes get a strange result because of that. We're sort of in that situation here. So it's a super powerful while until it isn't, until the accumulation of all of his utterly stupid, utterly wrong-headed, utterly counterproductive and self-destructive policies and acts until they eventually come together to just bring them down. And so we're sort of somewhere along that curve where he's still getting the advantage that come from unpredictability and sort of random behavior. But at some point, all that's going to add up to a whole mess of trouble for him, his party, in his country. Yeah. Yeah. We've talked a lot.

lot together over these months, Andrew, about the kind of frenetic, almost manic nature of this presidency and how it felt like it was accelerating last spring. And boy, surprised. I'm surprised at the leaps forward that it's taken towards kind of instability and chaos over the summer. Last word to you. And it's only going to get worse, which we've discussed time and time again. It's gotten continually worse over the last several months and over the last several years. And it's going to get worse still. His behavior is going to get crazier. And as I say, the next big watershed is going to be the midterm elections. And we'll see just how crazy he's become by that point. Yeah. Well, Andrew, thank you for finding some time for us today, Monday afternoon. No doubt you are pen to paper for the

Globe and Mail. And we look forward to reading your next column. So get back to work, sir. very good that was Andrew coin global male calmest regular contributor here at the monk dialogues i'm roger griffiths chair of the monk debates if you're enjoying these monk dialogues please uh share the monk podcast with friends and family get the news out and if you're over on our youtube channel well you're in good company over 100 000 subscribers uh to the monk debates uh click and like Andrew's video and uh again subscribe to the channel we got lots of great content coming your way. We'll catch you again soon. Until then, bye-bye. The Monk Debates are a project of the Aurea and Peter and Melanie Monk Charitable Foundations.

Rudyard Griffiths and Ricky Gerwitz are the producers. Be sure to download and subscribe wherever you get your podcasts. And if you like us, feel free to give us a five-star rating. Thank you again for listening.