The Peter Zeihan Podcast Series - Trade War Revival: Trump, Canada, and Tariffs || Peter Zeihan

Episode Date: September 1, 2026

Crippling one of the world's most deeply integrated manufacturing systems probably isn't a great idea, but here we are again.Join the Patreon here: https://www.patreon.com/PeterZeihanFull Newsletter: https://bit.ly/3UYvZ8M

Hey all, Peter Zine here. Come to you from Colorado. And the news is that between the 21st and the 22nd at midnight, the United States kicked in 50% tariffs on a suite of Canadian goods, basically ensuring that the trade war between the Trump administration in Canada is alive and well. What this is, what this isn't. First, what this isn't. These weren't NAFTA talks.

Bilateral talks with Canadians on NAFTA, much less tri-level talks with the Mexicans, have yet to begin. So the world's deepest economic integration, the most successful supply chain's humanity has ever put together, are still in limbo, and now with the United States throwing a 50% tariff on top of that, and saying flat out there are no plans for future negotiations, this really is getting into a no-man's land when it comes to the future of North American manufacturing. Keep in mind that the United States needs to at least double the size of its industrial plant simply to have access to the products it's going to lose as de-globalization really kicks in, especially in China. And doing that without our North American partners means we actually have to

increase our industrial plant by the volume of theirs as well. At the same time, the Trump administration keeps changing policies. We've now had over 8,500 tariff changes. This new batch adds a couple more hundred to that. And so no one who wants to invest in North American, and especially U.S. manufacturing is going to do so because the rules of the game keep changing and they don't even know who they can approach for partners. So one of the things that we've seen during the Trump administration is that industrial construction spending has dropped every single month of this administration but one where there was a slight uptick, I think earlier in this year. This is certainly going to exacerbate that plan because we're now at the point where the business

communities trust in the Trump administration has basically evaporated completely. And they will not start investing in new plant until such time as they know what the real rules of the game are that will be on the other side of negotiations with canada on the other sides of negotiations on whatever the next nafta is and at this point none of that has even started yet so um if you were looking for the reindustrialization of the united states under the trump administration we now have 18 months of data indicating that we've gone screaming in the opposite direction and we're actually farther away from clarity now than we were in January of 2025. This is unambiguously horrible news for the U.S. economy long term because it's raising the very virile possibility that not only will we not

have the replacement product supply chains in place when de-globalization really hits hard in the next couple of years, but we won't even be able to be functional with where we were two years ago. And the industries that are going to hit hardest by that by far are agriculture because their primary customers are Canada and Mexico. And automotive manufacturing because the average part that is in an American crafted vehicle crosses the border five or six times overall in its manufacture going to Mexico and Canada. And anything going to Canada is now facing potentially compounding tariffs. And if you happen to be headquartered in Detroit and producing cars in Michigan or the northern tier of the Midwest, you're talking about parts crossing maybe seven times. This is bad anyway. You look at it.

One more thing. I'm going backpacking in Yosemite for the next few weeks. And the next phase of this, I will not be here to talk with you about. In September, the Canadians have already promised that they're going to announce reciprocal tariffs designed to pressure the Trump administration specifically. It is unclear what those tariffs will be on. in the past when countries try to target political decision-making, they go after things that are politically sensitive, specifically in areas that really matter to the political policymaker.

I don't know what that's going to look like at president, but I have a real big doubt that it's going to work. Trump has made it very clear over the last year that it doesn't matter who he thinks his constituents are. He's willing to do whatever he thinks his version of math supports. So, for example, the beef industry has been absolutely, screaming for the last few weeks as Trump has been opening up their market to foreign imports and an attempt to lower prices. So actually suppressing long-term supply in the United States

in order to give him a short-term boost in preparation for the midterms. And none other than, say, the National Cattlemen's Association has just been screaming bloody murder about how damaging that is for them in the country mid-term. You're seeing this across almost every economic sector. So the idea that that strategy is going to work is very unlikely. Second thing is the Canadians, if they do decide to target things like the manufacturing sector that would really reverberate in places like Michigan and Swink states, two things to keep in mind. Number one, Trump's a lame duck already. He doesn't care about presidential elections, so that's unlikely to work.

And then second, three-quarters of Canada's exports come to the United States. Anything that they do that is real that will cause structural damage in the United States is actually going to hurt them more.